Professional Documents
Culture Documents
BY
HABTAMU WONDE EMBIALE
ID NO---------------014/2012
Submitted to: tossacollege@gmail.com.et
DESSIE, ETHIOPI
CHAPTER ONE
1. Background of the Study
The banking industry is being reformed by globalization, competition and innovation and
customer needs. Due to the emergence of a knowledge-based economy and society as
information and communication technology (ICT) advanced, banking services have undergone
profound changes during the last 10 years (Driga & Isac, 2014).
The development in ICT made this world a global village and revolutionized the banking
industry. According to Sumra et al. (2011), the introduction of E- banking has revolutionized and
redefined the ways banks were operating. In the 21st century where the banking industry is
highly complex and competitive ICT play a significant role in banking‟s operation (Juddy, 2013).
The competition in banking sector augmented over the last few years and to stay competitive,
banks are adopting novel tools and techniques to ensure customer retention and satisfaction
and E-Banking is one of the major tools and techniques. The banks that adopt the latest
technology and payment channels are more successful in the competitive financial market.
They have been able to generate more and more business resulting in their greater profitability
(Endalkachew, 2013).
The developments of technologies have enabled organizations to provide superior services for
customers‟ satisfaction. The banks should maintain close and stable relationship with their
customers by providing high quality product and services. Thus, E-banking benefits the customer by
allowing easier access to financial services, convenience and time saving in managing their finance
(Al-Smadi, 2012). Therefore, Ethiopian commercial banks are expected to deliver quality service
through new technologies to ensure customer satisfaction to stay competitive in the industry. Thus,
the main purpose of this study is examining the Effect of E-Banking Service Quality on Customer
Satisfaction the Case of Commercial Bank of Ethiopia (CBE) in Dessie Branches.
Amelework (2016) find out assurance has high positive and significant effect on customer
satisfaction. But, Simon (2016) reported that assurance has a negative and insignificant effect on
customer satisfaction satisfaction towards E-banking services.
Although a few related studies were conducted with effect of E-banking on customer satisfaction, till
now there is inconsistent conclusion. Thus, Fikerselassie (2017) proposed for future study that need
of examining E-banking and its effect on customer satisfaction in order to generalize the findings to
the Ethiopian economy and also the researcher stated the methodological gap of his study that the
sample used was not sufficient, hence making generalization of the findings was very difficult.
Likewise, Areeba et al. (2016) recommended that further research should be carried out with
increased sample size and also bank specific research should be conducted to generate more clear
results in order to generalize the results of the study. Furthermore, the present study minimized the
gap of methodology and it used the most famous SERVQUAL model which used for related studied
by different researches (Areeba et al., 2016; Surafel, 2016; Tizazu, 2012 and Gezahegn, 2015).
Therefore, due to inconsistent conclusion, methodological gap and recommendations of previous
researchers for further study, this research mainly focuses on to know Effect of E-Banking Service
Quality on Customer Satisfaction: The Case of CBE Dessie branches.
3. Research Questions
In general, the study answered the following research questions:in case of CBE Dessie Branches
1. What is the effect of E-banking service reliability on customer satisfaction?
2. What is the effect of E-banking service responsiveness on customer satisfaction?
3. What is the effect of E-banking service assurance on customer satisfaction?
4. What is the effect of E-banking service empathy on customer satisfaction?
5. What is the effect of E-banking service tangibility on customer satisfaction?
4. Objective of the study
1.4.1 General objective of the study
The general objective of the study is to examine the Effect of E-Banking Service Quality on
Customer Satisfaction: The Case of CBE Dessie Branches.
CHAPTER TWO
LITERATURE REVIEW
2. Introduction
This chapter is a comprehensive presentation of the relevant literature of previous studies that related
to the research problem. The section comprises of ten sections. These are History of E-Banking,
definition of e-banking, E-banking in Ethiopia, types of E-banking services, benefits of E-banking,
issues associated with E-Banking, challenge of E-banking in Ethiopia, opportunities of E-banking in
Ethiopia, customer satisfaction, service quality (SERVQUAL) model, relation between customer
satisfaction and service quality, relationship between E-Banking and customer satisfaction, empirical
review and conceptual framework.
