Berhanu Final 22

ELECTRONIC BANKING PRACTICES, CHALLENGES AND OPPORTUNITIES:
THE CASE OF CBE GONDAR CITY BRANCHES, NORTHWEST ETHIOPIA
A THESIS SUBMITTED TO DEPARTMENT OF MARKETING MANAGEMENT FOR THE
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF
ART IN MARKETING MANAGEMENT
UNIVERSITY OF GONDAR
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MARKETING MANAGEMENT
BY: BERHANU AYANAW
PRINCIPAL ADVISOR: WASSIE GETAHUN (PhD)
Co ADVISOR: MUHAMMED SEID (MBA)
JUNE, 2019
GONDAR, ETHIOPIA
Thesis Approval Sheet
We, the undersigned, hereby declare that we read the particulars include in the thesis
and we recommend the department to accept the thesis paper prepared by Berhanu
Ayanaw by entitled “ELECTRONIC BANKING PRACTICES,CHALLENGES AND
OPPORTUNITIES:THE CASE OF CBE GONDAR CITY BRANCHES” in partial
fulfillment of the requirement for the Award of Master of Art Degree in Marketing
management.
Approved by Board of Examiners
External Examiner________________________ Signature __________Date__________
Internal Examiner_______________________Signatue____________Date__________
Advisor_____________________________Signature________________Date_________
DECLARATION
I declare that this thesis paper entitled “ELECTRONIC BANKING PRACTICES,
CHALLENGES AND OPPORTUNITIES: THE CASE OF CBE GONDAR CITY
BRANCHES” is my own work, which has not been presented before for any degree or
examination in any other university or college, and that all the sources I have used or quoted
have been indicated and acknowledged by means of complete references.
Berhanu Ayanaw
Date ________________________________
Signature ___________________________
Letter of Certification
This is to certify that Mr. Berhanu Ayanaw has worked on “ELECTRONIC BANKING
PRACTICES, CHALLENGES AND OPPORTUNITIES: THE CASE OF CBE GONDAR
CITY BRANCHES” under our supervision. This work is original in nature and it is suitable for
submission in the partial fulfillment of the requirement for the Degree of Master of Art in
Marketing Management.
Wassie Getahun (PhD) ____________________ _____________________________
Name of Principal advisor Signature Date
Mr. Muhammed Seid (MBA) ________________ ___________________________
Name of Co. advisor Signature Date

Acknowledgement
First, and for most, I would like to express my grateful thank to my advisors Dr. Wassie Getahun
and Mr. Muhammed Seid who actively participated and gave their valuable comments and
suggestions from the very inception of the proposal till end.
Furthermore, I want acknowledge University of Gondar, college of Business and economics
department of marketing management for giving me this golden and educative opportunity.
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Table of Contents
Acknowledgement ......................................................................................................................................... i
List of acronyms/Abbreviations ................................................................................................................... vi
Abstract ....................................................................................................................................................... vii
1. Chapter One: Introduction ........................................................................................................................ 1
1.1 Background of the Study..................................................................................................................... 1
1.2 Statement of the Problem .................................................................................................................... 3
1.3 Objectives ........................................................................................................................................... 4
1.4 ResearchQuestions .............................................................................................................................. 4
1.5 Significance of the Study .................................................................................................................... 5
1.6 Limitation of the Study ....................................................................................................................... 5
1.7 Scope of the Study .............................................................................................................................. 5
1.8 Organization of the Study ................................................................................................................... 5
2. Chapter Two: Review of Related Literature ............................................................................................. 6
2.1 The Concept of E-Banking ................................................................................................................. 6
2.2 Theoretical Review………………………………………………………………………..…………9
2.2.1Types of E-Banking…..……………………………………………………….……….……….....9
2.2.1.1Internet Banking…........................................................................................................ ….…....9
2.2.2.2Mobile banking ........................................................................................................................ 10
2.2.2.3Automatic Teller Machine (ATM)........................................................................................... 10
2.2.2Customer Satisfaction in E-Banking..............................................................................................11
2.2.3 E- Banking Practice in the Ethiopian Commercial Banks ........................................................... 11
2.2.4 Benefit of E-banking.................................................................................................................... 12
2.2.4.1 Benefits of Mobile Banking ................................................................................................... 13
2.2.5 Trust in E-Banking ...................................................................................................................... 14
2.3 Empirical Review……………………………………………………………………..…………….15
2.3.1 E-Banking Development in China ............................................................................................. 15
2.3.2 Present status of e-banking in Bangladesh ................................................................................. 16
2.3.3 E-Banking in Sudan ................................................................................................................... 17
2.4 Challnges & Opportunities of E-Banking……………………………………………………...…...18
3. Chapter Three: Research Methodology .................................................................................................. 21
3 Introduction .......................................................................................................................................... 21
ii
3.1Research Design ................................................................................................................................ 21
3.2Sampling Technique and Determining Sampling Size of the study Population…….………..……..21
3.2.1Sampling Technique…………………………………………………………….………...……21
3.2.2 Determining Sampling Size of the study Population……………………………..………...….22
3.3Data Sources &Methods of data collectiontechniques………………………….…….………...…..22
3.3.1Data sources……………………………………………………………………….………...….22
3.3.2Methods of data collection techniques…………………………………………….……...…….23
3.4Data Presentation, Analysis and Interpretation………………………………………….…..………23
3.5Model specification……………………………………………………………………….……...….24
4. Chapter Four:Data Analysis & Interpretation………………...………………………………………...26
4.1 Demographic and socio-economic characteristics of sample population………….………….……26
4.2 The Present Practiceof Electronic Banking……………………………………………….…..……28
4.2.1 Current Practice of E-Banking……………...……………………………………….................28

4.3 The Main Challenges for the Adoption and Growth of E-Banking……………………………..….31
4.4 Opportunities for Adoption and Growth of E-Banking………………………………….................38
5. Chapter Five: Conclusion and Recommendation………………………………………………………42

5.1 Conclusion……...……………………………………………………………………………..…....42
5.2 Recommendations……………………………………………………………………………..…....44
References…………………………………………………………………………………………………45
Annex I Questioners………………………………………………………………………………………48
iii
LIST OF TABLES & FIGURES
LIST OF TABLES
Table 1 Demographic characteristic of respondents and socio-economic characteristics……...................27

Table 2 Analysis of respondents’ experience in One-Sample Statistics…………………………………..28
Table 3 current practice of customers’ e-banking…………………………………………………………………………………..29

Table 4 Chi-square analyses of respondents whether getting E-banking service or not……………..……30
Table 5 Model Summary………………………………………………………………………………..…32
Table 6 ANOVA to test the model………...………………………………………………………………32
Table 7 multiple regression model result for determinants of e-banking service………………..34
Table 8 Chi-square analyses to describe challenges for the adoption of e-banking……..............36

Table 9 Opportunities of e-banking……………………………………………………………...41
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LIST OF FIGURES
Figure 1: Conceptual Framework of E-banking………....………………………………………..8
v
List of Acronyms/Abbreviations
ATM: Automatic Teller Machine
CBE: Commercial Bank of Ethiopia
E-Banking: Electronic Banking
FCB: Foreign Commercial Banks
ICT: Information Communication Technology
PCB: Private Commercial Bank
PIN: Personal Information Number
SPSS: Statistical Package for Social Sciences
VIF: Variance Inflation Factor
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Abstract
The banking industry is being reshaped 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 period. In light of this idea, the
objective of this study was describing the practice, opportunities and challenges for
electronic banking in Ethiopia; the case of Gondar District. Thus, adopting mixed
method, a total of 134, commercial bank of Ethiopia Gondar city branch customers and
staffs was made to participate in the study. Quantitative data was collected using survey
whereas the qualitative data was collected using semi-structured interview guides.
Quantitative Data analysis was analyzed using SPSS version 20. Specifically frequency,
percentage, means and standard deviation was employed to analyze the data. On the
other hand, analysis of qualitative data was undergoing three main stages. First, data
including transcriptions was condensed in to manageable size. Second, themes were
developed by categorizing the reduced data in line with the study’s objectives. The
results of this version were gathered from 71 male customers and 29 female customers,
were all of them literate with 4.81 years of e-banking experience and most of them
engaged in saving account and most of their e-banking channel was ATM. Customers
were used e-banking for withdrawal, mobile top up and viewing their account. The major
determinant factors of e-banking are poor internet connection, power interruption,
inaccessibility of ATM and POS, Inconvenient locations of ATMs and POS and lack of
awareness about e-banking. The present study shows since 2013, the introduction of e-
banking, on average, sample customers of e-banking users had 4.81 years of
experience of using e-banking.
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Chapter One
1. Introduction
This chapter contains an introduction, background of the study, statement of the problem,
objectives of the study, research questions, and significance of the study, limitation and scope of
the study, description of the study area and organization of the study.
1.1 Background of the Study
Banking is a service industry which function is to extend financial services to its customers.
Since, the main area of operation of a bank is very different from the area of operation of a
manufacturing concern or a trading concern, the norms for the customers and the expectations of
the customers are also different from those of the consumers of public utilities and industrial
product (Subathra, 2015).
The existence of internet can make a world without boundaries, in other words, internet allows
us to connect with anyone without having to come face to face and take a long time. Internet
used not only for searching information, education, communication channels and entertainment
but also it uses as a source of income for the community (Anitha, 2012).
The banking industry is being reshaped 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 period.(Sisay and Muvva, 2011).
.
E-banking, a term used for new age banking system, represents an automated delivery of new
and traditional banking products and services directly to customers through electronic,
interactive communication channels.(Imola and Claudia, 2014) It is a service that provides
customers the opportunity to gain access to their accounts, execute transactions, and obtain
information on financial products and services through a public or private network, including the
internet (Imola and Claudia, 2014).
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E-banking encompasses the provision of banking services and products by banks to their
customers through electronic medium. This definition also extends to the use of information and
communication technology (ICT) by banks to provide services and manage customer
relationship more quickly and most satisfactorily. E-banking covers both computer and telephone
banking. For many banks, inclination to e-banking services improves customer services while
closely welding customers to the bank. The adoption of e-banking is also seen as a new method
of expanding customer base and to also counteract the aggressive effort made by traditional
banking institutions. E-banking allows customers to inquire information and carry out most
banking services such as account balance inquiry, bill-payment and inter-account transfers
through the internet. E-banking, therefore, includes systems that enable financial institutions,
customers, individuals and businesses to access accounts, transact business, and obtain
information on financial products and services through public or private networks (Bismark et al,
2015).
From the experience of other countries banking services, electronic payment systems are found
to benefit commercial banks by extending bank customer base, reducing operating costs,
enhancing customer services and improving banks competitive advantages. For example, some
proactive banks have considered cards as the strategic products to broaden their customer base,
cut down paper work, invoices and cashier services and build competitive advantage over other
banks without card products (Worku, et al., 2016).
Electronic banking is in an embryonic stage in the country. The current e-banking services being
delivered in the country are:
Automatic Teller Machine (ATMs)
POS (Point of Sale)
Online book transfer which is not considered as transaction by the NBE.
In Ethiopia there are more than 18 million mobile holders which provide more opportunities for
financial institutions to reach the unbanked areas. The numbers of mobile holders are near to fold
of the number of bank account holders in the country. The number of ATMs available in the
country has reached 194 by the end of 2011, much lower than the number of ATMs operated by
commercial banks in Kenya, which stood at 1,979 during the same time. Zemen bank has
launched prepaid bank cards which can be used without opening a deposit account at the bank.
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The cards will have preloaded funds, which can be withdrawn from ATMs or used to make
purchases from POS terminal. The prepaid cards will be given to the cardholders with a personal
identification number (PIN) to withdraw the cash. The prepaid cards can be used as gif cards or
employee salary or expense cards, which can avoid the need to carry around a large amount of
cash. The cards can be preloaded with a minimum of 100 Br. And a maximum of 50,000.00 Br.
and reloaded after the previous funds have been fully utilized. The bank will take a commission
each time a card is loaded (Worku, et al., 2016). .
The Ethiopian banking industry also entering in to this ICT based service to customer in order to
bring efficiency in operation by minimizing operating cost thereby increasing customer
satisfaction and profitability. The state owned Commercial bank of Ethiopia is pioneer in
introducing electronic banking service in the country with eight ATMs machine in 2001 in Addis
Ababa and then followed by Dashen Bank. Currently Zemen bank and Wogagen bank are also
providing the service(Abbasi, 2001).
In the specific area in which the study conducted, Gondar city, while this thesis was being done
there were six branches of commercial banks of Ethiopia. Currently, Commercial banks of
Ethiopia provide electronic banking service using ATM and POS which started the service since
2013 and currently all branches having ATMs located in each center as long as and POSs located
in different retail shop, supermarket, hotels, etc.Birutu (2012)
1.2 Statement of the Problem
Electronic banking provides many advantages for bank and customers as well. Therefore, many
banks have invested heavily in Electronic banking services. Although Electronic banking
provides many benefits, many individuals still refuse this service. Since the acceptance or
rejection of new technology depends on the factors that influence individuals’ behavioral
intention toward this technology, there is a need to determine which factors influence
individuals' intention to accept new technology. Electronic banking like other new technology
faces many problems associated with its acceptance, (Abbasi, 2001).
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In the face of rapid expansion of electronic payment systems throughout the developed and the
developing world, Ethiopia’s financial sector remain behind in expanding the use of the system.
Certainly, the banking industry in Ethiopia is underdeveloped. With a growing number of
import-export businesses and increased international trades, increase the demand of the customer
and international relations, the current banking system is short of providing efficient and
dependable services (Beza, 2010).
The customers of Ethiopian commercial banks have missed to enjoy with the technological
advancement in banking sector, which has been entertained elsewhere in African and the rest of
the world. 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 sector (Ibid).
The Commercial Bank of Ethiopia, as other banks in the country, has hugely entered into the
implementation of e-banking but to some extent suffered from problem of e-banking rejection.
So far limited studies have tried to deal with the practice, challenges and opportunities of e-
banking in Gondar City Branches. Therefore, doing this research may provide information on the
practice, challenges and opportunities of e-banking in the CBE Gondar City Branches.
1.3 Objectives
1.3.1 General Objective

