Undergraduate Project Report TECNO LINK Finallllllllllllllll

TECHNO LINK COLLEGE
BURAYU CAMPUS
A Research on: CHALLENGE AND OPPORTUNITY OF E-
BANKING IN KOLFE DISTINICT AT KETA MEDANIYALEM
BRANCH
A Research submitted to Mr.: Alemayehu Dugasa in partial fulfillment for the course
research methods
Group Members: NAME ID NO
1. DANIEL BELAY …………………………………. 080/12

2. HANA FEYISA …………………………………... 053/12
3. HAWI GUDISA ……………………………………. 028/12
4. KANANI KENEA ………………………………… 081/12
5. METI GIRMA ……………………………………… 069/12
6. TIGIST ADUGNA …………………………………. 043/12
June, 2023
DECLARATION
We, the under signed student, hereby declare that, this research project is our original
work, which has not been presented for a degree in this/elsewhere university. All sources
of materials used for this study have been fully acknowledged.
NAME SIGNATURE
1. DANIEL BELAY ___________
2. HANA FEYISA ___________
3. HAWI GUDISA ___________
4. KENANI KENEA ___________
5. METI GIRMA ___________
6. TIGIST ADUGNA ___________
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A Research on: CHALLENGE AND OPPORTUNITY OF E-
BANKING IN KOLFE DISTINICT AT KETA MEDANIYALEM
BRANCH
Approved by Examining Board

_______________ _______________ _______________
Advisor Signature Date
_______________ _______________ _______________
Internal Examiner Signature Date
_______________ _______________ _______________
External Examiner Signature Date
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ACKNOWLEDGEMENT
We are most grateful to the God for his infinite mercy and love that guided us
throughout the duration of the program.
We are deeply grateful to my advisor Mr. Alemayehu Dugasa for his precious and
contribution to this thesis; we also like to thank his thoughtful contribution to my stock
of knowledge.
Last but not least, we would like to express deep gratitude to staff and customer of
commercial bank for their willingness to the cooperation in filling the questionnaire.
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ABSTRACT
The introduction of electronic banking has completely changed the financial
environment, creating both benefits and difficulties for both individuals and financial
organizations. This study seeks to offer a thorough overview of the benefits and
problems related to electronic banking as a social studies researcher. This research uses
type of research method and also uses both primary and secondary data. A sample size of
10 employee and five customers were selected from a population of keta medaiyalem
branch. The sample were selected through non- probability sampling (purposive). The
results show the importance of taking preventative action to deal with the issues while
using the benefits of electronic banking for a more effective and equitable financial
system.
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Table of Contents
DECLARATION ....................................................................................................................................................... i
ACKNOWLEDGEMENT ....................................................................................................................................... iii
ABSTRACT ............................................................................................................................................................ iv
LIST OF TABLES.................................................................................................................................................. vii
ACRONYMS & ABBREVIATIONS .................................................................................................................... vii
CHAPTER ONE ....................................................................................................................................................... 1
1. INTRODUCTION ........................................................................................................................................ 1
1.1. BACKGROUND OF THE STUDY ..................................................................................................... 1
1.2. STATEMENT OF THE PROBLEM .................................................................................................... 2
1.3. OBJECTIVES OF THE STUDY.......................................................................................................... 3
1.4. SCOPE AND LIMITATION OF THE STUDY................................................................................... 4
1.5. SIGNIFICANCE OF THE STUDY ..................................................................................................... 5
1.6. ORGANIZATION OF THE STUDY ................................................................................................... 6
CHAPTER TWO ...................................................................................................................................................... 7
2. LITERATURE REVIEW ............................................................................................................................. 7
2.1. DEFINITION OF E-BANKING .......................................................................................................... 7
2.2. ORGANIZATIONAL CHALLENGES OF E-BANKING ................................................................ 10
2.3. CHALLENGES OF E-BANKING ..................................................................................................... 10
2.4. E-BANKING RISKS .......................................................................................................................... 12
2.5. OPPORTUNITIES OF E-BANKING FOR THE CUSTOMERS ...................................................... 14
2.6. IMPORTANCE OF E-BANKING FOR THE BANK ....................................................................... 15
2.7. BENEFITS OF E-BANKING ............................................................................................................ 15
2.8. CONCEPTUAL FRAMEWORK ....................................................................................................... 19
CHAPTER THREE ................................................................................................................................................ 20
3. RESEARCH DESIGN AND METHODOLOGY ...................................................................................... 20
3.1. INTRODUCTION .............................................................................................................................. 20
3.2. RESEARCH DESIGN ........................................................................................................................ 20
3.3. RESEARCH APPROACH ................................................................................................................. 20
3.4. STUDY AREA ................................................................................................................................... 21
3.5. POPULATION, SAMPLING TECHNIQUES AND SAMPLE SIZE ............................................... 21
3.6. SOURCES OF DATA ........................................................................................................................ 22
3.7. DATA COLLECTION INSTRUMENTS .......................................................................................... 22
3.8. METHOD OF DATA ANALYSIS .................................................................................................... 24
CHAPTER FOUR .................................................................................................................................................. 25
4. DATA PRESENTAION, ANALYSIS AND INTERPRETATION ........................................................... 25
4.1. DEMOGRAPHIC INFORMATION .................................................................................................. 25
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4.2. CHALLENGES OF ADOPTION AND DEVELOPMENT E-BANKING TECHNOLOGY IN
KOLFE DISTINCT ........................................................................................................................................ 29
4.3. ORGANIZATION FACTOR ............................................................................................................. 30
4.4. ENVIRONMENTAL FACTOR ......................................................................................................... 31
4.5. TECHNOLOGICAL FACTOR .......................................................................................................... 33
4.6. BENEFITS REALIZED FROM THE ADOPTION AND DEVELOPMENT OF E-BANKING
TECHNOLOGY IN ETHIOPIA BANKING INDUSTRY ............................................................................ 34
4.7. OPERATIONAL BENEFITS ............................................................................................................. 34
4.8. SERVICES BENEFITS ...................................................................................................................... 35
4.9. CUSTOMER SATISFACTION ......................................................................................................... 36
CHAPTER FIVE .................................................................................................................................................... 40
5. SUMMARY, CONCLUTION AND RECOMENDATION ...................................................................... 40
5.1. SUMMARY OF MAJOR FINDINGS ............................................................................................... 40
5.2. CONCLUSION .................................................................................................................................. 41
5.3. RECOMMENDATION ...................................................................................................................... 42
REFERENCES ....................................................................................................................................................... 44
APPENDEX- A ...................................................................................................................................................... 45
APPENDEX - B ..................................................................................................................................................... 50
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LIST OF TABLES
Table 1: Demographic Analysis for Employee ...................................................................................................... 25
Table 2: Types of E-Banking.................................................................................................................................. 27
Table 3: Demographic Analysis for customer ........................................................................................................ 28
Table 4: Organizational Factor ............................................................................................................................... 30
Table 5: Environmental Factor ............................................................................................................................... 31
Table 6: Technological Factor ................................................................................................................................ 33
Table 7: Operational Benefits ................................................................................................................................. 34
Table 8: Service Benefits ........................................................................................................................................ 35
Table 9: Customer Satisfaction............................................................................................................................... 36
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ACRONYMS & ABBREVIATIONS
ANOVA Analysis of Variance
ATM Automatic Teller Machine
CBE Commercial Bank of Ethiopia
CSEB Customer Satisfaction in Electronic Banking
E-banking Electronic Banking
EBSQ Electronic Banking Service Quality
EFT Electronic Fund Transfer
ICT Information Communication Technology
NBE National Bank of Ethiopia
POS Point of Sale/Purchase
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CHAPTER ONE
1. INTRODUCTION
As an introduction of the study, this chapter presents: background of the study, statement
of the problem, research objective, research questions, research method adopted, scope
and limitation of the study, significance of the study and organization of the whole paper
respectively.
1.1.BACKGROUND OF THE STUDY
The financial systems of most developing countries are cash driven; meaning that
monetary transactions are basically made through the exchange of bank notes and coins
for goods and services. However, this trend 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; Johnson, 2005).
Electronic funds transfer has been described as the third of the great ages of payment, the
first being payment by cash (notes and coins) and the second being paper based payment
(for instance, cheques) (Kilonzo, 2007). E-payment systems refer to the automated
processes of exchanging monetary value among parties in business transactions and
transmitting this value over the Information and Communication Technology (ICT)
networks. The common E-banking channels include the payment cards (debit or credit),
online web portals, Point of Sales (POS) terminals, Automated Teller Machines (ATM),
mobile phones, Automated Clearing House (ACH), direct debit/ deposit and Real Time
Gross Settlement System (RTGS) (Nnaka, 2009).
E-banking has many advantages and interesting diversities including a greater number of
customers, services in higher quality and lower price, preservation and enhancement of
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share in market, unlimited space for market, concentration in new distribution, making
competition between commercial banks, concentration on expenses and improvement of
revenue, providing extensive services, improvement in management system, decreasing
the expenses of contractions, close intra banking connection, controlling ecological
pollution, etc. (Farshad Havasi1 et al., 2013).
E-banking are closely related systems with huge interactions and their development
needs social identity, a reliable legal system, well-built communication network, and
strong government support (Zheng, et al., 2009). Since there can be many potential
problems related with E-banking system, it is necessary to develop a sound atmosphere
for E-banking like strengthen the construction of the network infrastructure, improve risk
mitigation mechanisms, develop skill man power, suitable legal and regulatory
framework for E-commerce and E-payment that deals with e-commerce including
enforceability of the validity of electronic contracts, nurture more practitioners in this
area and finally strengthen communications with government for policy support (Zheng,
et al., 2009).
1.2.STATEMENT OF THE PROBLEM
In this era of globalization, with increased competition around the globe in all sectors, a
strong banking industry is important in every country and can have a significant effect in
supporting economic development through efficient financial services; as a result, many
banks in the world are modifying their strategies to reach customers worldwide more
easily and cheaply. Therefore, banks are developing the technologies that will help them
deliver banking products and services by the most cost-effective channels and one of
such channels is adoption of E-banking or internet banking (Ayana, 2012).
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E-banking is a way to keep existing customers and attract new ones to the bank. The
transaction costs of providing these services are lower than the traditional approach. The
rapidly growing information communication technology is knocking the front door of
every organization in the world (Booz & Hamilton, 1997).
Even though E-banking has a lot of benefit in delivering service to both customers and
bank. In keta medanyalem several challenges hindered customers and banks easy access
to enjoy electronic banking that helps to reduce cost and times with the technological
advancement in banking sector which has been entertained elsewhere in Africa and the
rest of the world. This is due to lack of awareness or competition among banking
industries, poor internet access. The modern E-banking methods like ATMs, Debit cards,
Credit cards, Tele banking, Internet banking, Mobile banking and others are new to the
Ethiopian banking sectors (Ayana, 2012).
The introduction of electronic banking in to the banking sector is to bring extra