2.1 History of E-Banking
The evolution of the e-banking industry can be traced to the early 1970s when banks began to look at
these types of services as an alternative to some of their traditional bank functions. First, such a
choice was considered appropriate since it ensures reduced costs as branches were very expensive to
set up and maintain. Second, e-banking products and services like ATMs and electronic fund transfer
were an important element of differentiation used by banks (Driga & Isac, 2014).
The evolution of banking technology has been driven by changes in distribution channels as
evidenced by automated teller machine (ATM), Phone-banking, Tele banking, PC-banking and most
recently internet banking (Chang, 2003).
E-banking is a high-order construct, which consists of several distribution channels. It should be
noted that E-banking is a bigger platform than just banking via the Internet. However, the most
general type of E-banking in our times is banking via the Internet, in other words Internet banking.
The term E-banking can be described in many ways. In a very simple form, it can mean the provision
of information or services by a bank to its customers, via a computer, television, telephone, or
mobile phone (Daniel, 1999).
2.2 Definition of E-Banking
Daniel (1999) defines E-banking as the delivery of banks' information and services by banks to
customers through different delivery channels that can be used with different electronic devices
such as computer and a mobile phone with browser software, telephone or digital television.
Magemhe et al. (2002) also defined E-banking (e-banking) is nothing but e-business in banking
industry. E -banking is a generic term for delivery of banking services and products through
electronic channels, such as the telephone, the internet, the cell phone, etc.
E-banking is banking system which any user with electronic devise like a personal computer and a
browser can get connected to his bank’s website to perform any of the virtual banking functions. In
internet banking system, the bank has a centralized database that is web-enabled. (Krishna et al.,
2015)
Tiwari et al. (2007) state that Mobile banking is a term used for performing balance cheeks, account
transactions, payments credit applications and other banking transactions through a mobile device
such as a mobile phone or personal digital assistant (PDA). The mobile banking services were
offered over SMS, service known as SMS banking. Mobile banking is used in many parts of the world
with little or no infrastructure, especially remote and rural areas..
In the Prince (2015) study, Internet banking is to give customers access to their bank accounts via a
web site and to enable them to enact certain transactions on their account, given compliance with
stringent security checks. Internet banking provides convenient and flexible services to customers. It
enables customers to transact almost all their banking transactions online. One could check accounts,
query the bank and also transfer funds to other people on different accounts, it is the most financially
savvy innovative method for yielding higher profitability. Another feature of internet banking is that,
it gives a 24/7 access to customers. Furthermore Kwashie (2012) state internet banking services
enable customers to transfer funds, download and print statements, request for cheque book and
savings withdrawal booklet, establish and modify standing orders and make payments through the
internet.
2.4.4 Point of Sales (POS)
In the study Abele (2016), POS is sometimes referred to as point of purchase (POP) or checkout is
the location where a transaction occurs. A "checkout" refers to a POS terminal or more generally to
the hardware and software used for checkouts, the equivalent of an electronic cash register. A POS
terminal manages the selling process by a salesperson accessible interface. The same system allows
the creation and printing of the receipt. POS systems record sales for business and tax
purposes.POS enhances customers to make payment for goods and services without necessarily
coming in contact with physical cash as the purchase price would be debited on the buyer’s card
and credited on the seller’s account (Fikerselassie, 2017).
Many banks consider technology as a route for service quality improvements; while others consider
it as a cost-effective new service delivery tool whatever the underling strategy nobody questions the
importance of technology and adoption by banks. Moreover, it is important to assess how customer
find themselves, among these technologies from ATMs to Mobile banking, Internet banking and POS
terminals) and can meet real customer needs (Surafel, 2016).
Aghaei, Biglar, Jamshidian and Asadollah (cited in Prince, 2015), using 384 customers in Tehran
investigates the effect of E-banking on customer satisfaction finds a positive relationship between E-
banking services provided by the surveyed banks and customer satisfaction. A positive correlation
between customers‟ income and satisfaction of electronic banking services is found. Customers‟
positive experience with electronic banking is positively related to electronic banking customer
satisfaction.