The general objective of this study is assessment of the practice, opportunities and
challenges of e-banking in CBE Gondar City Branches, Northwest Ethiopia, 2018/19.
1.3.2 Specific Objectives
Assess the present practice of electronic banking
Identify the main challenges for the adoption and growth of e-banking
Identify opportunities for adoption and growth of e-banking
1.4 Research Questions
What looks the present practice of electronic banking?

What are the main challenges that affect the adoption & growth of e-banking?
What are the opportunities for adoption and growth of e-banking?
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1.5 Significance of the Study
It will help to identify the challenges and opportunities of e-banking in the study area
It will provide appropriate measure that has to be taken to adhere the challenges
It will provide the means to employ the opportunities adequately
It will be used as a spring board for further researches
1.6 Limitation of the Study
This study focused on the Electronic Banking in Ethiopia. The study might not be exhaustive in
considering the entire Practices, Opportunities and Challenges of e-banking. The researcher tried
to minimize and eliminate all the problems that the study may face throughout the process.
1.7 Scope of the Study
This research is limited to the practice, opportunities and challenges of E-banking in Ethiopia
with special reference to CBE in Gondar City Branches. It is only the CBE branches of the city
were covered. Although E-banking is issues that deserve the involvement of both the service
providers and customers in the aforementioned bank, the scope of the study is limited to the
perception of these two bodies only. The types of services provided by the bank includes: saving
Account, Local Transfer, Current Account, and Forex Transfer & Loan Transfer. In this study,
only Current Account, Saving Account & Local Transfer Customers will be considered.
1.8 Organization of the Study
This study was organized in to five chapters as follow. The first chapter introduces the reader
with the study. It presents the statement of the problem, research questions, general as well as
specific objectives of the research, significance of the study, scope of the study and limitation
briefly. The second chapter deals with theoretical and analytical/empirical review. The third
chapter discusses on research methodology. The fourth chapter was analyzed and interpreted
data and the last chapter was included the conclusion and the recommendations.
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Chapter Two
Review of Related Literature
2. Introduction
Chapter two contains the theoretical as well as empirical reviews. Among the theoretical reviews
internet banking, customer satisfaction, and present status of e-banking in Ethiopia and the likes
are involved. On the empirical review the experience of other countries are reviewed.
2.1The Concept of E-Banking
The concept of electronic banking has been defined in many ways; Daniel defines electronic
banking as the delivery of banks’ information and services by banks to customers via different
delivery plat forms that can be used with different terminal devices such as personal computers
and mobile phone with browser or desktop software, telephone or digital television (Daniel,
1999).
According to Abide and Noreen electronic banking defined as any use of information and
communication technology and electronic means by a bank to conduct transactions and have
interaction with stakeholders (Abraham, 2012).
Stan also defined electronic payment as a system of payment whereby transaction takes place
electronically without the use of cash. Magembe BAS and Shemi AP defined electronic banking
(e-banking) is nothing but e-business in banking industry (Daniel, 1999). 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. The concept and scope of e-banking is still evolving.
It facilitates an effective payment and accounting system thereby enhancing the speed of delivery
of banking services considerably (Uppal and Jantana, 2007). Ovia argues that electronic banking
is a product of e-commerce in the field of banking and financial services (Ovia, 2001). In what
can be describe as business to consumer domain for balance enquiry request for cheque books
recording stop payment instruction balance transfer instruction account opening and other forms
of traditional banking service. Banks are also offering payment services on behalf of their
customer who shop indifferent e-shops.
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Saleh M Nsouli and Andrea Schaechter also defined electronic banking as per the following
chart concluding that e-banking is providing banking products and services through electronic
delivery channels (Figure 1) (Nsouli and Schaechter, 2002).
In simple words, e-banking implies provision of banking products and services through
electronic delivery channels. Electronic banking has been around for quite some time in the form
of automatic teller machines (ATMs) and telephone transactions. In more recent times, it has
been transformed by the internet –a new delivery channel that has facilitated banking
transactions for both customers and banks (Nitsure, 2003).
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E-commerce (conducting
business through
electronic network)
E-finance (providing E-money (stored

financial service value or prepaid
through electronic payment
channel) mechanisms)
E-banking (providing other financial

banking products and services and products;
services through electronic insurance, online
delivery channel) brokerage etc.
Figure 1: Conceptual Framework that show the relation between practice and challenges for
electronic banking and its independent variables.
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2.2 Theoretical Review
2.2.1 Types of E-Banking
2.2.1.1 Internet Banking
Internet banking means offering banking products and services through the Internet by banking
institutions using a variety of facilities including computer access and other advanced equipment.
Internet banking can also be defined as a service that does not require in any software or special
access to a private network, but it is done through the Internet. Internet banking allows users to
manage financial matters in anywhere around the world during or outside banking hours.
The technology is growing rapidly because banking institutions in Malaysia are also moving
forward in providing services in accordance with the latest technology. Thus the existence of
alternative channels through bank electronic banking services such as Automatic Teller Machine
(ATM), phone banking, PC banking and Internet banking as a facilitator (Anita et.al, 2012).
In today’s highly technological world, the machine that destroys paper money and converts it
into electronic money is far from reality. But the part on the person interacting with his or her
banking account late at night is becoming more of a reality. The information superhighway has
found its way into many homes, schools, businesses, and institutions. Many people are cruising
the Internet each day to obtain information on the weather, latest sport scores, local news, and
many other exciting information. These people also buy and sell goods on this new media.
Consequently, many businesses are reaching out to customers worldwide using the Internet as its
communication channel (Yi-Jen Yang, 2011).
The impact of e-banking involves two aspects: the change of technological knowledge and
reconfiguration of the business model. Firstly, Internet technology has overturned the IT-
infrastructure of branch-based networking and triggered changes in the knowledge about
networking, data transmission, computing platform, interoperability, and system design. Next,
the e-banking has also changed traditional payment mediums, physical transaction processes,
service delivery channels, and security schema into a virtual environment. Finally, the
informational, customized, and self-service offerings enhance the existing functions of bricks-
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and-mortar banking. These novel online services are likely to be significant in differentiating e-
banking from traditional retail banking. E-banking makes obsolete the technological knowledge
of bricks-and-mortar banking (Li Hsia and Heng, 2006).
2.2.1.2 Mobile banking
Mobile banking is a service that enables customers to conduct some banking services such as
account inquiry and funds transfer, by using of short text message (Ayana, 2014).
It is a system that allows bank customers to conduct different financial transactions through a
mobile device, being the newest service in electronic banking; mobile banking relies on WAP
(Wireless Application Protocol) technologies since a mobile device requires a WAP browser
installed in order to allow access to information (Imola and Claudia, 2014).
2.2.1.3 Automatic Teller Machine (ATM)
ATM service in Ethiopia is offered by commercial bank of Ethiopia (CBE). The service is given
with eight ATMs in Addis Ababa. These ATMs enable customers to withdraw limited amount of
money from their account at any time. The ATMs also enable customers to check their account
balance. But depositing money through ATM is not currently possible. In order to get ATM
services, customers need ATM cards and secrete PIN codes. The ATM card is a smart card used
for security purpose only. The ATM card coupled with a PIN code provides state-of-the-art
authentication scheme called two-factor authentication, Birutu (2012).
Since the bank has connected only six of its branches, ATM service is given only to customer of
these six branches. Although there are only eight ATM currently, the bank has planned to add ten
more ATMs in the near future. This is very low as compared to that of Egypt, which had 1200
ATMS in 2002 (Wondwosson and Tsegai, 2005).
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2.2.2 Customer Satisfaction in E-Banking
E-banking can offer speedier, quicker and a dependable service to the customers for which they
may be relatively satisfied than that of manual system of banking. E-banking system not only
generates latest viable return, it can get its better dealings with customers (Nupur, 2010).
E-banking system, such as ATM, mobile banking, internet banking and others were not well
adopted by Ethiopian banking industry. This is due to low level of ICT infrastructure and lack of
legal frame works at NBE, which can initiate banking industry to implement the system. The
level of security risk associated with E-banking product or service, such as ATM, internet
banking, mobile banking and others, pose different challenges to different banks. Improvements
are required to ensure client confidence. Lack of competition among local and foreign banks is
also another challenge for the adoption of E-banking in the country (Ayana, 2014).
2.2.3 E- Banking Practice in the Ethiopian Commercial Banks
The history of modern banking in Ethiopia goes back to 1900 when an agreement was reached in
1905 between Emperor Minilik II and Mr.MaGillivray, representative of the British owned
National Bank of Egypt. Currently as per National Bank of Ethiopia estimates there are 18
private and 3 state owned banks. Out of these 19 banks, the state owned commercial Bank of
Ethiopia (CBE) is the largest and leading bank in financial operations (Mohammed, 2014).
With a growing number of import-export businesses, and increased international trades and
international relations, the current banking system is short of providing efficient and dependable
services and therefore all banks operating in Ethiopia should recognize the need for introducing
electronic banking system to satisfy their customers and meet the requirements of rapidly
expanding domestic and international trades, and increasing international banking services.
Undeniably the largest state-owned bank, Commercial Bank of Ethiopia, is the pioneer in
introducing ATM service for local users in 2001 with its fleet of eight ATMs located in Addis
Ababa. Moreover, CBE has had Visa membership since November 14, 2005 (Gardachew, 2008).
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2.2.4 Benefit of E-banking
Electronic banking is a new industry which allows people to interact with their banking accounts
via the Internet from virtually anywhere in the world. The electronic banking system addresses
several emerging trends: customer demand for anytime, anywhere service, product time-to-
market imperatives and increasingly complex back-office integration challenges. This system
allows consumers to access their banking accounts, review most recent transactions, request a
current statement, transfer funds, view current bank rates and product information and reorder
checks (Yi-Jen Yang, 2011).
Growth of Electronic banking in a country depends on many factors, such as success of internet
access, new online banking features, household growth of internet usage, legal and regulatory
framework. E-banking can offer speedier, quicker and dependable services to the customers for
which they may be relatively satisfied than that of manual system of banking. E-banking system
not only generates latest viable return, it can get its better dealings with customers (Nupur,
2010).
From the banks’ view point, the first benefits for the banks offering e-banking services was
better branding and better responsiveness to the market. The other benefits were possible to
measure in monetary terms. The main goal of every company was to maximize profits for its
owners and banks were not any exception. Automated e-banking services offered a perfect
opportunity for maximizing profits.
The main benefit from the bank customers’ point of view was significant saving of time by the
automation of banking services processing and introduction of an easy maintenance tools for
managing customer’s money. The main benefits of e-banking were as follows: Increased comfort
and timesaving-transactions made 24 h a day, without requiring the physical interaction with the
bank. Corporations had easier access to information as, they checked 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 of banks. Private customers looked for slightly different kind of benefits from e-
banking (SaidulHassan.et al, 2010).
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2.2.4.1 Benefits of Mobile Banking
A mobile payment service in order to become acceptable in the market as a mode of payment the
following conditions have to be met:
a) Simplicity and Usability: The m-payment application must be user friendly with little or no
learning curve to the customer. The customer must also be able to personalize the application to
suit his or her convenience.
b) Universality: M-payments service must provide for transactions between one customer to
another customer (C2C), or from a business to a customer (B2C) or between businesses (B2B).
The coverage should include domestic, regional and global environments. Payments must be
possible in terms of both low value micro-payments and high value macro payments.
c) Interoperability: Development should be based on standards and open technologies that