opportunities to the customers there by to enhance the banks „profitability. Unless this
technology brings increase customer satisfaction than the traditional brick and mortar
branches customer may perceive as the same as different branches rather than a new
means of delivery channels.
1.3.OBJECTIVES OF THE STUDY
1.3.1. GENERAL OBJECTIVE
The main objective of the study was to assess and identify the challenges and
opportunities of adoption and development of E-banking technology in CBE keta
medanyalem branch.
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1.3.2. SPECIFIC OBJECTIVES
The specific objectives of the study were:
 To explore the challenges encountered in the adoption and development of E-

banking in keta medanyalem branch.
 To find benefits realized by the banks in the adoption of E-banking technology to

complement their service delivery channels.
 To identify the driving forces towards the adoption and development of E-banking
service in keta medanyalem branch and
 To identify the existing opportunities for the adoption and development of E-

banking service in keta medanyalem branch.
1.4.SCOPE AND LIMITATION OF THE STUDY
The study was limited to surveying, interviewing and documentary analysis of the
purposely selected banks. One public commercial bank was purposely selected and it
excluded other banks to explore the intent of the study. This bank was selected from the
total population based on their familiarity with E-banking technology i.e., long years
services in providing E-banking products to public. Hence, the purposive sampling
procedure decreases the generalizability of findings and this study might not be
generalizable to all banks. Besides, the study was only to identify the adoption and
development of E-banking technology in the keta medanyalem branch with respect to
their: Challenges such as:
 Benefits;
 Driving forces; and Opportunity from the bank‟s perspective.
Thus, the study focused on the opinion of bank officials and does not include the
customers or public opinion on the subject matter.
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1.5.SIGNIFICANCE OF THE STUDY
The purpose of the study is to assess the benefits realized by Banks, driving forces,
challenges and opportunities for the adoption and development of E-banking technology
in keta medanyalem branch. In general, the study will have the following significance.
Since E-banking technology is in an infant stage in this branch, identification of

opportunities and challenges for the adoption of E-banking can impact positively on the
performance of banks that wish to adopt and/or have adopted E-commerce applications.
Provide an opportunity for decision-makers and managers of the Bank‟s to consider and
evaluate the opportunities and problems observed in the existing practices, in order to
take appropriate corrective measures in the area or to accelerate the positive factors (if
any) for the promotion of E-banking practices.
The finding will provide a framework for the Banks for the design of their future
directions and to adjust their goals and objectives as per real opportunities and
challenges.
The study will enable government organizations and trade associations to develop banks
E-banking assistance programs that are designed to address the factors identified by this
research. This study would also assist all stakeholders in the banking industry identify
and formulate strategies that will promote E-banking.
This study also seeks to address the lack of studies on E-banking adoption in developing
countries such as Ethiopia. In addition, the study will also provide input for further
research on the area, especially with respect to the challenges and opportunities related
with the adoption and provision of E-banking services to customers or the public at
large.
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1.6.ORGANIZATION OF THE STUDY
There are five chapters in the research report: The study's history, problem description,
objectives, and significance are all covered in chapter one. A variety of literature reviews
are included in chapter two in order to compile pertinent data about e-banking. The
methodology used to achieve results is described in depth in chapter 3. It contains the
sampling, sampling methodology, and data analysis of the study. The study's results and
conclusions were presented in chapter four together with supporting evidence from other
research projects. The primary conclusions, recommendations, and findings of the study
are the subject of Chapter 5.
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CHAPTER TWO
2. LITERATURE REVIEW
The purpose of this chapter is to review the literature in the area of E-banking adoption
and development and mainly focused on the challenges, benefits, drivers and
opportunities of adopting E-banking technology. This review of literature establishes a
framework, which can guide the study.
2.1.DEFINITION OF E-BANKING
Electronic banking is a system where banking services are provided electronically to

