2.

4 Electronic banking services delivered in CBE

2.4.1 ATM

An automated teller machine (ATM) is a computerized telecommunications device that provides the
customers with access to financial transactions in a public space without the need for a human clerk or
bank teller. Besides, the potential benefit of ATM are cashiers were relieved of some of the simpler
transactions of simply dispensing cash, cheaper to dispense cash through a machine /saves cost and on
the side of customers 24-hour availability (which might attract more customers) and potentially faster
service. ATM may provide access to customers at time branches are not working. The service of ATM is
Cash withdrawal, fast cash, pin change, fund

transfer (Account to Account), deposit (cash and check), foreign exchange, balance inquiry and mini
statement. CBE has 1501 ATM machines working in Ethiopia as of June 30 2017(CBE annual report
2017). The Different types of CBE ATMs are Personas, Self-Serve 32, Self-Serve 34, FOREX, NCR 6622,
NCR 6625 and NCR 6632.

2.4.2 POS

Point of Sale (POS) service is an innovative electronic money transferring system that allows the
customers of banks to pay for their purchases through their credit card at any POS enabled retailer.

Point of Sale (POS) means a retail shop, a checkout counter in a shop, or the location where a
transaction occurs. More specifically, the point of sale often refers to the hardware and software used
for checkouts the equivalent of an electronic cash register. Point of sale systems are used in
supermarkets, restaurants, hotels, stadiums, and casinos, as well as almost any type of retail
establishment. The money for the purchase is transferred immediately from account of debit card
holder to the store's account (Malak, 2007). CBE has 6811POS machines working in Ethiopia as of June
30 2017(CBE annual report 2017). CBE has two types of POS I. Cash Advance POS: - it is a type of POS
defined for the purpose of cash payment to customers using their card from branch side. II. Merchant
POS: - it is a type of POS defined for merchants, to facilitate their transaction activities, E.g. Hotels,
supermarkets, gas station, hospitals, and other business areas.

2.4.3 Internet banking

Internet banking is a web Banking or PC Banking which is working through internet. The easy
accessibility to internet facility and availability of computer lead the banks to provide their products and
services through the deliver medium internet (Shodhganga.inflibnet.ac. cha 2 e-banking).

Internet banking refers to a system that provides customers to get access to their accounts and
information on bank products and services through the use of banks website, without the intervention
or inconvenience of sending letters, faxes, original signatures and telephone confirmations(Safeena,
Date and Kammani, 2011).

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2.4.4 Mobile banking

Refers to the use of a mobile device to remotely access a bank account, primarily to check the account
balance and transfer money to other accounts. Examples of mobile banking service include account
enquiry and inter-account transfer using internet base application or USSD. Mobile banking (also known
as M-Banking, SMS Banking etc.) is a type used for performing balance checks, account transactions,
payments etc. using a mobile device such as a mobile phone. Mobile banking today is most often
performed via SMS or the Mobile internet but can also use special programs called clients downloaded
to the mobile device.

SMS banking is a type of mobile banking, a technology-enabled service offering from banks to its
customers, permitting them to operate selected banking services over their mobile phones using SMS
messaging. SMS banking uses short text messages sent through the client‟s mobile phone. SMS text
messages can be used for both passive and active operations.

2.4.5 Agent banking

A licensed financial institution (typically a bank) delivers financial services through a retail agent. That is,
the bank develops financial products and services, but distributes them through retail agents who
handle all or most customer interactions. Hence Customers do not deal with a bank, nor do they
maintain a bank account through different delivery channels like USSD, web and SIM toolkit. Agent
banking does have two basic models which are bank led model and nonbank led model.

Bank led model of agent banking is a licensed financial institution (typically a bank) delivers financial
services through a retail agent. That is, the bank financial products and services, but distributed them
through retail agents who handle all or most customer transactions.

The next model is non-bank led customers do not deal with a bank, nor do they maintain a bank
account. A bank may not be involved at all; rather customers deal with non-bank firms called mobile
network operators as the point of customer contact.

2.5 Theoretical background

Different theories discussed about technology adoption and motivation such as technology adoption
Model (Davis, 1985), technology-organization environment (TOE) framework was

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developed by (Tornatzky, G & Fleischer, 1990), theory of reasoned action (Ajzen & Fishbein, 1980;
Fishbein & Ajzen, 1975 ) and theory of planned behavior (TPB) (Ajzen, 1991). (Rogers, 2003)diffusion of
innovation theory, categorizes the adopters in to five namely innovators, early adopters, early majority
(deliberate), late majority (skeptical) and lagers (traditional).