allow one implemented system to interact with other systems.
d) Security, Privacy and Trust: A customer must be able to trust a mobile payment application
provider that his or her credit or debit card information may not be misused. Secondly, when
these transactions become recorded customer privacy should not be lost in the sense that the
credit histories and spending patterns of the customer should not be openly available for public
scrutiny. Mobile payments have to be as anonymous as cash transactions. Third, the system
should be foolproof, resistant to attacks from hackers and terrorists. This may be provided using
public key infrastructure security, biometrics and passwords integrated into the mobile payment
solution architectures.
e) Cost: The m-payments should not be costlier than existing payment mechanisms to the extent
possible. A m-payment solution should compete with other modes of payment in terms of cost
and convenience.
f) Speed: The speed at which m-payments are executed must be acceptable to customers and
merchants.
g) Cross border payments: To become widely accepted the m-payment application must be
available globally, word-wide (Vishal. Et.al, 2012).
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2.2.5 Trust in E-Banking
The Internet has played a key role in changing how we interact with other people and how we do
business today. As a result of the Internet, electronic commerce has emerged, allowing
businesses to more effectively interact with their customers and other corporations inside and
outside their industries. One industry that is using this new communication channel to reach its
customers is the banking industry. To gain the loyalty of customers, you must first gain
their trust. That’s always been the case, but on the Web, where business is
conducted at a distance and risks and uncertainties are magnified, it’s true.
(Reichheld and Schefter, 2000).
Online, customers can’t look a sales clerk in the eye, can’t size up the physical
space of a store or office, and can’t see and touch products. They have to rely on
images and promises, and if they don’t trust the company presenting those images
and promises, they’ll shop elsewhere. In fact, when we asked Web shoppers to name
the attributes of retailers that were most important in earning their business, the
number one answer was “a Website I know and trust.” All other attributes,
including lowest cost and broadest selection, lagged far behind. Price does not rule
the Web; trust does. When customers do trust an online vendor, they are much more
likely to share personal information. That information enables the company to
form a more intimate relationship with customers, offering products and services
tailored to their individual preferences, which is in turn increases trust and
strengthens loyalty. Such a virtuous circle can quickly translate into a durable
advantage over competitors (Reichheld and Schefter, 2000).
The electronic banking system addresses several emerging trends: customers’ demand for
anytime, anywhere service, product time-to-market imperatives and increasingly complex back-
office integration challenges. The challenges that oppose electronic banking are the concerns of
security and privacy of information (Yi-Jen Yang, 2011).
14
The nature of online service delivery gives rise to a lack of trust in e-banking among some
customers. In an online environment, there is no direct physical contact between buyer and
seller. This spatial distance means that consumers cannot use the physical cues, such as
observing the sales people or the physical office/store space, in order to judge trustworthiness
(Reichheld and Schefter, 2000).
One of the biggest challenges of e-payment is to ensure its security. Securing the payment
process involves authenticating both the customer and the merchant and protecting the
information to be transmitted from interception. In addition a means must be provided that
prevent repudiation both by the merchant and customer once the payment process has taken
place. E-payment systems have to take into account the need of multilateral security i.e. security
needs of all participating parties in the e-payment system must be given due attention. An e-
payment system that is not secured may not get trust from its users. Trust is one of the crucial
factors for the acceptance of e-payment system. The next section discusses major security
challenges of e-payment system (Wondwossen and Tsegai, 2005).
2.3 Empirical Review
2.3.1 E-Banking Development in China
As a large and typical developing country with an ambition to become one of the world’s
economic superpowers, China understands the importance of EC and has put a significant effort
towards developing various EC initiatives including e-banking within the banking sector.
Expanding from large cities such as Beijing, Shanghai and Guangzhou to coastal and inland big
cities, the Chinese EC market has been growing rapidly and is predicted to reach $654.3 billion
by 2010.
In order to address the escalating competition brought by the opening of the banking sector to
foreign players, China’s domestic banks are currently being proactive in devising and
implementing strategies to advance their e-banking products and services. The first generation of
electronic banking was introduced by the China Merchant bank in 1997, in the form of internet
payment system. Other major banks followed and introduced the same system between 1998 and
15
1999. Online banking services with rudimentary functionalities such as electronic bill payment
and fund management were then gradually made available to the retail and corporate customers
between 1999 and 2001.
As economies further developed and EC activities grew, the demand for more e-banking
functionalities increased dramatically, promoting another round of e-banking service
development among the Chinese domestic banks around 2001. The second generation e-banking,
which addresses the demand for increased sophistication in wealth management, provides
additional functions that would facilitate investment activities such as the purchase and sale of
stocks, currencies and mutual funds. Meanwhile, the basic asset management functionalities such
as bill payment and fund transfer were also redeveloped to improve usability and convenience.
More stringent security measures such as the deployment of USB security token, known as “U
Shield” was rolled out in 2002, amid the widespread concern about the reliability and security of
e-banking services. According to the latest research report on electronic banking conducted by
the China Financial Certification Authority, around 20% of bank account holders has adopted e-
banking in the urban areas, while around 40% of corporate account holders conducts their
transactions online in 2008 ( Kurnia et.al, 2009).
2.3.2 Present status of e-banking in Bangladesh
E-Banking satisfied customer demand in banking activities electronically throughout the world.
At present, several private commercial banks (PCBs) and foreign commercial banks (FCBs) in
Bangladesh offered limited services of tele banking, internet banking, and online banking
facilities working within the branches of individual bank in a closed network environment. The
FCBs played the pioneering role with adoption of modern technology in retail banking during the
early 1990s whereas the state owned commercial banks (SCBs) and PCBs came forward with
such services in a limited scale during the late 1990s.
International standard online banking facilities were expanding in Bangladesh. At present, 29