Bank customers and it has created a new path in doing the banking businesses-banking is
a product designed for the purposes of online banking that enables users to have easy and
safe access to his / her bank account.
E-banking is a safe, fast, easy and efficient electronic service that enables you access to
bank account and to carry out online banking services, 24 hours a day, and 7 days a
week. With this service you save your time by carrying out banking transactions at any
place and at any time, from your home or office all you need is internet access. E-
banking enables accurate statement of all means available in user‟s bank account,
Statement of current account, credits, overdrafts and users‟ deposits, Execution of
national and international transfers in various currencies, execution of all types of utility
bill payments (electricity, water supply, telephone bills, etc..), Carrying out customs
payments, electronic confirmation for all transactions executed by E-banking, and
management of your credit cards.
Electronic banking, popularly known as E-banking, is a service provided by the bankers,
that allows customers to carry out all their banking transactions like, financial
transactions, deposits, withdrawals, paying bills and to access the his/her/its account
information, through the use of electronic channels like Computers, Mobiles, ATMs,
Television and other electronic devices (Daniel, 1999). E-banking, is also known as
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internet banking or virtual banking or online banking or web banking, provides,
convenience their customers in accessing banking facilities from the comfort of their
home or office without having to physically visit their bank (Okoye, 2013).
2.1.1. KINDS / FORMS OF E-BANKING
The tools/channels use in executing e–banking include plastic cards (debit cards, credit
cards, prepaid cards), personal computers, telephone, mobile phones, internet, ATM „s,
POS or point of interaction machines (M Oladejo, 2012). The description of the above-
mentioned tools/channels is as follows: -
A. Plastic cards
Debit cards: - Debit card is a banking card enhanced with ATM and POS features so
that it can be used at merchant locations. Debit cards allow you to spend only what is in
your bank account. It is a quick transaction between the merchant and your personal
bank account. A debit card is linked to an individual‟s account, allowing funds to be
withdrawn at the ATM and point of sale without writing a cheque. When using a debit
card to pay for goods and services, the purchase amount is deducted from the
cardholder‟s checking account. The types of debit card include online debit card and
offline debit card. With offline debit card, debit is not made immediately. Benefits of
using a debit card include making the payment process at the checkout counter quicker
and more convenient, eliminating the need to carry a cheque book and a lot of cash,
using it at locations where personal cheques are not accepted, and reducing the
possibility of loss or theft of cash (Okoye, 2013).
Prepaid debit cards: - These are debit cards not usually linked to a customer„s account.
They must be funded before being used by cardholders. Prepaid debit cards are identified
with such names like cash cards, value cards, and Naira cards etc. prepaid cards can be
used as gift cards students ID cards, Government payment card, payroll card, Bursary
card, insurance cards, travel cards etc. (Girma, 2016).
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Credit Cards: - A credit card is different from a debit card in that it does not remove
money from the user‟s account after every transaction. In the case of credit cards, the
issuer lends money to the consumer (Or the user) to be paid to the merchant. A credit
card allows the consumer to revolve their balance at the cost of having interest charged.
The parties involved in a credit card transaction include cardholder, card issuing bank,
merchant, acquiring bank, independent sales organization, merchant account, credit card
association, transaction network, and affinity partner (Girma, 2016).
B. Automated Teller Machines (ATM): - This is a computerized telecommunications
device that provides the customer of a financial institution with space to financial
transaction in a public space without the need for a human clerk or bank teller. Using an
ATM, customers can access their bank accounts in order to make cash withdrawals and
check their account balance. ATMs rely on authorization of a financial transaction by the
card issuer or other authorizing institution via the communications network. Many banks
charge ATM usage fees for transactions (Girma, 2016).
C. Point-of-Sale Transfer Terminals (POS): - The system allows consumers to pay
for retail purchase with a check card, a new name for debit card. This card looks like a
credit card but with a significant difference. The money for the purchase is transferred
immediately from account of debit card holder the store's account (Malak, 2007).
D. Internet / extranet banking: - According to Booz, Allen & Hamilton (1997),
Internet banking‖ refers to systems that enable bank customers to accounts and general
information on bank products and services through a personal computer (PC) or another
intelligent device (Booz, 1997).
E. Mobile banking: - can be defined as an occurrence when customers access a bank„s
networks using cellular phones, pagers, personal digital assistants, or similar devices
through telecommunication wireless networks. It means performing banking activities
which primarily consists of opening and maintaining mobile/regular accounts and
accepting deposits; furthermore, it includes performing fund transfer or cash-in and cash-
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out services using mobile devices (NBE Directive, FIS-01-2012).
F. Tele-banking: - Telephone banking service is provided by phone. To access an
account, it is required to dial a particular telephone number and there are several options
of services. Options included; Checking account balance, funds transfer between current,
savings and credit card accounts Bill payments, Stock exchange transaction receive
statement via fax loan payment information.
2.2.ORGANIZATIONAL CHALLENGES OF E-BANKING
Doghouse and Toufaily (2009) directed a study on the achievement and basic calculates
selection of E-banking by Lebanese banks. The exploration was directed on the
components that can prompt to achievement the appropriation of E-banking and alternate
variables that can constitute as boundary to its selection, it concentrates on the
authoritative, auxiliary and vital elements which can quicken or, actual moderate the
reception of this electronic mode.
The consequences of their study demonstrates that the authoritative challenges (bank
measure, utilitarian divisions, specialized staff, specialized infrastructure, thought
dangers, leaders' global experience and dominance of advancement) are challenges
which apply noteworthy effect on the reception of E-banking, among the basic qualities,
the outcome established that inner mechanical environment of the bank is an essential
calculate deciding the appropriation of E-banking, additionally the outcome
demonstrates that which are creating in the universal scale will probably embrace E-
banking developments.
2.3.CHALLENGES OF E-BANKING
According to (Ubi, 2012), it is hypothesized that many of the factors affecting the
successful adoption of new technologies such as e-commerce and E-banking are generic
in nature and that the successful adoption of internet technologies in part depends on
how these are used in conjunction with the other technologies and management practices
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that form a technology cluster. However, the most critical challenges can be ascribed to
the very limited information and communication infrastructure available in most
developing countries.
The study that was conducted by (Awuondo, 2005) indicated that the challenges for the
adoption of E-banking in Africa is security, human face i.e., customers still value
personalized and responsive services from their bankers, poor and/or lack of
technological infrastructure especially in the rural areas, lack of proper legislation
governing e-transactions and preference to paper money, as opposed to “virtual” cashing
transactions etc.
The following are specific challenges hindering the adoption of e-commerce in
developing countries.
 Lack of convenient payment means, poor distribution system, imperfect legal

system, and lack of large-scale telecommunication transmission capability
(broadband), Internet security are problems face these countries.
 Another most pressing limitations are access to technology (computers,

connectivity, and gateway to Internet), limited bandwidth, which reduces the
capacity to handle audio and graphic data; poor telecommunications
infrastructures and unreliable electricity supply.
 The cost of the Internet access makes it inaccessible to most users in developing
countries. The cost of accessing the infrastructures also influences the growth of
ecommerce. The priority for most developing countries is to put in place the
necessary infrastructure and a competitive environment and regulatory framework
that support affordable Internet access. The monthly connection cost of the
Internet far exceeds the monthly income of a significant portion of the population.
 Confidence and trust are also an essential requirement for secure electronic
trading. The geographical separation of buyers and sellers, often coupled with a
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lack of real-time visual or oral interaction, creates a barrier to ecommerce adoption
in developing countries. Language is another important hindrance to ecommerce
adoption. Most people in developing countries are illiterates and uneducated.
Moreover, English is a primary language used in many Western countries where
new technologies originate. It is the predominant language for development of IT
and ecommerce and it is the main language used on the Web.
2.4.E-BANKING RISKS
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 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 eservice, as it can be difficult to
establish/configure new systems to ensure that sufficient, meaningful and clear
information is generated.
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
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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.
Strategic Risk: - E-banking is relatively new and as a result there can be lack of
understanding among senior management about its potential and implications. People
with technological but not banking skills can end up driving the initiatives. E-initiatives
can spring up in an incoherent and piecemeal manner in firms. They can be expensive
and can fail to recoup their cost. Furthermore, they are often positioned as loss leaders
(to capture market share), but may not attract the types of customers those banks want or
expect and may have unexpected implications on existing business lines.
Business Risk: - Business risk is also significant in E-banking. Given the newness of E-
banking, nobody knows much about whether E-banking customers will have different
characteristics from the traditional banking customers. They may well have different
characteristics. This could render existing score card models inappropriate, thus resulting
in either higher rejection rates or inappropriate pricing to cover the risk. Banks may not
be able to assess credit quality at a distance as effectively as they do in face-to-face
circumstances. It could be more difficult to assess the nature and quality of collateral
offered at a distance, especially if it is located in an area the bank is unfamiliar with
(particularly if this is overseas).
Security: - Security issues are sources of concerned for everybody more especially as it
concerns banking industry. E-banking is prone to security breaches such as fraud, theft
of commercially sensitive or financial information, defacement of web sites or denial of
service and flaws in system design and/or set up leading to security breaches. All these
security breaches have potentially serious financial, legal and reputational implications.
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2.5.OPPORTUNITIES OF E-BANKING FOR THE CUSTOMERS
The study the benefit of E-banking for Customers as follows: 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: -
 Reduced costs in accessing and using the banking services.
 Increased comfort and time saving transactions can be made 7x24, 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
is available on internet sites.
 For example, it is possible to manage company‟s short-term cash via internet

banks (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.
 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.
 Speed: The response of the medium is very fast; therefore, customers can actually
wait till the last minute before concluding a fund transfer.
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 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.
2.6.IMPORTANCE OF E-BANKING FOR THE BANK
Electronic Banking as already stated has greatly serviced both to the public and the
banking industry. This has resulted in creation of a better enabling environment that
supports growth, productivity and prosperity. Besides many tangible benefits in the form
of reduction of cost, reduced delivery time, increased efficiency, reduced wastage,
banking electronically controlled and thoroughly monitored environment and discourage
many illegal and illegitimate practices associated with banking industry like money
laundering, frauds and embezzlements. Further E-banking has helped banks in better
monitoring of their customer base. This is a useful tool in the hand of the bank to device
suitable commercial packages that are in conformity with customer needs. As E-banking
provide opportunity to banking sector to enlarge their customer base, a consequence to
increase the volume of credit creation which results in better economic condition.
Besides, E-banking has also helped in documentation of the economic activity of the
masses (Salehi, 2004).
2.7.BENEFITS OF E-BANKING
Banks just like other businesses are tuning to information technology to improve
business efficiency, service quality and attract new customers (F Havasi, 2013). Aver
that 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,
2002). (F Havasi, 2013) It is of the view that disputes can be minimized between the
employees as there is a clear flow of processes. Conducting business outside the normal
branch working hours has also been a factor that has been considered convenient for
15
bankers, inexpensive access to the bank 7x24 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,
2001). This ultimately leads to improved customer satisfaction. They 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 margins
downward. Karem observed 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.
Other benefits that have accrued because of the adoption of electronic banking in
developed countries include the ability to attract new customers and widening the
customer database, improving bank marketing and communication, and having the
ability to retain high profit customers (F Havasi, 2013).
According to (Ubi, 2012) companies can gain two fundamental types of benefits from E-
banking. These are generally described as: Value creation or value enhancement for one
or more of a company‟s stakeholder‟s groups, and lower cost of providing goods and
services to the market place. Value creation includes; improvement in internal and
external communication through effective e-marketing, increment of sales through an
ecommerce website integrated with a back-office systems and improvement in supplier
relations and productivity through collaborative work spaces. Lower costs are: reduction
in communication and travel cost using online meeting tools; shared workspaces and;
benefit from license free open-source alternatives to proprietary software.
16
2.7.1. BENEFIT OF E-BANKING FOR BANKS
The primary benefits of E-banking are as follows: -