Research Questions
In this study the researcher tried to analyze the determinants factors that affect customer’s selection of
banking services. To address these issues, the student researcher has raised the following basic research
question:

1. What are the factors that customers patronize in selecting specific banking services?

2. Is there any relationship between socio-cultural factors and customers’ selection of banking
services?

3. Is there any relationship between service quality and customers’ selection of banking services?

4. Is there any relationship between accessibility and customers’ selection of banking services?

3.3 Description of the study area

The study area had conducted in Gondar city, which is one of the biggest and historical towns in
Ethiopia. Gondar city locates North West of Ethiopia and southwest of the Simien Mountains. Based on
the 2007 national census conducted by the Central Statistical Agency of Ethiopia (CSA, 2007),
Gondar had a total population of 207,044, of whom 98,120 were men and 108,924 women. There are
different financial institutions licensed to engage in financial business in the town. From this CBE has 12
actively working branches in Gondar city namely Gondar main, Jantekel, Mintiwab, Atse Bakafa,
Fasiledes, Kidame Gebeya, Zoble, Maraki, Guzara, Ras Dashen, Azeo and Abajale branch up to the end of
2017 (CBE, 2017)

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3.4 Sampling technique and Procedure

3.4.1 Target population

The population of the study contains CBE customers currently used either of the CBE e-banking products
in Gondar city. In Gondar city, CBE has 94,154 debit card holders, 80,614 mobile banking subscribers,
1011 internet banking users and 16 merchants working with CBE BIRR agent banking, 7014 agent
banking users, and 15 agents (CBE performance report 2017/2018). Hence, the researcher has been
selected this study area with purpose of Gondar city customers are more diversified and well enough
to provide information on determinants of e-banking adoption and in return helps achieve research
objectives.

3.4.2 Sampling Technique

Sampling is the statistical process of selecting a subset called a sample of a population of interest for
purposes of making observations and statistical inferences about that population (Bhattacherjee, 2012).

Because of the large number of the sample unit, time and cost constraint the sample was taken from the
targeted population by using non probability sampling. Hence it was difficult to know the lists of e-
banking users in Gondar, non-probability sampling were used.

This study were employed non-probability sampling; because the sampling unit is unavailable and
difficult to reach randomly selected samples in person based on the list of customers. Employing
convenient sampling technique were better when infinite population to reduce cost, time and easy to
handle (Saunders, Lewis & Thornhill, 2009). (Laekemariam, 2015) used convenient sampling technique
on the study of “Factors Affecting the Adoption of Mobile Banking in Commercial Bank of Ethiopia”.

To increase the representation of samples equal number of respondents was selected from all twelve
CBE branches purposively, in order to avoid lower responsiveness the questioners are collected through
the immediate help of the researcher in person. In addition to increase the representation of samples
the data are collected in different times and dates continuously from June 07th – June 28th 2018. This
method helped the researcher to get highly representative

What is an ATM card?

An ATM card is a bank card used to access an ATM. Virtually everyone who has a checking
account also has a card that can be used at an ATM, in the form of a debit or credit card.
However, some banks also issue ATM-only cards, which can’t be directly used for making
purchases.

Deeper definition
When someone opens a deposit account with a bank, she’ll frequently be given a payment card
to access the funds in the account. In most cases, the card will be a debit card or check card, or,
in the case of a line of credit, a credit card. In addition to making purchases, all of these cards
function as ATM cards, meaning that they can be used to withdraw funds at an ATM.

Some banks may issue an ATM-only card, which can’t be used to make purchases; it can only be
used to perform regular ATM functions, although some exceptions apply, such as when the
payment processing company has a terminal installed at the retailer. All debit cards are ATM
cards, but not all ATM cards are debit cards.

As with other payment cards, ATM cards are secured with a personal identification number
(PIN). ATMs allow customers to deposit and withdraw cash as well as check their balance, but
customers may have to pay a fee when using an ATM card at an ATM not associated with the
issuing financial institution.

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ATM card example

Scott just opened up a new checking account at a local branch of a bank. After making an initial
deposit, the bank gave him a debit card to use to make purchases as well as use at an ATM. He
can use the card at any ATM, but he gets assessed a $3 fee every time he uses it at the ATM of
another bank.