2.9 Empirical Review
Jannatul (2010) on his part of study on the impact of variables of E-banking on customer satisfaction
in Bangladesh used the five service quality dimensions namely reliability, assurance, responsiveness,
empathy and tangibles are established based on SERVIOUAL model. The results of the study
indicated that the factors are the major service quality dimension for customer satisfaction in E-
banking and the three variables reliability responsiveness and assurance have more contribution to
satisfy the customers of e-banking in Bangladesh.
The study of Hitesh (2015) conducted a research on customer Satisfaction and E-Banking services in
a Case Study of Tricity that the service quality dimensions such as Responsiveness tangibility,
assurance, empathy and reliability have shown more or less a great impact on customer satisfaction
with internet banking services.
Areeba et al. (2016) conducted a study to assess The Impact of E-Banking on Customer Satisfaction
in the banking sector of Pakistan. The study uses the five dimensions of service quality (tangibility,
reliability, responsiveness, assurance and empathy). The result of the study showed that the three
service quality dimensions (Reliability, Responsiveness and Assurance) have significant correlation
with customer satisfaction whereas Tangible and Empathy not have significant relation with
customer satisfaction In the study Abebe (2016) entitled on opportunities and challenges in the
adoption of E-banking services case in Dashen bank, the results of the study showed that the major
obstacles of Ethiopian banking industry faces in the adoption of E-banking are security risk,
customer familiarity with the service, technical, managerial and implementation skills of E-banking,
maintenance capability up on failure, promotion, public awareness, ICT infrastructures and low
internet access as major challenges in adoption of E-banking service in Dashen bank.
CHAPTER THREE
RESEARCH METHODOLOGY
3. Introduction
This chapter described the methodology the researcher adopted in carrying out the study. According
to Sharma (cited in Prince, 2015), “methodology refers to as system of principles and methods of
organizing and constructing theoretical and practical activity. Therefore, this section framework the
description of study area, the research approach, research design, target population, sampling
techniques, sample size, data collection and measurement, validity and reliability test and ethical
consideration.
3.1 Description of Study Area
The research will focus on E-Banking service users of commercial bank of Ethiopia Dessie Branches.
Dessie is the capital of the south wollo Zone which is located at 402 km north of Addis Ababa. Based
on Dessie town administration (2018) report, the population of Dessie town in 2017/18 is 219,227
with the proportion of male 114,313 and female 104,914. Currently, the town has public and private
commercial banks. These banks are commercial bank of Ethiopia, Awash International Bank, Dashen
Bank, Birhan International Bank, Abay Bank, Wegagen Bank, Abyssinia Bank, Buna International
Bank, Nib International Bank, Oromia International Bank, Anbessa International Bank, Oromia
Cooperative Bank, and Hibret Bank. The current total customers of Dessie commercial bank of
Ethiopia are 175,591 of which 66,385 are E-banking users on the month June 2018(Own survey from
CBE Branches)
3.2 Research Approach
The study will use quantitative research approach. The quantitative research approach makes use of
statistics and numbers which are mostly presented in figures. Quantitative research involves large
samples and planned questionnaire that is then numerically and statistically analyzed (Areeba et al.,
2016). The quantitative data enables the researcher to analyze objectively by using descriptive and
inferential statistics
3.3 Research design
This study will use an explanatory research design that helps the researcher to identify the nature of
the relationship between the E-banking service quality (independent variables) and customer
satisfaction (the dependent variables) at Dessie town commercial banks of Ethiopia. An explanatory
research design aids the researcher to determine and explain the characteristics of dependent as well
as independent variables (Saunders, et al., 2009
3.4 Target population
The study target population includes E-banking users of commercial bank of Ethiopia at four
branches such as Dessie, Mugad, Tossa and B/Wuha. The reason why the researcher chooses these
branches is that these branches consists a large number of customers than other commercial banks of
Ethiopia branches in Dessie town. The total number of customers of the four-branches were 105,415
out of them 46,385 were E-banking users on the month June 2018(Own survey from CBE Branches).
3.5 Sampling Technique
To select participants to the study convenience sampling technique wills used because it will not
possible to get access to the list of E-banking customers to conduct probability sampling procedure.
As a procedure, each respondent asked that whether he/she was the customers and the banking user
of the selected branch before the questionnaire distribution.