Price - In the long run a bank can save on money by not paying for tellers or for
managing branches. Plus, it's cheaper to make transactions over the Internet.
Customer Base - the Internet allows banks to reach a whole new market- and a well off
one too, because there are no geographic boundaries with the Internet. The Internet also
provides a level playing field for small banks who want to add to their customer base.
Efficiency- Banks can become more efficient than they already are by providing Internet
access for their customers. The Internet provides the bank with an almost paper less
system. Customer Service and Satisfaction- Banking on the Internet not only allow the
customer to have a full range of services available to them but it also allows them some
services not offered at any of the branches. The person does not have to go to a branch
where that service may or may not be offer. A person can print of information, forms,
and applications via the Internet and be able to search for information efficiently instead
of waiting in line and asking a teller. With better and faster options, a bank will surely be
able to create better customer relations and satisfaction.
Image - A bank seems more state of the art to a customer if they offer Internet access. A
person may not want to use Internet banking but having the service available gives a
person the feeling that their bank is on the cutting image.
2.7.2. BENEFIT OF E-BANKING FOR CUSTOMERS
The main benefit from the bank customers‟ point of view is significant saving of time by
the automation of banking services processing an introduction of an easy maintenance
tools for managing customer‟s money. The main advantages of E-banking for corporate
customers as per are as follows: -
 Reduced costs in accessing and using the banking services.
 Increased comfort and timesaving transactions can be made 7x24, without
17
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
is available on internet sites. For example, it is possible to manage company‟s
short-term cash via internet banks (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
2.7.3. DRIVERS FOR ADOPTION OF E-BANKING TECHNOLOGY
Exploratory research conducted by (Salehi, 2004) in Iran indicated that the adoption
status of E-banking is the transition of pre-development to development phase and the
main drivers for adopting E-banking are downsizing, gaining competitive advantage,
increasing market share and improving bank‟s image. In addition to the above factors,
the case study that was conducted in China by Sherah Kurnia, Fei Peng, Yi Ruo Liu
(2005) suggested that the government support is also a strong driver for E-banking
adoption. The government support is manifested in two ways. Firstly, the Government is
establishing an electronic commerce (EC)-friendly environment in the country. The
government in recent years to revamp the national ICT and logistic infrastructures has
committed heavy investments. New EC laws and regulations have also been passed and
adjusted to provide legal protections for EC activities in general. Secondly, the
government also directly offers financial incentives to promote E-banking adoption.
The study that was conducted by (Awuondo, 2005) indicated that the drive forces for the
adoption of E-banking in Africa are rapidly changing customers‟ needs and preferences,
government support, competitive forces and product differentiation strategies and
pressure to reduce transactional and operation costs. In the study on online banking
18
drivers that providing faster, easier and more reliable services to customers were
amongst the top drivers of E-banking development.
2.8.CONCEPTUAL FRAMEWORK
The conceptual farm work of the study shows that the causal relationship between the
major challenges and opportunities of E-banking and its growth. This can be shown by
the following conceptual framework of the study Challenges of E-banking Opportunities
of E-banking.
 Technological challenges
 Environmental challenges
 Organizational challenges
Increase in global computation development of IT increase in customer awareness to E-
banking.
19
CHAPTER THREE
3. RESEARCH DESIGN AND METHODOLOGY
3.1. INTRODUCTION
This chapter will present the methodological framework applied to solve the research
problem and to answer the research questions. The chapter starts with the chosen
research design, research approach and study area. Afterwards, the sample selection and
the data collection methods will be presented.
3.2.RESEARCH DESIGN
The research design is the blueprint that shows research type selection, appropriate data
type to be collected and method/s of data analysis.
This study was focused on describing the current situation of the problem and answer the
research questions which are in the form of „„what‟‟, and to highlight the most important
factors that can negatively or positively affect the adoption and development of E-
banking in keta Medanalem branch. Moreover, this research aims to explain the
phenomenon and assess the current practice of E-banking. Therefore, Descriptive
research is being used to achieve the research objectives.
3.3.RESEARCH APPROACH
There are three approaches that are used in conducting a given research in terms of the
type of data used. These are quantitative, qualitative and mixed research approach.
Quantitative research approach focuses primarily on the construction of quantitative data
which is a systematic record that consists of numbers constructed by researcher utilizing
the process of measurement and imposing structure. The quantitative research approach
employs measurement that can be quantifiable while the qualitative approach cannot be
measured. In mixed research approach inquirers draw liberally from both qualitative and
20
quantitative assumptions. The research conducted this study using mixed research
approach; the rationale for combining both quantitative and qualitative data is to better
the research by the combining both numeric values from quantitative research and the
detail of 28 qualitative research and to neutralize limitations of applying any of a single
approach. The mixed research approach uses separate quantitative and qualitative
methods as a means to offset the weaknesses inherent within one method with the
strengths of the other method.
3.4.STUDY AREA
The area chosen for this study is kolfe distinct on keta medahanyalem branch of
commercial banks because the college we learn is located to this distinct and also, we
choose of keta medahanyalem branch.
3.5.POPULATION, SAMPLING TECHNIQUES AND SAMPLE SIZE
Population: is the entire aggregation of items from which samples can be drawn. The
populations of the present study the commercial banks under study. In order to undertake
this study, the researcher purposely sampled fund of branches in this distinct. And we
choose keta medahanyalem branches those are located around our college. The
researcher chooses to take one branches as a sample, because it is often impossible or too
much expensive to collect data from all the potential units. Thus, this research paper used
purposive sampling method to draw the sample from the population.
Sampling Techniques: the research study was conducted on keta medanyalem branch of
CBE, particularly on E-banking department office. The sampling technique was used is
non-probability sampling. Purposive to non-probability will be used for collecting and
analyzing information. The purposive of non-probability sampling is used is that by
purposively selecting good willingness I providing data. The proposal development, the
study employees 10 of the office employees from a total of 25 and respondents were
select from the office according to the position they hold that to selective employees.
21
Sample Size: The researcher chooses to take ten of the office and five customers
because it is often impossible or too much expensive to collect data from all the potential
units. Thus, this research paper used purposive sampling method to draw the sample
from the population.
Sample size 25% of the population
From the top manager and management staff 25% out of 10 = 2.5
25%*10 = 2.5
From internal employees 100% = 10 all of them was include
From organization (customer) 50% out of 5 = 2.5
5* 25% = 2.5
From organization (customer) 100% = 5
Totally 15 sample have been included.
3.6.SOURCES OF DATA
The study was conducted by collecting data from both primary and secondary sources.
Primary data was collected from the staffs of the commercial banks based on a
structurally designed questionnaire. It included both closed ended and open-ended
questions, which gives the respondents an opportunity for adequate expression of their
view on the questions. In order to get sufficient and reliable data that represents the
branch of we selected commercial banks both primary and secondary data was collected
from bank. Secondary data: different documents, records and reports of the industry,
Regulatory organ reports, from web site, books, annual reports and magazines, articles
and journals were also analysis.
3.7.DATA COLLECTION INSTRUMENTS
In order to collect sufficient data so as to answer the research questions, researcher

designed two surveys; the first was a questionnaire to get quantified results. The second
survey was interviews aimed to collect data from E-Banking managers. In addition to
22
questionnaire and interview secondary data source has been also used.
3.7.1. QUESTIONNAIRES
The questioners are important method for collecting primary data and that it further
allows the researcher to be well focused on the specific research topic. The questionnaire
was used because the researcher considered it to be more convenient as respondents
could answer at their convenience. The questionnaire was developed by the researcher
based on the research questions and the literature. The researcher used open and closed-
ended type of questionnaires, which gives the respondents an opportunity for adequate
expression of their view on the questions. The questionnaire began with a 30
introductory statement, which specified the purpose of the research as purely academic.
Respondents were encouraged being objective in their responses since they were assured
of confidentiality. To determine the probable usefulness of the questionnaire further
revision is needed prior to conducting the survey, the questionnaire was pilot tested. The
researcher circulated the questionnaire to four postgraduate students and six professional
staffs of sampled private commercial directly engaged in E-banking technology. The
subjects were asked if they had any problems understanding the questionnaire or have
specific comments regarding the questionnaire.
The format for responding was through both open-ended and close-ended questions. The
subjects were encouraged to be very free with their responses, make suggestions for
improvement and outline any difficulties they found. After each questionnaire was
accomplished, every question was asked what he/she meant in checking various answers.
Comments were solicited on the intelligibility of the questions and what the changes
should be done in order to make the questions simpler. These respondents also gave their
comments on understanding the instructions about the scaling and the time taken to
answer the questions. The test found no grave problems and minor modifications were
made to the survey questions based on the response obtained. In addition, the pilot study
was conducted to ensure the validity, sequence and relevance of the questionnaire to this
23
study.
3.7.2. INTERVIEWS
In addition to questionnaires, semi-structured interviews were conducted with E-banking