scheduled banks offered any branch banking facilities through their respective bank online
network that provided facilities like transaction through any branch under the respective bank
online network; payment against paid order or pay order encashment, demand draft encashment,
16
opening or redemption of FDR from any branch of the same bank; remote fund transfer, cash
withdrawal, cash deposit, account statement, clearing and balance enquiry within branches of the
same bank; and L/C opening, loan repayment facility to and from any branch of respective bank
under its own online network.
Internet banking in true sense was still absent in Bangladesh. German banks offered the internet
banking since the mid-nineties, although the only product they were offering at the time was
information. Only 7 out of 48 banks were providing some banking services via internet that
included account balance enquiry, fund transfer among accounts of the same customer, opening
or modified term deposit account, cheque book or pay order request, exchange rate or interest
rate enquiry, bills payment, account summary, account details, account activity, standing
instructions, loan repayment, loan information, statement request, cheque status enquiry, stop
payment cheque, refill prepaid card, password change, L/C application, bank guarantee
application, lost card (debit/credit) reporting, pay credit card dues, view credit card statement, or
check balance (SaidulHassan.et al, 2010).
2.3.3 E-Banking in Sudan
Over the past decade, the number banks in the Sudan has been steadily increasing; the number
increased from 27 in 2002 to 32 banks in 2012.Currently the Central Bank of Sudan (CBS)
oversees 32 licensed banks of which 27 are registered as commercial, including one state-owned
bank, three branches of foreign banks, and 23 joint-venture banks. Five banks are registered as
"specialized" of which three state-owned banks and two joint-venture banks.
The specialized banks provide funds to specific sectors of the economy; agriculture, industry,
and social development. All the banks in Sudan are head quartered in Khartoum, the capital city.
The Sudanese banking industry as a whole has a network of 506 branches, which is quite low
compared to the area of the country (1.9 million square km) and the size of population which is
estimated to be 35million in 2012. In addition, the geographical distribution of banks' branches is
uneven across the 17 country's states with 190 branches located in Khartoum state, representing
37.5% of total branches.
17
Sudatel Telecom Group, the former Sudanese telecommunication corporation, has erected an
infrastructure in the field of communication which paved the way for utilizing advanced
technologies in the field of e-banking, and government electronic services, consequently, the
Electronic Banking Services Company (EBS) was established and formed in 2000 which is
geared to facilitate banks with needed equipment’s, accessories and administer the network that
connects all banks. Apparently, the company offers diverse utilities, and working as a
consultative figure for the banks, monitoring the network, provision of maintenance, and
executing all projects that lead to the development of e- banking activities to sustain excellent
services delivery (Mohammed and Mohamed, 2012).
2.4 Challenges and opportunities of E-Banking
The changing financial landscape has brought with it new challenges for bank management and
regulatory and supervisory authorities. The major ones stem from increased cross-border
transactions resulting from drastically lower transaction costs and the greater ease of banking
activities, and from the reliance on technology to provide banking services with the necessary
security (Nsouli and Schaechter, 2002). While electronic banking can provide a number of
benefits for customers and new business opportunities for banks, it exacerbates traditional
banking risks. Even though considerable work has been done in some countries in adapting
banking and supervision regulations, continuous vigilance and revisions will be essential as the
scope of e-banking increases. In particular, there is still a need to establish greater harmonization
and coordination at the international level. Moreover, the ease with which capital can potentially
be moved between banks and across borders in an electronic environment creates a greater
sensitivity to economic policy management. To understand the impact of e-banking on the
conduct of economic policy, policymakers need a solid analytical foundation. Without one, the
markets will provide the answer, possibly at a high economic cost. Further research on policy-
related issues in the period ahead is therefore critical(Nsouli and Schaechter, 2002).
The primary challenge for banks is to provide consistent service to customers irrespective of the
kind of channel they use. The more a bank relies on electronic delivery channels, the greater the
potential for reputation risks. There are some serious implications of international e-banking. It is
18
a common argument that low transaction costs potentially make it much easier to conduct cross-
border banking electronically. For many banks, cross-border operations offer, an opportunity to
reap economies of scale. But cross-border finance also needs a higher degree of cross-border
supervision. Such cooperation may need to extend to similar supervisory rules and disclosure
requirements (for efficiency and to avoid regulatory arbitrage) and some harmonizing of legal,
accounting and taxation arrangements (Nitsure, 2003)
Major concerns of electronic transactions are the issues of security and privacy. In the developed
countries like France, 3 out of 40 purchases on line and the remaining 37 are reluctant to use on
line services and the reason is security and privacy which is the major threats to perform online
business. It is not only the duty of industry but also the duty of government assuring people to
perform secure electronic transactions (Abbasi, 2001).
When we see the challenges and opportunities of e-banking in Ethiopia only 20% of the
Ethiopian households are connected to IT network and a large number of people are served by
one bank branch even compared to other African countries. Un-served market, stable and secure
political environment, rapidly growing mobile infrastructure, availability of delivery channels
(outlets), safe and sound financial sector are the most important opportunities in Ethiopia.
Low level of financial literacy of the public, level of readiness and capacity of financial
institutions to provide service, infrastructure, insufficient cash flow in rural areas limited
potential agents, and presence of a few branches in rural areas are some of the challenges facing
the country. Legal and related issues, the importance of looking in to the role of newly emerging
third party technical providers, reconsidering pre-paid balance requirements and widening the
scope of mobile banking service are also critical (Birutu, 2012).
Abraham described in Ethiopian, among the known common problems which are related to
electronic banking few of them are listed below (Abraham, 2012).
• Lack of banking services through the web or other electronic means such as using mobile
phone.
• Data and network security and privacy.
19
• Lack and limitation of government policies, regulations and e-commerce laws, as well as
legislation to protect workers and to make the Internet secure.
• Weak telecommunications.
• Broken and slow Internet connections.
• Lack of Internet awareness.
But in recent years the Ethiopian government has a grand plan for the improvement of ICT
infrastructures hoping for Ethiopia to leapfrog into the information age.
Banking in Ethiopia faces numerous challenges to fully adopt and adopt e-banking application
and seize the opportunities presented by ICT applications in general. Key challenges of for e-
banking applications are: Low level of internet penetration and poorly developed
telecommunication infrastructure, lack of infrastructure for telecommunications, internet and
online payments impede smooth development and improvements of e-commerce in Ethiopia.
Lack of suitable legal and regulatory framework for e-commerce and e-payment: Ethiopian
current laws don’t accommodate electronic contracts and signature.
Ethiopia has not yet enacted legislation that deals with e-commerce concerns including
enforceability of the validity of electronic contracts, digital signatures and restricts the use of
encryption technologies. High rate of illiteracy: low literacy rate is a serious impediment for the
adoption of e-banking in Ethiopia as it hinders the accessibility of banking services. For citizens
to fully enjoy the benefits of E-banking, they should not know only how to read and write but
also possess basic ICT literacy. High cost of internet: The cost of internet access relatively to per
capita income is a critical factor. Compared to the developed countries, there is higher cost of
entry in to e-commerce market in Ethiopia. These include high start-up investment costs of
computers and telecommunication and licensing requirements. Absences of financial networks
that link deferent banks, frequent power interruption: lack of reliable power supply is a key
challenge for smoothly running e-banking in Ethiopia. Resistance to changes in technology
among customers and staff due to lack of awareness on the benefits of new technologies, fear of
risk, lack of trained personnel in key areas, tendency to be content with the existing structures
and people may be resistance to new payment systems (Sisay and Muvva, 2011).
20
Chapter Three
Research Methodology
3.Introduction
This section deals on the overall methodologies used to conduct the research scientifically. It
talks about the research design, sampling design, source of data collection instrument, and
finally, methods used to analyze the collected data.
3.1 Research Design
The research aims at assessing the practices, opportunities and challenges of Electronic banking
in CBE Gondar city and the nature of the research is descriptive research design. Therefore, the
research design adopted for this study was a descriptive study because of the nature of the
expected data and the research objectives (Estier and Partnov, 2013). For this research, both
Quantitative and Qualitative data was collected through primary and secondary sources and
especially used in establishing the relationship between the variables through descriptive
analysis.
In order to attain the objective of the study and answer the research questions; the researcher
adopts both quantitative and qualitative research approach (Mixed approach). The rationale of
using such a mixed approach is to gather data that could not be obtained by adopting a single
method and for triangulation, (Ayana, 2014).
3.2. Sampling Technique and Determining Sampling Size of the study Population
3.2.1 Sampling Technique
Taking the whole branches of CBE is a tremendous work and the CBE package activities might
be homogenous. Therefore, the researcher prefers three branches of CBE. Thus, the target
population for this study was the customers of CBE and the managers. The researcher used
simple random probability sampling methods to select branches. The researcher was employed
both probability and non-probability sampling methods. From probability sampling methods,
simple random systematic sampling method was used to drawn sample customers of the banks
and the CBE branches. Whereas, anon-probability sampling method is a purposive sampling
method that used to select the branch managers and vice-branch managers.
21
3.2.2 Determining Sampling Size of the study Population
The sample population of this study was taken from Gondar city administration CBE branches.
There are 15 CBE branches in the city.
It was difficult to cover the whole population in this research study. As Rescoe (1975) cites in
sakaran (2000), “sample sizes larger than 30 and less than 500 are appropriate for most
research”. Therefore from 100-400 customers which represent the customers of CBE and which
make a visit per a day in each branch, a total number of 100 customers were taken as a reliable
sample size because dealing with all customers was impossible and concerning managers, a total
number of 3 branch managers and 3 vice-branch managers were taken, because of they are key
informants, as a sample size for interviews. For each branch, the sample population was taken
proportionally and then 34, 33 and 33 sample size for Piyasa, Arada and Maraki respectively,
Rescoe (1975) cites in sakaran (2000).
3.3 Data sources and Methods of data collection techniques
3.3.1. Data sources
In this study, both the primary and secondary data was employed. Primary data sources: Since
the primary sources have the advantage of providing detail information, high accuracy and
understandable units in which the data are recorded, the researcher rely on the primary data.
Primary sources are more closely related with the problem under study. Primary data was
collected from sampled respondents who are living in the selected study areas.
Secondary data sources: secondary data sources were used to substantiate primary data. These
data was extracted from Gondar town CBE service providers and from other sources, such as
government reports, journals, published and unpublished research works.
22
3.3.2. Methods of data collection techniques
A range of data collection techniques which was used in this study is presented below.
Questionnaire: Structured questionnaires were used for collecting quantitative and qualitative
data from selected study participants. The household survey covers demographic characteristics,
household socioeconomic factors and customer perceptions. To this study, questionnaire has
many advantages; it provides standardized questions to respondent, it allows respondents to
consult or refer documents. In turn some close-ended questions also were consolidated by open-
ended questions to root out the basic causes of different perspectives that emphasize particular
dimensions to insight people’s activities and perceptions. Close ended and open-ended
questioners was used to collect information from the employees of the CBE.
Interviews: Semi-structured interviews were made as method of primary data collection with
part of questionnaire to gather sufficient and relevant data from respondents/key informants.
Because of questionnaire method of data collection alone has some drawbacks like high no
response rate, it is not methodologically advisable in collecting data from illiterate respondents
and it may not yield accurate and reliable information as some words create confusion plus
enumerators role limitation. Individuals who are considered knowledgeable and rich in
experiences about e-banking activities and socio-economic condition of the community in the
study area was identified and interviewed individually.
3.4 Data Presentation, Analysis and Interpretation
In this study the collected field data was presented and analyzed by using both quantitative and
qualitative descriptions. Data that was collected from the interview narrated qualitatively and
data collected from questioners was analyzed quantitatively and present by using percentages,
mean, standard deviation, chi square, T-test, regression and tables, charts and graphs. Both the
data obtain from the questionnaire and interview supported by different secondary data including
reports, records, journals etc. Finally the data that was collected from the sample population was
analyzed and interpreted using descriptive tools under the support of SPSS version 20.
23
3.5 Model specification
Dependent variable: The practice of e-banking users.
Independent variables: The following variables were either positively or negatively affecting
the practice and opportunities of e-banking users of the dependent variables as follow:
• High internet cost
• Frequent network/internet interruption
• Frequent power interruption
• lack of awareness about e-banking
• Inconvenient locations of ATMs and POS
• Inaccessible internet
• Lack of ICT knowledge
• Inaccessible ATM and POS
• lacks of information security considered as a barrier for the adoption e-banking
The other independent variables are sex, age, marital status and educational levels. A persons’
sex may not affect the participation of e-banking, while age structure has a paramount effect on
e-banking participation. If a person’s age is younger, he or she might be actively engaged in the
participation of e-banking technology. When they are become older and older, their rate of
activity becomes decrease. Educational level also positively affects the participation of e-banking
technology. If a person is more educated he or she might has the opportunity to participate in e-
banking and more reluctant.
The Multiple Regression Model
Regression techniques have long been central to the field of economic statistics
(“econometrics”). Increasingly, they have become important to lawyers and legal policy makers
as well. The relationship between the dependent and independent variables in this case could be
best represented by multiple regressions. To explore such issues, the investigator assembles data
on the underlying variables of interest and employs regression to estimate the quantitative effect
of the causal variables upon the variable that they influence. The investigator also typically
assesses the “statistical significance” of the estimated relationships, that is, the degree of
confidence that the true relationship is close to the estimated relationship. Hence, the multiple
24
regression models were used in this study to analyze the determinant of customer relationship on
the market performance, (Amare, 2015). Following Gujarati (2003) and Aldrich and Nelson
(1984) the econometric distribution function for the function of customer relationship on the
market performance is specified as:
In the multiple linear regression models, Y has normal distribution with mean
Y = β0 + β1Χ1 + …+βρΧρ + σ (Υ), SD(Y) = σ (independent of X’s)…………………1
Y = customer relation market performance
The model parameters β0 + β1 + …+βρ and σ must be estimated from data.
β0 = intercept or a constant amount (what one earns with none of the parameters);
β1 … βρ = regression coefficients (coefficients of independent variables)
X1+…Xp are termed the “independent,” “explanatory,” or “exogenous” variables; σ = σ res =
residual standard deviation
Before model analysis was commenced, to check the problem of multi-collinearity the Variance
Inflation Factor (VIF) for continuous explanatory variables were used in this study. Following
Gujarati (1995), VIF is defined as:
ଵ
VIF (Xi) = ………………………………………………………….2
ଵିோ మ
Where:
Xi = the ith quantitative explanatory variable regressed on the other quantitative explanatory
variables.
R2i = the coefficient of determination when the variable Xi regressed on the remaining
explanatory variables. If the value of VIF exceeds 10, it is used as a signal for existence of strong
multi-collinearity between continuous explanatory variables.
25
CHAPTER FOUR
4. DATA ANALYSIS AND INTERPRETATION