Convenience sampling is a non-probability sampling technique where subjects are selected because
of their convenient accessibility and proximity to the researcher (Black et al, cited in Fikerselassie,
2017). Saunders et al. (2009) described about convenience sampling that it involves selecting
haphazardly those cases that are easiest to obtain for your sample and the sample selection process is
continued until your required sample size has been reached. It is a sampling technique where samples
are obtained from convenient elements. This refers to happening of the element at the right place at
the right time, that is, where and when the information for the study is being collected. The selection
of the respondents is left to the discretion of the interviewer.
3.6 Sampling Size
Israel (1992) reviewed criteria for specifying a sample size and present several strategies for
determining the sample size. The approaches to determining the sample size include using a census
for small populations, imitating a sample size of similar studies, using published tables, and applying
formulas to calculate a sample size (Israel, 1992). Israel (1992) published sample size determination
formula will use to determine samples for the study.
3.7 Data collection and Measurement
The primary data for this study collected through structured close-ended questionnaire. The
structured questionnaire will anchored on 5-point Likert type scale with the following degree of
response: Strongly disagree, Disagree, Moderately Agree, Agree and strongly agree. The
questionnaire will classify in to three parts. The first part of the questionnaire will about the
demographic characteristics of respondents. The second part will intended to measure the E-banking
service quality and the third section will measure customers‟ satisfaction on E-banking service
delivery. The E-banking service quality instrument had five sub scales, SERVQUAL dimensions,
such as: Reliability, Responsiveness, Tangibility, Assurance and Empathy.The collection process
will started with asking permission of manager of the respective banks which selected for the study.
Following the permission, the volunteering E-banking customers were selected using the
convenience sampling techniques.
3.8 Data Analysis and Model Specification
The collected data will code and entered into Statistical Package for Social Science (SPSS) software
version 20. Both descriptive and inferential statistical will used for data analysis. The descriptive
statistics analysis results will show by frequency distribution, percentages, mean and standard
deviation whereas correlation and multiple regression analysis will use to show inferential statistical
analysis.
Descriptive analysis will use to describe the data that will collect from questionnaires in the form of
frequency, percentage and tabulation form. Additionally, correlation and multiple regression analysis
will conduct to explain the relationship and effect of the independent on customer satisfaction in E-
banking service.
The research will use multiple regression model to determine significance level of the variables
towards E-banking induced customer satisfaction.
3.9 Validity
It refers to the extent to which an empirical measure adequately reflects the real meaning of the
concept under consideration. Validity refers to the degree to which a statistical instrument measures
what it is intended to measure. It emphasizes the accuracy of a measurement instrument (Saunders, et
al., 2009).
Therefore, this study ensured the validity through extensive literature review and adopted the five
SERVQUAL model instruments which originally developed by Parasuraman et al. (1988) and used
in previous researchers (Areeba et al., 2016; Surafel, 2016; Simon, 2016 and Gezahegn, 2015).
3.10 Reliability
Reliability refers to the extent to which your data collection techniques or analysis procedures will
yield consistent findings. It focuses on whether the research method and design is accurate
(Saunders, et al., 2009). The reliability test is an important instrument to measure the degree of
consistency of an attribute which is supposed to measure. It measures the internal consistency of the
items in a scale.
The normal range of Cronbach‟s coefficient alpha value ranges between 0-1 and the higher values
reflects a higher degree of internal consistency.
The reliability test indicates that the extent to which the items in a questionnaire are related to each
other. Cronbach's alpha is one of the most commonly accepted measures of reliability.
The most commonly accepted value of Cronbach's alpha is 0.70 as it should be equal to or higher
than to reach internal reliability (Eskandarpour, 2016).
4. TIME SCHEDULE AND BUDGETING
2020G.c 2021G.c
Activity Sep Oct Nov Dec Jan Feb Mar Apr May June Jul Aug
1 Preliminary work * *
(literature review)
3 Data collection * *
*
Field work
4 Data processing *
Tabulating data *
Data analysis *
5 Data interpretation *
6 Report writing *
8 Revision based on *
comments
10 Defense * *
1.1 Fee for data collectors 1 persons for 10 days 100/day 1000.00
2.0 Stationary
Others
5.0
Subtotal 1500
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