managers of the commercial banks to have sufficient information regarding the research
problem and with the relevant bodies of the National Bank of Ethiopia (Banking
Supervision directorate). The major purpose of this interview was to corroborate certain
facts that the investigator already thinks have been established Therefore, Thus, semi-
structured interviews were conducted so as to substantiated and improve the results of
questionnaire.
3.7.3. SECONDARY DATA SOURCES
The secondary sources of data constituted data gathered from records and reports of the
banks, World Wide Web (www) of the two commercial banks, literature on E-banking,
books and journals, and unpublished theses. The most important use of this secondary
data source will be to corroborate and augment evidence from other sources World Wide
Web Thus, the document examination helps to substantiate the patterns that evolved
from the data collected via questionnaires and interview, so that the validity of the
findings could be enhanced through secondary sources.
3.8.METHOD OF DATA ANALYSIS
In order to meet the stated research objectives, the collected data was analyzed based on
the nature of the objective. Accordingly, the data collected via questionnaires was
analyzed with descriptive statistics using statistical package for social scientists.
Furthermore, suggested that qualitative research is fundamentally interpretative i.e., the
researcher makes an interpretation of the data. Thus, the data that was collected from the
interview and reviews of documents were interpreted qualitatively. To sum, the analysis
of quantitative data and interpretation of qualitative data combines to seek convergence
among the results.
24
CHAPTER FOUR
4. DATA PRESENTAION, ANALYSIS AND INTERPRETATION
This chapter shows the presentations and discussions of the findings obtained from the
analysis. Both descriptive and explanatory techniques of data analysis are employed to
see the characteristics of the sample, identify and discus the relationship between
dependent and independent variables.
4.1.DEMOGRAPHIC INFORMATION
Demographic information, generally describe the characteristics of the respondent

gender, age, educational background, marital status, occupation, year of experience and
types of e-baking used by customers were asked. The results obtained from the
structured questionnaires are present on the table below.
Table 1: Demographic Analysis for Employee
Demographic Frequency Percentage

character
Gender
Male 6 60%
Female 4 40%
Total 10 100%
Age
≤20 - -
21-25 4 40%
26-30 4 40%
30-35 1 10%
Above 35 1 10%
Total 10 100%
25
Marital status
Married 6 60%
Single 3 30%
Divorce 1 10%
Total 10 100%
Salary income
- -
6,000-8,000 2 20%
8,000-9,000 4 40%
9,000-10,000 2 20%
Above 10,000 2 20%
Total 10 100%
Education back ground
12 Certificate/Diploma - -
Degree 6 60%
Masters 3 30%
PHD/Any 1 10%
Total 10 100%
Work experience
3 30%
2-5 5 50%
5-10 - -
10-15 2 20%
Above 15 - -
Total 10 100%
26
Source: own questionnaire
Table 2: Types of E-Banking
Types of electronic banking
Frequency Percentage
ATM 10 100%
Mobile Banking 9 90%
Internet banking 8 80%
Point of sale (POS) 8 80%
CBE Birr 9 80%
The result obtained from demographic characteristics of the respondents shows that 60%
are males and the rest 40% are females this shows that e-banking is largely prefer by
males than female. The majority of the respondents constitute 40% (or 4) lied in the 21–
25-year age group. The second dominant age group was the 26-30 age group, comprise
40% or (4), follow by the 30–35-year age group with 10% (or 1) and the respondents
belongs to the last age groups 10% (1) from above 35 years. The result also shows more
than 70.6 % of ATM users age ranges from age 21–25 and 26-30 age indicating that this
banking channel is more preferred by younger societal groups. Respondent is educational
status shows: 0% (0) are 12 certificate/diploma, Degree 60% (6) and masters 30% (3),
PHD 10% (1). Marital status of the respondents was observed as 30% (3) were Single,
1% (10) are Divorced, married are 60% (6). from the above result married are more users
of e-banking service. Regarding the duration service experience, have used e-banking for
less than 2 years 30% (3), have used e-banking for 2 to 5 years and 50% (5), have used
e-banking for 10-15 years 20% (2), This shows that 2-5 years‟ experience are more
preferable than other. Types of E-Banking Regarding Types of E-Banking service users
of ATM are 100% (10), Mobile Banking users are 90% (9), internet banking are 80%
(8), POS users are 80% (8), and CBE Birr users are 90% (9).The above result shows that
27
customers highly use ATM compared to other e-banking users so the banks prefer to
create awareness and training for their customer about other e-banking product and
service to get benefit and to meet their aim making of cashless society.
Table 3: Demographic Analysis for customer
Demographic Frequency Percentage

character
Gender
Male 3 60%
Female 2 40%
Total 5 100%
Age
- -
21-25 1 20%
26-30 2 40%
30-35 2 40%
Above 35 - -
Total 5 100%
Marital status
Married 3 60%
Single 2 40%
Divorce - -
Total 5 100%
Education back ground
12 Certificate/Diploma 1 20%
Degree 2 40%
28
Masters 2 40%
PHD/Any - -
Total 5 100%
The result obtained from demographic characteristics of the respondents shows that 60%
are males and the rest 40% are females this shows that e-banking is largely prefer by
males than female. The majority of the respondents constitute 21-25 age group, comprise
20% or (1), follow by the 26–30-year age group with 40% (or 2) and the age 30-35 40%
(2). Respondent is educational status shows: 20% (1) are 12 certificate/ diploma, Degree
40% (2) and masters 40% (2). Marital status of the respondents was observed as 40% (3)
were Single, married are 60% (2). From the above result married are more users of e-
banking service.
4.2.CHALLENGES OF ADOPTION AND DEVELOPMENT E-BANKING

TECHNOLOGY IN KOLFE DISTINCT
There are so money challenges that negatively affect adoption and growth of the E-
banking technology. A total of questions on challenges of adopting and extending of E-
banking technology obtained from different literatures were asked to indicate the extent
to which each respondent agrees to corresponding closed ended statements rated on a
five-point type scales ranging from „1‟ “Strongly Disagree” to „5‟ “Strongly Agree”.
Statistical results are presented by the percentage of the technical questions column
showed the variability of the data points for each variable under consideration.
29
4.3.ORGANIZATION FACTOR
Table 4: Organizational Factor
s.no The potential challenges that

affect to adaption or
development use of e-banking SA A N D SD
technologies
Freq % Freq % Freq % Freq % Freq %
1.1 Lack of customer awareness 6 60 0 0 0 0 0 0

with e-banking product
4 40
1.2 Lack technical and managerial

skills in implementation and
development of e-banking
technology:
1 10 5 50 1 10 3 30 0 0
1.3 High cost of implementation of

e-banking. (Such as cost of ICT
equipment and network,
software and re- organization
1 10 9 90 0 0 0 0 0 0
1.4 Resistance to changes in

technology among by board, top
management and staff: 1 10 9 90 0 0 0 0 0 0
Source: survey result 2015
From question item.1, 40% strongly agreed, 60% agreed while 0% of respondents were
neutral. More over 0% disagree and 0% strongly disagree with the result compilation.
This implies that electronic banking service provided by commercial banks lack of
customers awareness e-banking so we have to do well how our customer to know too
well. From question item.2 (1%) and (50%) of respondents are strongly agreed and
agreed respectively with the question, 1% were neutral while 3% and 0 disagreed and
strongly disagreed respectively so that it can be conclude that one of the technical and
managerial skill of e-banking system is decreasing in the banking hall of commercial
banks as per Question.3 10% strongly agreed and 9% agreed while 0% were neutral.
More over 0% and 0% were disagreed and strongly disagreed respectively. This
30
consolidates the fact that although many respondents are agreeing that cost on ict,
network, re-organization and etc.… so he have to proof that cost to make more stretch
the internet how can the customer satisfied. From question item 4, (1%) and (9%) of the
respondents strongly agreed and agreed respectively up on the question, 0 % were
neutral while 0% and 0% were disagreed and strongly disagreed.
4.4.ENVIRONMENTAL FACTOR
Table 5: Environmental Factor
s.no The potential challenges that affect to SA A N D SD

adaption or development use of e-
banking technologies
1.5 Lack of sufficient government support 0 0 10 100 0 0 0 0 0 0

affect customer willingness
1.6 Lack of legal frame work for e-banking: 0 0 10 100 0 0 0 0 0 0
1.7 Cross-country legal and regulatory 0 0 10 100 0 0 0 0 0 0

differences will have impact on the
adoption of new technological innovation in
the banking sector
1.8 Lack of law mandating the bank to adopt e- 0 0 10 100 0 0 0 0 0 0

banking technology
1.9 Limitation in network infrastructure and 0 0 10 100 0 0 0 0 0 0

internet related support services
1.10 Customer law levels of computer literacy 0 0 10 100 0 0 0 0 0 0
1.11 Limitation in ICT infrastructure 3 30 7 70 0 0 0 0 0 0
1.12 Lack of adequate coordination interaction 1 10 9 90 0 0 0 0 0 0

and cooperation between banks and other
decision-making centers in e-banking
context
1.13 Absences of financial networks that links 1 10 9 90 0 0 0 0 0 0

different banks
1.14 Frequent power disruption 2 20 8 80 0 0 0 0 0 0
31
1.15 Tight foreign currency regulation 1 10 9 90 0 0 0 0 0 0
1.16 Lack of uniform platform by banks i.e., lack 1 10 9 90 0 0 0 0 0 0