Many studies previously presented on this topic were performed at different governmental and
private bank institutions in other countries. My study took place in a government CBE in Gondar
town Amhara Region State of Ethiopia. Electronic banking is an easy, relatively cheap in time
saving and human resource requirement customers can use to save, receive and send their
monetary. This study was done to examine the current practice of e-banking, its challenges and
opportunities of e-banking service of CBE in Gondar town. Total of 100 questionnaires were
distributed to the respondents, all of them were returned questionnaires. Therefore, the response
rate of the questionnaire is 100% and valid to analyze. The questionnaires were designed to seek
information about the respondents’ sex, age, marital status, educational status and monthly
income customers’ Commercial Bank of Ethiopia in Gondar town.
4.1 Demographic and socio-economic characteristics of sample population
A table is presented in table 4.1, in order to show the distribution of sex of respondent
customers’ of Commercial Bank of Ethiopia in Gondar town relationships among the three
branch studying sites (Piasa, Arada and Maraki branches). Regarding of sex of studying
population as the service receiving from CBE, 71 percent of the respondents were male and the
remaining 29 percent were female customers. Their proportion is not that much wide gap, that
males were much greater outnumbered than females by 42 percent, implying that the
participation of female customers to get service was very low. Regarding to age structure of
respondents, 58 percent of respondents were in the age group between 31--45 years. The next
largest group of the respondents is in the age group of 46-60 years (23%). About 11 percent
respondents were from the age group of 1--30, 8percent of respondents were between greater
than 61 years of age. This implies that CBE has more middle aged customers that can stay with
the firm at currently and for the coming several years. There are lesser customers within the age
ranges of greater than 61 and less than 30 years old. However, the CBE institution should give
emphasis on all age groups to expand its customer base.
Regarding with marital status, the descriptive analysis indicated that there were also different gap
in demographic sizes among the three studying sites. The largest group of CBE customers’ were
26
married (65%), while the remaining 29 percent, 4 percent and 2 percent of them were
categorized in single, divorce and widowed respectively. In terms of qualification, as indicated,
all of the customers were literacy or there were no illiterate customer, but there are occupied in
different educational status and great difference among them. From the sample population,
certificate and diploma/TVT customers each of them hold 30 percent, 23 percent and 17 percent
respondents were grade 9--12, and degree and above educational profiles respectively.
Table 4.1 demographic characteristic of respondents and socio-economic characteristics
Study Sites
Items Responses Total
PIYASA ARADA MARAKI
Male 25.0% 19.0% 27.0% 71.0%
sex
Female 9.0% 14.0% 6.0% 29.0%
Single 4.0% 13.0% 12.0% 29.0%
Married 24.0% 20.0% 21.0% 65.0%
Marital status
Divorced 4.0% 0.0% 0.0% 4.0%
Widowed 2.0% 0.0% 0.0% 2.0%
9-12 3.0% 11.0% 9.0% 23.0%
Certificate 9.0% 14.0% 7.0% 30.0%
education level
diploma/TVT 17.0% 7.0% 6.0% 30.0%
first degree and above 5.0% 1.0% 11.0% 17.0%
1-30 3.0% 1.0% 7.0% 11.0%
31-45 22.0% 22.0% 14.0% 58.0%
age
46-60 7.0% 5.0% 11.0% 23.0%
>61 2.0% 5.0% 1.0% 8.0%
<3000 12.0% 14.0% 20.0% 46.0%
Monthly 3001-6000 17.0% 5.0% 9.0% 31.0%
income birr 6001-9000 4.0% 7.0% 4.0% 15.0%
>9001 1.0% 7.0% 0.0% 8.0%
Source: survey data, 2019
Regarding to the amount of income that studied population monthly earned 46 percent of them
received below 3, 000 birr per month and 31 of them earned between 3,001-6,000 birr. The
remaining 15 percent and 8 percent of customers were there monthly income earned between
6001—9000 and greater than 9001. The chi-square diagnosis indicated that there was a
significance difference association of monthly income earnings among the three studying sites
27
4.2 The Present Practice of Electronic Banking
4.2.1 Current practice of e-banking
As detail interview with the managers of the sample studying sites of CBE in Gondar town
announced, the introduction of electronic banking was become a familiar technological activities
have started since 2013 as from where any districts were under took in Ethiopia. Regarding with
the years of getting E-banking service (experience), as the one sample T-test diagnosis indicated
there was a significance differences among the sample populations mean years of experience at 5
confidence level, P(0.000) < 0.05. On average customers had 4.81 years of experience of e-
banking and a standard deviation measures how spread out the distribution was, 1.11 a standard
deviation indicated that there is a significant variation in the respondents’ years of experience.
Table 4.2 Analysis of respondents’ experience in One-Sample Statistics

Item Mean Std. Std. Error T-Value p-value
Deviation Mean
Years of getting E-banking service (experience) 4.81 1.11 .111 43.239 0.000*
*Significance at or < 0.05 Source: survey data, 2019
Regarding to customers getting service from CBE, majority (62.0%)sample populations of e-

banking customers, were getting saving services, 25 percent of customers were gotten current
account, and the remaining 9 and 4 percent were loan and others respectively and statistically
there was not significance difference association among the sample study populations at 5%
confidence level, 0.062 > 0.05.
28
Table 4.3 current practice of customers’ e-banking
Study Sites
Items Total X2 p-value
Responses PIYASA ARADA MARAKI
current account 6.0% 11.0% 8.0% 25.0%
Saving 28.0% 16.0% 18.0% 62.0%
Service 12.065a .061
Loan 0.0% 4.0% 5.0% 9.0%
Others 0 2% 2% 4%
ATM 17.0% 13.0% 25.0% 55.0%
E-banking Pos 7.0% 4.0% 4.0% 15.0% 12.552a 0.014*
channel Both ATM and
10.0% 16.0% 4.0% 30.0%
POS
With respect to e-banking channel, 55 percent of sample populations were getting e-banking
services through ATM e-banking channel, of these 25 percent from Maraki branch 17 percent
from Piasa and 30 percent of sample respondents depending on both ATM and POS e-banking
channel and the remaining 15 percent of them were through POS. The cross tab statistical
analysis justified that there was a significance difference association in e-banking channel usage
among the study site sample populations, since the significance value is less than the critical
value.
Considering to responses whether getting E-banking service or not, 96 percent of sample

population accepted that they were getting e-banking service for the purpose of money
withdrawal with equal distribution of customers (32%) in each study sites of CBE. Due to this
reason the chi-square analysis test indicated that there was no significance difference among
sample study site customers’ at a priori alpha level, p (0.788) > (0.05%). In the same fashion,
majority of sample respondents receiving e-banking services for the purpose of balance inquiry,
fund transfer between accounts and viewing account statements with their contribution rating
scale of 86 percent, 51 percent and 69 percent respectively and statistically with no significance
difference association among sample populations at 5 percent confidence level. However, with
regard to the fact in sending and receiving money through e-banking, from the total sample size,
61 percent of customers were not able to use in sending and receiving money through e-banking
services from customer to customer, of this 23 percent, 21 percent and 17 percent were from
Maraki, Arada and Piyasa CBE branches respectively.
29
Customers also highly not adopting the use of e-banking technology in changing mobile pin code
security their account and making foreign currency exchange activities in the fact as the sample
survey result indicated 78 percent and 85 percent of respondents were refused, with relatively
equal distributions among them indicating no statistical difference at 5% confidence level.
Surprisingly, the sample survey results showed that customers with different magnitude of
services adopting e-banking technologies in mobile top up, requesting for stop payment on
checks and making purchase payments with their chi-square statistical significance difference at
a priori @ level. 59 percent of sample customers refusing mobile top up e-banking users, of this
at Maraki branch of CBE was the maximum (26%) whereas at Piyasa was the minimum (14%).
Table 4.4 Chi-square analyses of respondents whether getting E-banking service or not
Study Sites p-
Items Total X2
Responses PIYASA ARADA MARAKI value
Money withdrawal Yes 32.0% 32.0% 32.0% 96.0%
.475a .788
No 2.0% 1.0% 1.0% 4.0%
Yes 29.0% 30.0% 27.0% 86.0%
Balance inquiry 1.154a 0.562
No 5.0% 3.0% 6.0% 14.0%
Fund transfer between Yes 18.0% 14.0% 19.0% 51.0%
1.593a .451
accounts No 16.0% 19.0% 14.0% 49.0%
Viewing account statements Yes 25.0% 22.0% 22.0% 69.0%
.494a .781
No 9.0% 11.0% 11.0% 31.0%
Yes 17.0% 12.0% 10.0% 39.0%
Sending and receiving money 2.875a .238
No 17.0% 21.0% 23.0% 61.0%
Mobile top up Yes 20.0% 14.0% 7.0% 41.0%
9.834a 0.007*
No 14.0% 19.0% 26.0% 59.0%
Yes 6.0% 9.0% 7.0% 22.0%
To change pin code .922a .631
No 28.0% 24.0% 26.0% 78.0%
Requesting for stop payment Yes 11.0% 5.0% 1.0% 17.0%
10.324a .006*
on checks No 23.0% 28.0% 32.0% 83.0%
Making purchase payments Yes 19.0% 7.0% 6.0% 32.0%
13.573a .001*
No 15.0% 26.0% 27.0% 68.0%
Making foreign currency Yes 7.0% 3.0% 5.0% 15.0%
1.737a .420
exchange No 27.0% 30.0% 28.0% 85.0%
30
In contrary, 41 percent of sample customers were adopted in mobile top up e-banking users with
20 percent of them shared to Piyasa and 14 percent and 7 percent belong to Arada and Maraki
branches respectively. 83 percent of sample e-banking customers were not adopted the activity of
requesting for stop payment on checks in e-banking services with 32 percent at Maraki and 23
percent at Piyasa branches of CBE. And in the same manner only 32 percent of sample
customers were accepted in using e-banking technology for the purpose of making purchase
payments.
4.3The Main Challenges for the Adoption and Growth of E-Banking
E-banking service adopting technology of customers is the second research question. What are
the main challenges that affect the adoption and growth of e-banking?
Multiple regression models were applied to identify determinant factors affecting e-banking
adopting technology of customers. As the major focus of this study aims to investigate the
practice, opportunities and challenges of e-banking services in CBE Gondar City Branches, as
they were using it so as to serve commerce in reliable to the people, considered as the dependent
variable of the model; while the variables were listed in table 4.7 are independent variables that
determine the dependent variable.
Before fitting the model, it was important to check whether there exists serious problem of
multi-co-linearity among the hypothesized explanatory variables. The values of Variance
Inflation Factor /VIF/ (i.e. 2.1) for each of the continuous variables were found to be less than
ten and hence, there was no a multi-co linearity problem among all the hypothesized continuous
variables included in the model.
Determining How Well the Model Fits
In addition, goodness of fit in multiple regression analysis is measured by count R2 which

indicates the number of sample observations correctly predicted by the model. The count R2 is
interpreted based on the principle that if the predicted probability of the event is less than 0.50,
the event will not occur, and if it is greater than 0.50, the event will occur (Maddala, 1981).
Hence, the model results showed that the multiple regression model correctly predicted, (R2 =
0.525), 52.5 of sample households.
31
In the other hand, the model summary table (table 4.5) provided the R, R2, adjusted R2 and the
standard error of the estimate, which can be used to determine how well the regression model
fits the data. The value of R (0.724) is the multiple correlation coefficients indicates that a good
level of prediction, which considered to be one of the measure of the quality of the prediction of
the total market performance for the sake of their production of the household (dependent
variable). The “R Square”, (R2), column explains the coefficient of the total determination of
the model, which is the proportion of variance in the dependent variable that can be explained
by the explanatory variables. Hence, the coefficient of determination 0.525 summarized that our
independent variables explained 52.5% of the variability of our dependent variable of the total
produce their service delivery. The Adjusted R-squared of 0.477 suggests that the independent
variables listed in table 4.7, fit to the model by approximately 47.7%.The P- value of 0.000
(Less than 0.05) implies that the model of customer adoption of e-banking technology in
relationship with CBE organization is significant at the 5 percent significance level.
Table.4.5. Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .724a .525 .477 .511