of law mandating the banks to use common
software platform
1.17 Relative high cost of internet 1 10 9 90 0 0 0 0 0 0
The Environmental factor was relating to Lack of sufficient government support affect
customer willingness, Lack of legal frame work for e-banking , Cross-country legal and
regulatory differences will have impact on the adoption of new technological innovation
in the banking sector , Lack of law mandating the bank to adopt e-banking technology
and Limitation in network infrastructure and internet related support services the
majority of the respondents 10(100%) said Environmental factor respectively. However
9(90%) Lack of adequate coordination interaction and cooperation between banks and
other decision-making centers in e-banking context, Absences of financial networks that
links different banks , Tight foreign currency regulation ,Lack of uniform platform by
banks i.e., lack of law mandating the banks to use common software platform, Relative
high cost of internet are said Environmental factor The remaining 8&7(80%&70%) of
the respondent replied that Frequent power disruption and Limitation in ICT
infrastructure are said strongly agreed on Environmental factor.
In general, from the Environmental factor all of the respondents that have Lack of
sufficient government support affect customer willingness, Lack of legal frame work for
e-banking, Cross-country legal and regulatory differences will have impact on the
adoption of new technological innovation in the banking sector, Lack of law mandating
the bank to adopt e-banking technology and Limitation in network infrastructure and
internet related support services.
32
4.5.TECHNOLOGICAL FACTOR
Table 6: Technological Factor
s.no 1, the potential challenges that affect to SA A N D SD

adaption or development use of e-
banking technologies
1.18 Lack of confidence with the security 1 10 9 90 0 0 0 0 0 0

aspects
1.19 Laws of audit trial 1 10 9 90 0 0 0 0 0 0
1.20 Money laundering and other financial 1 10 6 60 3 30 0 0 0 0

crimes are easily facilitated through e-
banking
1.21 Users do not trust the e-banking 2 20 5 50 3 30 0 0 0 0

technology provided by banks
1.22 Customer fear of risk to use e-banking 1 10 9 90 0 0 0 0 0 0

technology:
As the table above shows, Technological factor 9(90%) of respondents estimated that
Lack of confidence with the security aspects, Laws of audit trial and Customer fear of
risk to use e-banking technology, said agreed respectively whereas 6(60%) Money
laundering and other financial crimes are easily facilitated through e-banking, the rest
agreed and 3(30%) neutral 5 (50%) Users do not trust the e-banking technology provided
by banks, Thus, significant number of respondents indicated that, estimated that Lack of
confidence with the security aspects, Laws of audit trial and Customer fear of risk to use
e-banking technology at the area under study.
33
4.6.BENEFITS REALIZED FROM THE ADOPTION AND DEVELOPMENT OF E-
BANKING TECHNOLOGY IN ETHIOPIA BANKING INDUSTRY
Perceived benefits are the gains or improvements derived from existing traditional ways
of operating business transactions using E-banking technology applications. The
following section summarizes respondents‟ views of expectations and perceived benefits
for E-banking development. Benefits expected to be gained from E-banking as an option
is a big deciding factor for a Bank‟s decision to adoption and growth E-banking
technology. Some of these benefits include facilitate development of new products and
new business, improvement productivity, cost saving, increased market share, speed and
efficiency of doing business, improvement in customer service and others. A total of 15
questions on “Benefits” of adoption and development of E-banking were asked to
indicate the extent to which each respondent agrees to corresponding closed ended
statements rated on a five-point Likert type scales ranging from 1‟ “Strongly Disagree”
to „5‟ “Strongly Agree”. Statistical results on the variables under the benefits of E-
banking including the number of frequencies, the Mean and Standard Deviation of the
data points. The mean and mode tried to tell the averages where the data points fall for
each specific variable while the standard deviation column showed the variability of the
data points for each variable under consideration.
4.7.OPERATIONAL BENEFITS
Table 7: Operational Benefits
s.no The following are some of the

benefits the banks realized from
adoption of e-banking systems, SA A N D SD
please indicate your choice
2.1 Reduced paper work
7 70 3 30 0 0 0 0 0 0
2.2 Law transaction cost 7 70 3 30 0 0 0 0 0 0
34
2.3 Enhance productivity in the 7 70 3 30 0 0 0 0 0 0
banking industry
2.4 Enhance foreign currency 7 70 3 30 0 0 0 0 0 0

generation
2.5 Increase reliability and reducing 7 70 3 30 0 0 0 0 0 0

errors
Source: compiled from questionnaire
As Table above shows, Operational Benefits 7(70%) of respondents explain that

Reduced paper work, Law transaction cost, enhance productivity in the banking industry,
increase reliability and reducing errors said strongly agreed. whereas 3(30%) agreed
under Operational Benefits. So as per the answers the customer satisfied with the e-
banking.
4.8.SERVICES BENEFITS
Table 8: Service Benefits
s.no The following are some of the benefits the SA A N D SD

banks realized from adoption of e-
banking systems, please indicate your
choice
freq % freq % freq % Freq % freq %
2.6 Facilitates development of new products and 7 70 3 30 0 0 0 0 0 0

new business in the banking industry
2.7 e-banking is convenient, in terms of 7 day 8 80 2 20 0 0 0 0 0 0

and 24 hours services i.e., accessibility i.e.,
no time limit to access bank account and
information
2.8 Enhance accessibility of the bank service (in 8 80 2 20 0 0 0 0 0 0

terms of place)
2.9 Overcome geographical limitation 5 50 5 50 0 0 0 0 0 0
2.10 Improve customer service 8 80 2 20 0 0 0 0 0 0
2.11 Improving transaction speeds 8 80 2 20 0 0 0 0 0 0
35
2.12 Reduce queues in the banking hall 8 80 2 20 0 0 0 0 0 0
2.13 Facilitate marketing and market access 8 80 2 20 0 0 0 0 0 0
2.14 Create better relationship among banks and 8 80 2 20 0 0 0 0 0 0

client
2.15 encourage price transparency 5 50 5 50 0 0 0 0 0 0
According to the above table, 8(80%) of respondents were strongly agreed that the
Services Benefits of e-banking is convenient, in terms of 7 day and 24 hours services i.e.,
accessibility i.e., no time limit to access bank account and information, enhance
accessibility of the bank service (in terms of place), Improve customer service,
improving transaction speeds, reduce queues in the banking hall and create better
relationship among banks and client. On the other hand, the rest, 2(20%) of respondents
were agreed on the Services Benefits of e-banking is convenient, in terms of 7 day and
24 hours services i.e., accessibility i.e., no time limit to access bank account and
information, enhance accessibility of the bank service (in terms of place), Improve
customer service, improving transaction speeds, reduce queues in the banking hall and
create better relationship among banks and client and overcome geographical limitation.
4.9.CUSTOMER SATISFACTION
Table 9: Customer Satisfaction
s.no SA A N D SD
Information on electronic banking
1, Customer are fully aware & have

enough information about electronic
banking service 1 10 2 20 1 10 1 10 0 0
Security and privacy
36
2, Customers are concerned about their 2 20 2 20 1 10 0 0 0 0
private information & security policy
3, There is user privacy policy 1 10 2 20 1 10 1 10 0 0

mentioned on the website to
strengthen trust of customers
Perceived usefulness
4, Customers are aware of the usefulness 1 10 2 20 2 20 0 0 0 0

of electronic banking service
5, Customers think that using electronic 2 20 3 30 0 0 0 0 0 0

banking facilities saves their time and
money
Perceived ease of use
6, E - banking service is more accessible 1 10 2 20 1 10 1 10 0 0

to users than visiting a bank branch
7, Learning and using electronic banking 2 20 2 20 1 10 0 0 0 0

is easy to use
8, The service is adapted to disable and 0 0 1 10 1 10 2 20 1 10

elder people who are lacking
computer experience
Trust
9, Customers have high degree of trust 1 10 2 20 2 20 0 0 0 0

on the bank and are satisfied with
security of electronic banking service
provide by the bank
Awareness
10, The bank provides help (demo) all its 0 0 2 20 1 10 1 10 1 10

website to use electronic banking for a
new user
11, The bank provide training to enhance 0 0 2 20 0 0 2 20 1 10

awareness of customer to use
electronic banking
Government policy
12, Customers are satisfied government 0 0 1 10 2 20 1 10 1 10

policy implemented for electronic
banking like money, laundering and
prohibiting card holders from
effecting payments for international
37
transaction
Infrastructure/ quality of internet
13, Customers encounter problems related 1 10 2 20 1 10 1 10 0 0

with internet while using electronic
banking service
14, Customers are satisfied with the speed 0 0 2 20 1 10 1 10 1 10

of internet and infrastructure provided
ethio telecom
15, The bank provides an alternative way 1 10 2 20 1 10 1 10 0 0

to use electronic banking services
when there is slow internet connection
Technology
16, Customer has access to personal 1 10 0 0 0 0 3 30 1 10

computer and internet
17, Banks have experienced and skilled it 1 10 2 20 1 10 1 10 0 0