Significance at or < 0.05 Source: survey data, 2019
The F-ratio in the ANOVA table (Table 4.6), tests that the overall regression model is a good fit
for the data. The table shows that the independent variables statistically significant predict the
dependent variable, F (9, 90) = 11.033, p < 0.000 (that is the regression model is a good fit of the
data).
Table.4.6 ANOVA to test the model
ANOVA
Model Sum of Squares df Mean Square F Sig.
Regression 25.892 9 2.877 11.033 .000*
1 Residual 23.468 90 .261
Total 49.360 99
32
Among nine factors considered in the model, six were found to have a significant impact in
challenging the relationship between the customer e-banking activities and service delivery of
CBE in the study sites. These are high internet cost, frequent network/internet interruption,
frequent power interruption, lack of awareness about e-banking, inconvenient locations of
ATMS and POS and inaccessible ATM and POS, significant at or less than 5% probability level
(table 4.7).
Estimated Model Coefficients
As it was indicated in table 4.7, there is a significance difference association between the high
internet cost of the e-banking and the service CBE at 5 percent level of confidence, since the
significance value (-3.104) is less than that of the level of confidence (0.05), p (.003). Consider
the effect of the high internet cost of the e-banking, the standardized coefficient, is equal to -
.240, and means that for each one unit increase in internet cost of the e-banking, there is a
decrease on the service CBE by 24 percent. Hence the independent variable high internet cost of
the e-banking and CBE service quality was inversely proportional.
The determinants of frequent network/internet interruption were negatively and a significant

different association for the contribution of service delivery of CBE for e-banking customers at
5% probability level, or as p (0.000) < 0.05. The coefficient of the variable -.474 indicated that
an e-banking customer who had practices a one unit of frequent network/internet interruption
with a the bank service delivery was negatively correlated in a decreasing function and thereby
decreasing their e-banking customer relation activities on the service delivery of CBE rates by
47.4 percent extent. Herein, we can infer that a person who had frequent network/internet
interruption of e-banking has a probability bad relationship in the service getting from CBE.
33
Other things remain constant; the frequency power interruption is another strong factor positively
associated and significant with relationship of service delivery of CBE for e-banking customers
at a priori @ level. The positive effect of the frequency of power interruption might indicate in
the study areas, those sample populations with a one unit increase power interruption, there was
an increase service delivery of CBE by 24.3 percent for e-banking customers. Meaning that in
the study area power was not frequently switched off and interruption of e-banking service was
not expected.
Lack of awareness about e-banking of customers had some implications for service provider. In
advance, customer-related measures with regard to lack of awareness about e-banking should be
the primary objectives for a firm’s business strategy. In other words, customers with lack of
awareness about e-banking adversely effects on the CBE quality of service delivery.
Table 4.7 multiple regression model result for determinants of e-banking service
Coefficients
Unstandardized Standardized Collinearity
Coefficients Coefficients Statistics
Model t Sig.
B Std. Beta Tolerance VIF
Error
(Constant) 3.333 .437 7.632 .000
High internet cost -.121 .039 -.240 -3.104 .003* .886 1.129
Frequent network/internet interruption -.310 .056 -.474 -5.511 .000* .714 1.400
Frequent power interruption .104 .034 .243 3.074 .003* .845 1.184
lack of awareness about e-banking -.087 .034 -.196 -2.578 .012* .912 1.096
Inconvenient locations of ATMs and POS -.096 .043 -.187 -2.204 .030* .735 1.361
Inaccessible internet .060 .043 .115 1.400 .165 .783 1.278
Lack of ICT knowledge .044 .036 .094 1.218 .226 .881 1.135
Inaccessible ATM and POS .087 .040 .174 2.197 .031* .838 1.193
lacks of information security considered as a

barrier for the adoption e-banking -.062 .040 -.128 -1.581 .117 .808 1.237
34
Inconvenient locations of ATMs and POS to give service for e-banking adopters were negatively
and a significant different association for the service outcome effect of CBE at 5% probability
level, or as p (.03) < 0.05.The standardized coefficients of beta (B) value (-.18), described that a
one unite increased of inconvenient locations of ATMs and POS to the proxy of customer
decreased by 18 percent of expected service of the bank. This means locations of ATM and POS
should be in open visible and without the absences of any traffic that hinders the movement of
the customers to get the already technology. However in the opposite hand, the inaccessibility of
ATM and POS to utilize by the customers from place to place was a positive and a significant
different association to the effect of service delivery of the bank at a priori alpha level, if other
factors remain constant. A 17.4 percent delivery service outcome of CBE is increased due to the
causality of a one unit increased in the parameter of the inaccessible of ATM and POS.
A cross tabulation diagnosis analyses also presents the main challenges resisting the adoption
and growth of e-banking technology customers of CBE in the selected sample sites. As presented
the table 4.8 below, surprisingly the chi-square analyses output produced ten of from the given
instrument parameters were significantly different associations among the selected sample study
branches of CBE. 57 percent of customers were unable to withdraw large amount of money from
ATM as they strongly agree with 24 percent of them shared to Maraki, and 19 percent were to
Piyasa. However, high e-banking services' fees was not the problem as 47 and 40 percent of the
sample respondents strongly disagree and disagree respectively and statistically there was a
significance different association among sample study sites at 5% degree of confidence. The
security situation of the electronic banking sites were statistically significant different at 5%
degree of freedom because the response distribution vary as 19 percent of Piyasa sample sizes
was strongly agree while 18 percent of Arada and 8 percent of Maraki customers were disagree
and strongly disagree as the security situation of e-banking sites were not well to serve the
customers. Complexity of e-banking activity was not a problem for the e-banking users as 44 and
29 percent of respondents were strongly disagree and disagree respectively.
35
CBE had pitfalls on the activities of “slow banks response to correct erroneous transactions” and
“delay of the bank to maintain ATMs’ that are failed to provide services” as 68 percent and 50
percent of sample respondents were strongly agree and disagree respectively and the chi-square
analyze tests was statistically a significance difference among the sample respondents at 5%
confidence level, since their table value is less than the recommended alpha value. Therefore
CBE service providers of those sample study sites of staff members and the managers should be
seriously pay attention in response to correct erroneous transactions and quickly maintaining of
ATMs’ to boost the quality of services to satisfy the needs of the customer.
48 percent sample respondents were disagreed on the idea “fear to use e-banking technologies,
such as ATM, internet” while and 31 percent of them agreed on the issue. This slowdowns the
confidence level of e-banking users of the technology, 38 and 23 percent of sample e-banking
users were agreed and as strongly disagreed on the idea of “lack of confidence in security issue
on the use of e-banking technology” and the cross tab analyses signifies there was a significance
difference association among sample respondents.
Table 4.8 Chi-square analyses to describe challenges for the adoption of e-banking
Study Sites
Items Responses PIYAS ARAD MARA Total X2 p-value
A A KI
strongly disagree 0.0% 2.0% 0.0% 2.0%
Unable to withdraw large
Disagree 0.0% 4.0% 0.0% 4.0% 16.21
amount of money from 0.013
Agree 15.0% 13.0% 9.0% 37.0% 2a
ATM *
strongly agree 19.0% 14.0% 24.0% 57.0%
High e-banking services' Disagree 15.0% 13.0% 12.0% 40.0% 21.96 0.001
fees Agree 9.0% 0.0% 2.0% 11.0% 8a *
strongly agree 2.0% 0.0% 0.0% 2.0%
Disagree 7.0% 18.0% 10.0% 35.0%
Security 30.480a 0.000*
Agree 2.0% 3.0% 10.0% 15.0%
strongly agree 19.0% 3.0% 5.0% 27.0%
36
Disagree 9.0% 8.0% 12.0% 29.0% 14.98
Complexity 0.02*
Agree 1.0% 5.0% 10.0% 16.0% 9a
strongly agree 4.0% 3.0% 4.0% 11.0%
Slow banks response to
Disagree 0.0% 4.0% 0.0% 4.0%
correct erroneous 25.703a 0.000*
transactions Agree 12.0% 9.0% 3.0% 24.0%
strongly agree 22.0% 16.0% 30.0% 68.0%
Delay of the bank to Disagree 1.0% 0.0% 6.0% 7.0%
maintain ATMs’ that are
Neutral 7.0% 2.0% 0.0% 9.0% 25.813a 0.001*
failed to provide
service Agree 14.0% 21.0% 15.0% 50.0%
strongly agree 6.0% 10.0% 8.0% 24.0%
Lack of Confidence in Disagree 2.0% 3.0% 2.0% 7.0%
security issue on the use of Neutral 11.0% 9.0% 6.0% 26.0% 17.675a .024*
e-banking technology Agree 10.0% 16.0% 12.0% 38.0%
strongly agree 11.0% 5.0% 7.0% 23.0%
Fear to use e-banking Disagree 7.0% 22.0% 19.0% 48.0%
technologies ,such as ATM, 34.101a 0.000*
internet Agree 21.0% 6.0% 4.0% 31.0%
strongly agree 4.0% 0.0% 1.0% 5.0%
Using e- Banking requires a Disagree 0.0% 7.0% 3.0% 10.0%
25.414a 0.000*
lot of mental effort Agree 24.0% 8.0% 10.0% 42.0%
strongly agree 10.0% 16.0% 20.0% 46.0%
E- banking can be Disagree 8.0% 9.0% 4.0% 21.0%
frustrating users to make Neutral 0.0% 5.0% 5.0% 10.0% 50.462a 0.000*
decision to use Agree 4.0% 7.0% 7.0% 18.0%
strongly agree 1.0% 6.0% 17.0% 24.0%
37
Using e-Banking requires a lot of mental effort as 46 and 42 percent of respondents agreed and
strongly agreed respectively. Due to this, 24 of them strongly agreed on the idea “E- banking can
be frustrating users to make decision to use”, even if 27 of the others were well equipped. As a
result the bank should be providing some resistance technological packages to the customers so
as to run e-banking technologies effectively.
4.4 Opportunities for Adoption and Growth of E-Banking
The opportunities for the growth and adoption of e-banking customers were measured based on
the following eighteen (18) evaluation criteria’s, table 4.9. The cross tabulation diagnosis tool
likert scale indicated that the customers rate of response were not significantly different
association along with the eight evaluation criteria’s at a priority alpha level, since their
precisions value is greater than the critical value. 46 and 45 percent of customers opportunity
were strongly agreed and agreed’ on the idea of “I do get the service of electronic banking 24
hours per day and 7 days a week”, respectively. However, majority of the customers were
strongly disagreed (31%) and disagreed (59%) in the “electronic banking can do everything for
me as employees do”, even if 66percent and 28 percent of them were strongly agreed and agreed
respectively with regard to controlling of their bank account has improved after using electronic
banking.
Electronic banking had becoming better opportunities on the ideas of: minimize customer service
cost, opportunity of time saving and convenience, convenient, in terms of time saving,
convenient to use at any time and place, reduces physical presence of customer and convenient
life style to users as majority of their rating scale were rested on between agreed and strongly
agreed decisions. Of this relatively homogenous responses were tested and that the chi-square
test analysis indicated with no significance difference among the categorical sample study site
customers at a given confidence level.
38
In the other hand, based on the evaluation criteria’s, there was a significance difference
association between the sample e-banking user and the e-banking provider of CBE regarding
about the idea of “the opportunities for electronic banking service expansion in the city is high”,
at 5% confides interval, since the P (0.001) < @(0.05). From the total sample size, 44 percent
and 26 percent of sample populations were agreed and strongly agreed respectively, while 20
percent of them were neutral about the ideas; perhaps they might confuse about the standard
package criteria of the bank. Of course their expectation was at good opportunity in that
electronic banking is providing banking service satisfaction up to my expectation as 41 percent
and 34 percent of them were agreed and disagreed and significantly different at 5% degree of
freedom.
Regarding the saving status of their account was not a good opportunity since 59 percent (21%
for each Piyasa and Maraki) and 31percent of the sample members were disagreed and strongly
disagreed respectively, with respect to the idea “perceived usefulness from operational cost
saving”, due to low interest rate. However, it decreased the monetary transactional cost as 50
percent and 46 percent of the sample respondents strongly agreed and agreed respectively and
statistically a significance different association between the sample study site branches of CBE at
a priori alpha level, p (0.019) <@(0.05).
With regard to human resource requirement opportunities of e-banking, 71 percent sample

population strongly agreed and 25 percent agreed in the fact that e-banking reduces human
resource requirement. The chi square analysis revealed that there was a different statistical
association among the three sample sites at 5% degree of freedom. Furthermore the opportunity
of e-banking was a good position as 66 percent and 28 percent of sample population strongly
agreed and agreed as it facilitates quick response. Because, it enables users to accomplish
activities more quickly and easily in the fact that 59 percent and 32 percent of e-banking adopters
were recommended as strongly agreed and agreed respectively and the chi square diagnosis
revealed that there was statistically a significance difference association at 5% confidence level,
since p (0.029) < @(0.05%). However, in the activity of operating the e-banking was a safe
mode, that is why 46 percent of users were disagreed and 26 agreed and 15 strongly agreed and
13 strongly disagreed regarding about the idea of “easier way to operate banking transactions”,
39
which made statistically a significance difference association among sample e-banking users of
CBE, at a priori @ level, p (0.1%) < @ (5%).
Electronic banking minimizes the risk of carrying cash, became a familiar acceptance activity and
provides a good opportunity way as 70 percent of sample e-banking users strongly agreed; of this 28% at
Piyasa and 23 % at Maraki and 23 percent (10% at Maraki) agreed.
40
Table 4.9 Opportunities of e-banking
Study Sites
Items Responses Total X2 p-value
PIYASA ARADA MARAKI
The opportunities for strongly disagree 0.0% 2.0% 2.0% 4.0%
electronic banking Disagree 0.0% 3.0% 3.0% 6.0%
service expansion in Neutral 0.0% 7.0% 13.0% 20.0% 25.983a 0.001*
the city is high Agree 22.0% 12.0% 10.0% 44.0%
strongly agree 12.0% 9.0% 5.0% 26.0%
Electronic banking is Disagree 0.0% 4.0% 10.0% 14.0%
providing banking
Neutral 0.0% 2.0% 5.0% 7.0% 27.806a 0.001*
service satisfaction
up to my expectation Agree 15.0% 15.0% 11.0% 41.0%
strongly agree 19.0% 10.0% 5.0% 34.0%
Perceived usefulness Disagree 21.0% 17.0% 21.0% 59.0%
from operational cost Neutral 0.0% 4.0% 0.0% 4.0% 23.410a 0.003*
saving Agree 0.0% 5.0% 0.0% 5.0%
strongly agree 0.0% 1.0% 0.0% 1.0%
Minimize customer strongly disagree 3.0% 2.0% 0.0% 5.0%
service cost Disagree 0.0% 3.0% 0.0% 3.0%
Neutral 0.0% 3.0% 0.0% 3.0% 14.144a 0.07*
Agree 12.0% 16.0% 20.0% 48.0%
strongly agree 17.0% 11.0% 13.0% 41.0%
Decrease transactional Disagree 0.0% 0.0% 2.0% 2.0%
15.222a 0.019*
cost Agree 18.0% 10.0% 18.0% 46.0%
strongly agree 16.0% 23.0% 11.0% 50.0%
Reduces human strongly disagree 0.0% 2.0% 0.0% 2.0%
resource requirement Disagree 0.0% 2.0% 0.0% 2.0%
Agree 4.0% 11.0% 10.0% 25.0% 14.480a 0.025*
strongly agree 30.0% 18.0% 23.0% 71.0%
Facilitates quick Disagree 0.0% 0.0% 4.0% 4.0%
14.877a 0.021*
response Agree 13.0% 8.0% 7.0% 28.0%
strongly agree 21.0% 25.0% 20.0% 66.0%
Enables users to strongly disagree 0.0% 4.0% 1.0% 5.0%
accomplish activities Disagree 0.0% 2.0% 0.0% 2.0%
more quickly and easily Neutral 0.0% 0.0% 2.0% 2.0% 17.110a 0.029*
Agree 9.0% 13.0% 10.0% 32.0%
strongly agree 25.0% 14.0% 20.0% 59.0%
Easier way to operate Disagree 14.0% 22.0% 10.0% 46.0%
21.934a 0.001*
banking transactions Agree 9.0% 2.0% 15.0% 26.0%
strongly agree 6.0% 2.0% 7.0% 15.0%
Electronic banking strongly disagree 0.0% 4.0% 0.0% 4.0%
minimizes the risk of Disagree 0.0% 3.0% 0.0% 3.0%
carrying cash 16.916a 0.01*
Agree 6.0% 7.0% 10.0% 23.0%
strongly agree 28.0% 19.0% 23.0% 70.0%
41
CHAPTER FIVE
5. CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion
Electronic banking become a familiar banking system in monetary in and out flow in this
contemporary world. So, CBE has a big part in providing and growing up of e-banking system
for customers in a fashionable way. The current study provided evidence that, if planned
properly, e-banking can serve as an effective platform for customers current practice of e-
banking system and their challenges while they are using it and their opportunities that support to
use in future use. The present study shows,since 2013, the introduction of e-banking, on average,
sample customers of e-banking users had 4.81 years of experience of using e-banking.
There was a wide gap in using E-banking channel of CBE among the study sites and statistically
different at 5% confidence level.
Majority of sample population (96%) accepted that they were getting e-banking service for the
purpose of money withdrawal balance inquiry with equal distribution of customers (32%) in each
study sites of CBE. In the same fashion, majority of sample respondents receiving e-banking
services for the purpose of balance inquiry, fund transfer between accounts and viewing account
statements with their contribution rating scale of 86 percent, 51 percent and 69 percent
respectively and statistically with no significance difference association.
However, 61 percent of customers were not able to use in sending and receiving money through
e-banking services from customer to customer. Customers also highly not adopting the use of e-
banking technology in changing mobile pin code security their account and making foreign
currency exchange activities.
Surprisingly, customers with different magnitude of services adopting e-banking technologies in

mobile top up, requesting for stop payment on checks and making purchase payments with their
chi-square statistical significance difference at a priori @ level.
42
The main challenges affecting the adoption and growth of e-banking high internet cost, frequent
network/internet interruption, lack of awareness about e-banking, frequent power interruption,
inconvenient locations of ATMs and POS and inaccessible ATM and POS as the econometrics
model revealed in detail. A cross tabulation diagnosis analyses also presents the main challenges
resisting the adoption and growth of e-banking technology customers of CBE in the selected
sample sites.57 percent of customers were unable to withdraw large amount of money from
ATM as they strongly agree. However, high e-banking services' fees was not the problem as 47
and 40 percent of the sample respondents strongly disagree and disagree respectively and
statistically there was a significance different association among sample study sites at 5% degree
of confidence.
CBE had pitfalls on the activities of “slow banks response to correct erroneous transactions” and
“delay of the bank to maintain ATMs’ that are failed to provide services” as 68 percent and 50
percent of sample respondents were strongly agree and disagree respectively and the chi-square
analyze tests was statistically a significance difference among the sample respondents at 5%
confidence level. Therefore CBE service providers of those sample study sites of staff members
and the managers should be seriously pay attention in response to correct erroneous transactions
and quickly maintaining of ATMs’ to boost the quality of services to satisfy the needs of the
customer.
Using e-banking requires a lot of mental effort as 46 and 42 percent of respondents agreed and
strongly agreed respectively. Due to this, “e- banking can be frustrating users to make decision to
use”, even if 27 of the others were well equipped.
43
5.2 Recommendations
In order to make a safe mode electronic banking system and to satisfy the needs of customers’ in
for which it was intended by CBE, it requires intensive efforts from all the stakeholders in the
commerce process. In the light of this, the researchers offer the following recommendations:
It is important to understand customers’ skills in e-banking ability and awareness

creation should be made even if all of the customers were literate because of the
strange of the technology that sample users were lack of awareness about e-banking,
so limiting the participation of e-banking.
Frequent power interruption and frequent network/internet interruption were the
significance factors of the e-banking system and limiting it performance. Therefore,
the concerning bodies should be work hand in hand so as to provide a better e-
banking system thereby satisfying the customers motivation in a sustainable way.
Inconvenient locations of ATMs and POS and its inaccessible were not in the right
position as the sample population survey was unpleasant. Therefore, CBE as an
entity should be look in detail manner the locations of ATMs and POS and its
accessibility to enhance the participation of e-banking customers.
Slow banks response to correct erroneous transactions and delay of the bank to
maintain ATMs’ that are failed to provide service were the banks fragile activities.
Hence, it is better to way giving frequent feedbacks to invalid transactions and
quickly maintains the ATMs working effectiveness which create a harmonious
relationship between them.
The technology of emerging electronic banking should be appreciable that it creates
a better opportunity of time saving and convenience, convenient to use at any time
and place, facilitates quick response, enables users to accomplish activities more
quickly and easily, electronic banking minimizes the risk of carrying cash and etc, as
the result of this version indicated. Therefore, the sample study bank branches of
CBE in particular and CBE in other areas in general, should be efficiently and
effectively scaling up the financial package strategy by using this chance to improve
the service performance of it and to increase the involvement and willingness of e-
banking customers to do so.
44
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47
Annex I Questioners
Research Questionnaire
Dear Bank Customer:
I am a marketing management student in Gondar University as part of my studies; i am carrying

out a research on the Electronic Banking in Ethiopia - Practices, Opportunities and Challenges in
Gondar town. You have been selected to participate in this survey, and I would appreciate you
for answering all the questions. Please answer the following questions as candidly as you can!
Please be assured that the responses you give are for academic purposes only and don’t put your
name on the questionnaire. No individual answers will be analyzed. Rather, only composite
information will be used.
Thank you for your assistance in providing this valuable information.
BerhanuAyanaw
Section I. Demographic Information(Read each of them and put (√) a tick mark in each box.
1 Gender: MaleFemale
2. Marital status: SingleMarriedSeparated Divorced Widowed
2. Please indicate your education level: Illiterate 1-8 9-12Certificate
Diploma and TVET First Degree and above
3. Please indicate your Occupation. Unemployed Employee Retired
Business OwnerStudent
4. Monthly income birr, 3,000 or below3001-6,000 6,001--9,000
9,001 and Above
5. Age of household 18—30 31—45 45—60 61+
Section II. Current practice of e-banking
6 Please indicate which service you use from CBE.
Current account Saving accountLoan Others
48
7. E-banking channel you use ATM POSBoth ATM and POS
Mobile banking Internet banking Other
8. Years of getting E-banking service (experience) -----------------------------------
9. Are you using e-banking services for……………? /E-Banking Services utilizing by Users’/
(Adopters)
Items Yes No
Money withdrawal
Balance inquiry
Fund transfer between accounts
Viewing account statements
Sending and receiving money
Mobile top up
To change pin code
Requesting for stop payment on checks
Making purchase payments
Making foreign currency exchange
49
Section III Challenges or Barrier
1. Strongly Disagree, 2=Disagree, 3=Neutral, 4=Agree and 5=Strongly agree
Items 1 2 3 4 5
High internet cost
Frequent network/internet interruption
Frequent power interruption
lack of awareness about e-banking
Frequent breakdown of ATMs
Inconvenient locations of ATMs and POS
Inaccessible internet
High e-banking services' fees
Unable to withdraw large amount of money from ATM
Lack of ICT knowledge
Inaccessible ATM and POS
Security
Complexity
Slow banks response to correct erroneous transactions
Delay of the bank to maintain ATMs’ that are failed to provide service
Lack of Confidence in security issue on the use of e-banking technology.
Fear to use e-banking technologies ,such as ATM, internet banking, and mobile banking
Lack of trust on the use of e-banking system is a barrier.
lacks of information security considered as a barrier for the adoption e-banking
Using e- Banking requires a lot of mental effort
E- banking can be frustrating users to make decision to use
Source: Survey, 2018/19
50
Section IV. Opportunities of e-banking
1.Strongly Disagree, 2=Disagree, 3=Neutral, 4=Agree and 5=Strongly agree
Items 1 2 3 4 5
The opportunities for electronic banking service expansion in the city is high
Electronic banking is providing banking service satisfaction up to my expectation
I do get the service of electronic banking 24 hours per day and 7 days a week
Electronic banking can do everything for me as employees do
Controlling of my bank account has improved after using electronic banking
Perceived usefulness from operational cost saving
Minimize customer service cost
Decrease transactional cost
Reduces human resource requirement
Opportunity of Time saving and convenience
Convenient, in terms of time saving
Convenient to use at any time and place
Reduces physical presence of customer
Facilitates quick response
Enables users to accomplish activities more quickly and easily
Convenient life style to users
Easier way to operate banking transactions
Electronic banking minimizes the risk of carrying cash
Source: Survey, 2018/19
51
Appendix V. Regression Model Statistics
Model Summary
Model R R Square Adjusted R Std. Error of Change Statistics
Square the Estimate R Square F Change df1 df2 Sig. F
Change Change
a
1 .724 .525 .477 .511 .525 11.033 9 90 .000
a. Predictors: (Constant), lacks of information security considered as a barrier for the adoption e-banking , High internet cost ,
Inaccessible internet , Lack of ICT knowledge , lack of awareness about e-banking , Inaccessible ATM and POS , Frequent
power interruption , Inconvenient locations of ATMs and POS , Frequent network/internet interruption
ANOVAa
Model Sum of Squares df Mean F Sig.