professional to administer latest
technology
The table above shows Information on electronic banking were faced during Customer
are fully aware & have enough information about electronic banking service high
1(10%) strongly agreed, 2(20 %) agreed the rest 1(10%) are neutral and disagree so it
was good to safe time for customer.
Security and privacy: some of the customer selected strongly agree and agree so as we
can see from this result the customer privacy was protected so they do not fear.
Perceived usefulness: 3(30%) of the customer said strongly agreed on Customers are
aware of the usefulness of electronic banking service and Customers think that using
electronic banking facilities saves their time and money and the other 5(5%) of the
responds agreed on the Perceived usefulness.
38
Perceived ease of use: most of the respondents have strongly agreed and agreed. So, as
we can see the electronic banking are saves their time and money.
Trust: most of the respondents are agree the other are neutral so as we can see some of
them are trusted with the bank and satisfied with security of electronic banking the
services provide by the bank.
Awareness: most of the respondents are agree and disagree so as we can see we have to
do more how to the customer make know more information about e-banking because too
easy to use it.
Government policy: most of the respondents are says neutral so we have to give them
more information about satisfied government policy implemented for electronic banking.
Infrastructure/quality of internet: most of the respondents are says agree as we can

conclude from this the customer are satisfied with the quality of the internet and
provided in ethio telecom.
Technology: most of the respondents are says agree and disagree so as we conclude the
banks have to be more experienced and skilled it professional to administer latest
technology.
39
CHAPTER FIVE
5. SUMMARY, CONCLUTION AND RECOMENDATION
This chapter presents a Summary of Findings, Conclusions, and Recommendations.

Findings from this study are based on analysis in the previous chapter and in reference to
the research questions in chapter one, presents the recommendations for further studies.
5.1.SUMMARY OF MAJOR FINDINGS
According to the descriptive analysis it can be concluded that among the majority current
e-banking users, The result obtained from demographic characteristics of that e-banking
is largely prefer by males than female. The result also shows more than 70.6 % of ATM
users age ranges from age 21–25 and 26-30 ages indicating that this banking channel is
more preferred by younger societal groups. Respondent is educational status shows:
Degree and masters are preferable. According to marital status of the respondent from
the above result married are more users of e-banking service.
The challenges as discussed in the study can be categorized into three main groups i.e.,
Organizational, environmental and technological. High cost of implementation of E-
banking such as cost of ICT equipment and network, software and re-organization, lack
of customer awareness with E-banking service provided, and lack of skills and trained
staff in implementation and running of E-banking system and resistance to changes in
technology among by Board, top Management and staff are described in the study as
organizational challenges for adoption and growth of E-banking.
From the Environmental factor all of the respondents that have Lack of sufficient
government support affect customer willingness, Lack of legal frame work for e-
banking, Cross-country legal and regulatory differences will have impact on the adoption
of new technological innovation in the banking sector, Lack of law mandating the bank
to adopt e-banking technology and Limitation in network infrastructure and internet
40
related support services in connection with technology factors, lack of customer trust
with E-banking services provides by the banks, customer fear of risk to use E-banking
technology and security risks are consider as technological factors negatively affect the
adoption and growth of E-banking technology in Ethiopia. In this study, majority of
challenges for adoption and development of E-banking technology in Ethiopia are
derived from the external environments and limitation in network infrastructure and
internet related supports services is one of basic challenge in adoption and development
of E-banking technology.
In customer satisfaction, quality internet, security and privacy, perceived usefulness trust
and etc…we see on the customer satisfaction.
5.2.CONCLUSION
The findings of the study revealed that adoption and development of E-banking
technology in keta medaniyalem stretches wide across the two extremes of the
challenges and prospects where the concerted effort by stakeholders to overcome the
challenges will bring about immense opportunities to the dominant players in the field
with the ultimate result of transforming the country towards financial inclusion.
Accordingly, a number of conclusions can be drawn from these results.

Potential operational efficiency benefits of E-banking adoption and development as
perceived by the Ethiopian banks are: increase productivity, reduces paper work, reduce
transaction cost, generate foreign currency, increase reliability and reducing errors.
Despite the above benefits of adopting and developing E-banking technology, it is
associated with some challenges. The study shows that high cost of ICT equipment‟s and
network, software and re-organization, lack of customer awareness and resistance to
changes in technology are the major challenges of banks facing for adoption and
development E-banking technology. The prevailing technical and managerial skills
41
available in the banking industry towards adopting and extending of E-banking
technology are found to be limited to influence the technological development rate.
Limitation in network infrastructure and internet related support services, low levels of
computer literacy, low level of ICT infrastructure and lack of sufficient government
support are considered the basic external challenges facing Ethiopian banks to adopt and
develop E-banking technology. Besides, Security risks and lack of trust on the
technological innovations are other challenges faced by the banks in adoption and
development of E-banking in the country.
5.3.RECOMMENDATION
Based on the findings the researcher came up with the following possible
recommendations to policy makers, the banks, and the government in order to overcome
the challenges, exploit the untapped opportunities in adoption of E-banking technology
and to ensure a successful practice of E-banking technology in keta medaniyalem
branch.
 The Banks should create deep awareness to community concerning the E-banking
products they offer and the benefits associated with using E-banking services
through advertising their products and services on the internet, mass media as well
as through organizing public exhibition and talk shows. Besides, the bank should
attract the community to use the technology, this way, customers‟ interest would
be are used;
 Banks should work to improve customers‟ confidence by providing adequate

security of transaction back up of critical data files and alternative means of
processing information.
42
 In collaboration with banks, Government should educate and inform the
community on the workability and effectiveness of E-banking technology. This
will increase the customer confidence.
43
REFERENCES
 Ackah David, Makafui R. Agboyi (2014), Adoption of electronic banking in Ghana banking
system, a case study of Trust Bank (Ghana) Limited, thesis, Atlantic International University
AIU, Hawaii, Honolulu, U.S.A
 Awuondo, I. (2005). The Future of E-banking in Africa.
 Booz, D. a. (1997). E-banking: A global study of potential effects.
 Claessens, J. D. (2002). On the security of today‟s online electronic banking systems.
Computers & Security.
 Daghfous, M (2009). `Adoption of Internet banking by Australian consumers: An empirical
Investigation and trends in South African Internet banking; Aslib Proceedings, New
Information Perspectives, 56(3), 187-196.
 Daniel, E. (1999). Provision of electronic banking in the UK and the Republic of Ireland.
International Journal of bank marketing.
 Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of
information technology. MIS quarterly, 319-340.
 F Havasi, F. M. (2013). E-banking: Status, implementation, challenges, opportunities. IOSR
Journal of Humanities and Social Science.
 Girma, K. (2016). Challenges and Opportunities of Electronic Banking in Ethiopian Banking
Industry.
 M Oladejo, T. A. (2012). Banker's perceptions of electronic banking in Nigeria: A review of
post consolidation experience. Research Journal of Finance and Accounting.
 Malak, J. (2007). Readiness of the Palestinian banking sector in adopting the electronic banking
system: exploratory study. Unpublished MA thesis, The Islamic University of Palestine.
 Okoye, V. (2013). E-banking in Nigerian banking industry: challenges and prospects.
International Journal for Management Science and Technology (IJMST).
 Salehi, M. (2004). Salehi, M. (2004). E-Banking in Emerging Economy: Empirical Evidence of
Iran (Corresponding author) Accounting and Management Department.
 Thornton, J. &. (2001). Customer orientations and usage of financial distribution channels.
Journal of services Marketing.
 Ubi, H. U. (2012). Adoption of e-commerce in the Nigerian banking Industry: problems and
prospects, A study of UBA PLC and Zenith Bank PLC.
44
APPENDEX- A
TECNO LINK COLLEGE
ACCOUNTING AND FINANCE DEPARTMENT
QUESTIONERY TO BE FILLED BY BANK EMPLOYEES
The challenge and opportunity of electronic banking in particular at the Keta Medehaiyalem Branch in
Kolfe must be answered. This questionnaire was created to collect information for a study on the
opportunity and challenges of electronic banking in Kolfe distinct at the Keta Medehaiyalem branch.
This study is only being done to fulfill a portion of the requirements for a bachelor of arts (BA) in
accounting and finance. Dear respondents, the answers you will give are very important to the validity
of this study. As a result, we respectfully ask that you answer each question truthfully. Your data's
confidentiality is valued greatly and appropriately maintained.
Part 1: Background Information
Name of the Bank you are working: ____________________________
Gender: < male> <female> <missing
Age: [] 21-25 [] 26-30 [] 30-35 [] 35 above []
Marital status: <married> <single> <divorce>
Salary income:
Work Experience: 0-2 Yrs. [] 2-5 Yrs. [] 5-10 Yrs. [] 10-15 Yrs. [] 15 Above)
Education Level: 12 Complete [] Diploma [] BA/BSc [] MA/MSc [] PhD []
Part 2: personal information
1, name of the banker _________________________________
2, year of the bank establishment__________________________
3, commencement date of offering the e-banking service ____________________________
45
4, what type of e-banking service does the bank provide to its customer?
ATM
MOBILE banking
Internet banking
Point -of -sale transfer terminals
Others (please specify) ___________________________
5, number of technology experts who are involved in the e-banking services _______________
Part 3: questions regarding e-banking challenges and opportunities
Below are lists of questioners relating to adaption of e-banking. Please indicate whether you agree or
dis agree with each statement by ticking on the spaces that specify your choice from the options that
range from strongly agree to strongly dis agree.
Key: SA= strongly agree N= neutral SD= strongly dis agree
A= agree D=dis agree
Factors s.no 1, please indicate the extent you agree or dis SA A N D SD

agree of the potential challenges that affect to
adaption or development use of e-banking 5 4 3 2 1
technologies
1.1 Lack of customer awareness with e-banking

product
Factors
1.2 Lack technical and managerial skills in

implementation and development of e-banking
technology:
1.3 High cost of implementation of e-banking. (Such