Square
Regression 25.892 9 2.877 11.033 .000b

1 Residual 23.468 90 .261
Total 49.360 99
a. Dependent Variable: service
b. Predictors: (Constant), lacks of information security considered as a barrier for the adoption e-banking , High internet
cost , Inaccessible internet , Lack of ICT knowledge , lack of awareness about e-banking , Inaccessible ATM and POS ,
Frequent power interruption , Inconvenient locations of ATMs and POS , Frequent network/internet interruption
52
Opportunities E-banking
Coefficientsa
Model Unstandardi Standar t Sig. 95.0% Correlations Collinearity
zed dized Confidence Statistics
Coefficients Coeffici Interval for B
ents
B Std. Beta Low Upper Zer Parti Part Tole VIF
Error er Boun o- al ranc
Boun d orde e
d r
3.33 7.63 2.46
(Constant) .437 .000 4.201
3 2 6
-
- -
High internet cost .039 -.240 3.10 .003 -.198 -.043 -.311 -.226 .886 1.129
.121 .254
4
-
Frequent network/internet - -
.056 -.474 5.51 .000 -.422 -.198 -.502 -.401 .714 1.400
interruption .310 .510
1
3.07
Frequent power interruption .104 .034 .243 .003 .037 .171 .257 .308 .223 .845 1.184
4
-
lack of awareness about e- - -
.034 -.196 2.57 .012 -.155 -.020 -.262 -.187 .912 1.096
banking .087 .151
8
1
-
Inconvenient locations of - -
.043 -.187 2.20 .030 -.182 -.009 -.226 -.160 .735 1.361
ATMs and POS .096 .288
4
1.40
Inaccessible internet .060 .043 .115 .165 -.025 .144 .260 .146 .102 .783 1.278
0
1.21
Lack of ICT knowledge .044 .036 .094 .226 -.028 .115 .246 .127 .089 .881 1.135
8
2.19
Inaccessible ATM and POS .087 .040 .174 .031 .008 .166 .061 .226 .160 .838 1.193
7
lacks of information
-
security considered as a - -
.040 -.128 1.58 .117 -.141 .016 -.164 -.115 .808 1.237
barrier for the adoption e- .062 .094
1
banking
a. Dependent Variable: service
53
Study Sites
Items Responses PIYAS ARAD MARAK Total X2 p-value
A A I
The opportunities for strongly disagree 0.0% 2.0% 2.0% 4.0%
electronic banking Disagree 0.0% 3.0% 3.0% 6.0%
0.001
service expansion in Neutral 0.0% 7.0% 13.0% 20.0% 25.983a
*
the city is high Agree 22.0% 12.0% 10.0% 44.0%
strongly agree 12.0% 9.0% 5.0% 26.0%
Electronic banking is strongly disagree 0.0% 2.0% 2.0% 4.0%
providing banking Disagree 0.0% 4.0% 10.0% 14.0%
0.001
service satisfaction Neutral 0.0% 2.0% 5.0% 7.0% 27.806a
*
up to my Agree 15.0% 15.0% 11.0% 41.0%
expectation strongly agree 19.0% 10.0% 5.0% 34.0%
I do get the service of strongly disagree 2.0% 1.0% 0.0% 3.0%
electronic banking 24 Disagree 2.0% 2.0% 0.0% 4.0%
hours per day Neutral 0.0% 2.0% 0.0% 2.0% 9.749a .283
and 7 days a week Agree 17.0% 14.0% 14.0% 45.0%
strongly agree 13.0% 14.0% 19.0% 46.0%
can do everything for Disagree 15.0% 21.0% 23.0% 59.0%
10.927 0.091
me as employees do Agree 4.0% 4.0% 0.0% 8.0%
strongly agree 2.0% 0.0% 0.0% 2.0%
Controlling of my strongly disagree 0.0% 2.0% 1.0% 3.0%
bank account has Disagree 0.0% 2.0% 1.0% 3.0%
improved after using Agree 13.0% 7.0% 8.0% 28.0%
6.246a .396
electronic
banking strongly agree 21.0% 22.0% 23.0% 66.0%

Perceived usefulness Disagree 21.0% 17.0% 21.0% 59.0%
from operational cost Neutral 0.0% 4.0% 0.0% 4.0% 23.410a 0.003*
saving Agree 0.0% 5.0% 0.0% 5.0%
strongly agree 0.0% 1.0% 0.0% 1.0%
Minimize customer strongly disagree 3.0% 2.0% 0.0% 5.0%
service cost Disagree 0.0% 3.0% 0.0% 3.0%
Neutral 0.0% 3.0% 0.0% 3.0% 14.144a 0.07*
Agree 12.0% 16.0% 20.0% 48.0%
strongly agree 17.0% 11.0% 13.0% 41.0%
Decrease
Disagree 0.0% 0.0% 2.0% 2.0% 15.222a 0.019*
transactional cost
Agree 18.0% 10.0% 18.0% 46.0%
54
strongly agree 16.0% 23.0% 11.0% 50.0%
Reduces human strongly disagree 0.0% 2.0% 0.0% 2.0%
resource requirement Disagree 0.0% 2.0% 0.0% 2.0%
14.480a 0.025*
Agree 4.0% 11.0% 10.0% 25.0%
strongly agree 30.0% 18.0% 23.0% 71.0%
Opportunity of Time strongly disagree 1.0% 0.0% 0.0% 1.0%
Disagree 2.0% 0.0% 0.0% 2.0%
saving and 8.025a 0.236
Agree 13.0% 9.0% 9.0% 31.0%
convenience strongly agree 18.0% 24.0% 24.0% 66.0%
Convenient, in terms strongly disagree - - - -
of time saving Disagree - - - --
.412a 0.814
Agree 7.0% 9.0% 8.0% 24.0%
strongly agree 27.0% 24.0% 25.0% 76.0%
Convenient to use at Disagree 0.0% 2.0% 0.0% 2.0%
9.973a .126
any time and place Agree 8.0% 11.0% 15.0% 34.0%
strongly agree 26.0% 19.0% 18.0% 63.0%
Reduces physical strongly disagree - - - -
presence of customer Disagree 0.0% 1.0% 2.0% 3.0%
6.501a .165
Agree 12.0% 15.0% 19.0% 46.0%
strongly agree 22.0% 17.0% 12.0% 51.0%
Facilitates quick Disagree 0.0% 0.0% 4.0% 4.0% 0.021
14.877a
response Agree 13.0% 8.0% 7.0% 28.0% *
strongly agree 21.0% 25.0% 20.0% 66.0%
Enables users to strongly disagree 0.0% 4.0% 1.0% 5.0%
accomplish activities Disagree 0.0% 2.0% 0.0% 2.0%
more quickly and Neutral 0.0% 0.0% 2.0% 2.0% 17.110a 0.029*
easily Agree 9.0% 13.0% 10.0% 32.0%
strongly agree 25.0% 14.0% 20.0% 59.0%
strongly disagree - - - -
Convenient life style
Disagree 0.0% 2.0% 0.0% 2.0%
to users 4.575a .334
Agree 15.0% 14.0% 17.0% 46.0%
strongly agree 19.0% 17.0% 16.0% 52.0%
Easier way to operate Disagree 14.0% 22.0% 10.0% 46.0%
21.934a 0.001*
banking transactions Agree 9.0% 2.0% 15.0% 26.0%
strongly agree 6.0% 2.0% 7.0% 15.0%
minimizes the risk of Disagree 0.0% 3.0% 0.0% 3.0%
16.916a 0.01*
carrying cash Agree 6.0% 7.0% 10.0% 23.0%
strongly agree 28.0% 19.0% 23.0% 70.0%
55

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ELECTRONIC BANKING PRACTICES, CHALLENGES AND OPPORTUNITIES:

THE CASE OF CBE GONDAR CITY BRANCHES, NORTHWEST ETHIOPIA

A THESIS SUBMITTED TO DEPARTMENT OF MARKETING MANAGEMENT FOR THE

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF

ART IN MARKETING MANAGEMENT

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MARKETING MANAGEMENT

BY: BERHANU AYANAW

PRINCIPAL ADVISOR: WASSIE GETAHUN (PhD)

Co ADVISOR: MUHAMMED SEID (MBA)

DEPARTMENT OF MARKETING MANAGEMENT

Ayanaw by entitled “ELECTRONIC BANKING PRACTICES,CHALLENGES AND

OPPORTUNITIES:THE CASE OF CBE GONDAR CITY BRANCHES” in partial

Approved by Board of Examiners

External Examiner________________________ Signature __________Date__________

I declare that this thesis paper entitled “ELECTRONIC BANKING PRACTICES,

CHALLENGES AND OPPORTUNITIES: THE CASE OF CBE GONDAR CITY

have been indicated and acknowledged by means of complete references.

PRACTICES, CHALLENGES AND OPPORTUNITIES: THE CASE OF CBE GONDAR

Wassie Getahun (PhD) ____________________ _____________________________

Name of Principal advisor Signature Date

Mr. Muhammed Seid (MBA) ________________ ___________________________

Name of Co. advisor Signature Date

suggestions from the very inception of the proposal till end.

Furthermore, I want acknowledge University of Gondar, college of Business and economics

4.2.1 Current Practice of E-Banking……………...……………………………………….................28

4.4 Opportunities for Adoption and Growth of E-Banking………………………………….................38

5. Chapter Five: Conclusion and Recommendation………………………………………………………42

Table 1 Demographic characteristic of respondents and socio-economic characteristics……...................27

Table 3 current practice of customers’ e-banking…………………………………………………………………………………..29

Table 8 Chi-square analyses to describe challenges for the adoption of e-banking……..............36

ATM: Automatic Teller Machine

CBE: Commercial Bank of Ethiopia

E-Banking: Electronic Banking

FCB: Foreign Commercial Banks

ICT: Information Communication Technology

PCB: Private Commercial Bank

PIN: Personal Information Number

SPSS: Statistical Package for Social Sciences

VIF: Variance Inflation Factor

The banking industry is being reshaped by globalization, competition and innovation

1.1 Background of the Study

1.2 Statement of the Problem

1.3.1 General Objective

What looks the present practice of electronic banking?

1.7 Scope of the Study

1.8 Organization of the Study

2.1The Concept of E-Banking

E-finance (providing E-money (stored

E-banking (providing other financial

electronic banking and its independent variables.

2.2.1 Types of E-Banking

2.2.1.1 Internet Banking

2.2.1.2 Mobile banking

2.2.1.3 Automatic Teller Machine (ATM)

2.2.3 E- Banking Practice in the Ethiopian Commercial Banks

c) Interoperability: Development should be based on standards and open technologies that

2.3 Empirical Review

2.3.1 E-Banking Development in China

2.3.2 Present status of e-banking in Bangladesh

International standard online banking facilities were expanding in Bangladesh. At present, 29

2.3.3 E-Banking in Sudan

2.4 Challenges and opportunities of E-Banking

3.1 Research Design

External Examiner____________ Signature Date

Wassie Getahun (PhD) _________

Mr. Muhammed Seid (MBA) ___________