Organizational
as cost of ICT equipment and network, software

and re- organization
1.4 Resistance to changes in technology among by
46
board, top management and staff:
1.5 Lack of sufficient government support affect

customer willingness
1.6 Lack of legal frame work for e-banking:
1.7 Cross-country legal and regulatory differences

will have impact on the adoption of new
technological innovation in the banking sector
1.8 Lack of law mandating the bank to adopt e-

banking technology
1.9 Limitation in network infrastructure and internet

related support services
1.10 Customer law levels of computer literacy
1.11 Limitation in ICT infrastructure
1.12 Lack of adequate coordination interaction and

cooperation between banks and other decision-
making centers in e-banking context
Factors
1.13 Absences of financial networks that links

different banks
1.14 Frequent power disruption

Environmental
1.15 Tight foreign currency regulation
1.16 Lack of uniform platform by banks i.e., lack of

law mandating the banks to use common
software platform
1.17 Relative high cost of internet
1.18 Lack of confidence with the security aspects

Technol
Factor
ogical
1.19 Laws of audit trial
47
1.20 Money laundering and other financial crimes are
easily facilitated through e-banking
1.21 Users do not trust the e-banking technology

provided by banks
1.22 Customer fear of risk to use e-banking

technology:
Please kindly state any other barriers or challenges that the banks face in the adoption e-banking of keta
___________________________________________________________________________________
___________________________________________________________________________________
Benefits s.no The following are some of the benefits the banks SA A N D SD
realized from adoption of e-banking systems,
please indicate your choice 5 4 3 2 1
2.1 Reduced paper work
2.2 Law transaction cost
2.3 Enhance productivity in the banking industry

Operational
2.4 Enhance foreign currency generation

benefits
2.5 Increase reliability and reducing errors
2.6 Facilitates development of new products and new

business in the banking industry
2.7 e-banking is convenient, in terms of 7 day and 24

hours services i.e., accessibility i.e., no time limit to
access bank account and information
Services benefits
2.8 Enhance accessibility of the bank service (in terms

of place)
2.9 Overcome geographical limitation
2.10 Improve customer service
48
2.11 Improving transaction speeds
2.12 Reduce queues in the banking hall
2.13 Facilitate marketing and market access
2.14 Create better relationship among banks and client
2.15 encourage price transparency
Please kindly state any other benefit the banks gained from adoption of e-banking system (ATM, POS
AND mobile banking system) in the delivery of the service customers?
___________________________________________________________________________________
___________________________________________________________________________________
49
APPENDEX - B
TECNO LINK COLLEGE
ACCOUNTING AND FINANCE DEPARTMENT
QUESTIONERY TO BE FILLED BY BANK CUSTOMERS
This questionnaire was created to collect information for a study on the opportunity and challenges of
electronic banking in Kolfe distinct at the Keta Medehaiyalem branch. This study is only being done to
fulfill a portion of the requirements for a bachelor of arts (BA) in accounting and finance. Dear
respondents, the answers you will give are very important to the validity of this study. As a result, we
respectfully ask that you answer each question truthfully. Your data's confidentiality is valued greatly
and appropriately maintained.
Background Information
Name of the Bank you are working: ____________________________
Gender: < male> <female> <missing
Age: [] 21-25 [] 26-30 [] 30-35 [] 35 above []
Marital status: <married> <single> <divorce>
Education Level: 12 Complete [] Diploma [] BA/BSc [] MA/MSc [] PhD []
Strongly Dis Moderate/ agree Strongly

dis agree agree agree
Neutral
Information on electronic banking
Customer are fully aware & have

enough information about electronic
banking service
Security and privacy
Customers are concerned about their

private information & security policy
50
There is user privacy policy
mentioned on the website to
strengthen trust of customers
Perceived usefulness
Customers are aware of the

usefulness of electronic banking
service
Customers think that using electronic

banking facilities saves their time and
money
Perceived ease of use
E - banking service is more

accessible to users than visiting a
bank branch
Learning and using electronic

banking is easy to use
The service is adapted to disable and

elder people who are lacking
computer experience
Trust
Customers have high degree of trust

on the bank and are satisfied with
security of electronic banking service
provide by the bank
Awareness
The bank provides help (demo) all its

website to use electronic banking for
a new user
The bank provide training to enhance

awareness of customer to use
electronic banking
51
Government policy
Customers are satisfied government

policy implemented for electronic
banking like money, laundering and
prohibiting card holders from
effecting payments for international
transaction
Infrastructure/ quality of internet
Customers encounter problems

related with internet while using
electronic banking service
Customers are satisfied with the

speed of internet and infrastructure
provided ethio telecom
The bank provides an alternative way

to use electronic banking services
when there is slow internet
connection
Technology
Customer has access to personal

computer and internet
Banks have experienced and skilled it

professional to administer latest
technology
52

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TECHNO LINK COLLEGE

Group Members: NAME ID NO

1. DANIEL BELAY …………………………………. 080/12

1. DANIEL BELAY ___________

2. HANA FEYISA ___________

3. HAWI GUDISA ___________

4. KENANI KENEA ___________

5. METI GIRMA ___________

6. TIGIST ADUGNA ___________

Approved by Examining Board

Table 2: Types of E-Banking.................................................................................................................................. 27

Table 3: Demographic Analysis for customer ........................................................................................................ 28

Table 4: Organizational Factor ............................................................................................................................... 30

Table 5: Environmental Factor ............................................................................................................................... 31

Table 6: Technological Factor ................................................................................................................................ 33

Table 7: Operational Benefits ................................................................................................................................. 34

Table 8: Service Benefits ........................................................................................................................................ 35

Table 9: Customer Satisfaction............................................................................................................................... 36

ATM Automatic Teller Machine

CBE Commercial Bank of Ethiopia

CSEB Customer Satisfaction in Electronic Banking

E-banking Electronic Banking

EBSQ Electronic Banking Service Quality

EFT Electronic Fund Transfer

ICT Information Communication Technology

NBE National Bank of Ethiopia

POS Point of Sale/Purchase

1.1.BACKGROUND OF THE STUDY

1.2.STATEMENT OF THE PROBLEM

The introduction of electronic banking in to the banking sector is to bring extra

1.3.OBJECTIVES OF THE STUDY

1.3.1. GENERAL OBJECTIVE

The specific objectives of the study were:

 To explore the challenges encountered in the adoption and development of E-

 To find benefits realized by the banks in the adoption of E-banking technology to

 To identify the existing opportunities for the adoption and development of E-

1.4.SCOPE AND LIMITATION OF THE STUDY

 Driving forces; and Opportunity from the bank‟s perspective.

Since E-banking technology is in an infant stage in this branch, identification of

Electronic banking is a system where banking services are provided electronically to

2.1.1. KINDS / FORMS OF E-BANKING

2.2.ORGANIZATIONAL CHALLENGES OF E-BANKING

 Lack of convenient payment means, poor distribution system, imperfect legal

 Another most pressing limitations are access to technology (computers,

 Reduced costs in accessing and using the banking services.

 For example, it is possible to manage company‟s short-term cash via internet

2.6.IMPORTANCE OF E-BANKING FOR THE BANK

The primary benefits of E-banking are as follows: -

2.7.2. BENEFIT OF E-BANKING FOR CUSTOMERS

 Reduced costs in accessing and using the banking services.

 Increased comfort and timesaving transactions can be made 7x24, without

 Private customers seek slightly different kind of benefits from E-banking

2.7.3. DRIVERS FOR ADOPTION OF E-BANKING TECHNOLOGY

3.5.POPULATION, SAMPLING TECHNIQUES AND SAMPLE SIZE

3.7.DATA COLLECTION INSTRUMENTS

In order to collect sufficient data so as to answer the research questions, researcher

In addition to questionnaires, semi-structured interviews were conducted with E-banking

3.7.3. SECONDARY DATA SOURCES

3.8.METHOD OF DATA ANALYSIS

Demographic information, generally describe the characteristics of the respondent

Table 1: Demographic Analysis for Employee

Demographic Frequency Percentage

Above 10,000 2 20%

Education back ground