RIFT VALLEY UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT
ASSESSMENT ON THE EFFECT OF CORE BANKING ON CUSTOMER
SATISFACTION: A CASE OF COMMERCIAL BANK OF ETHIOPIA
KOMTO BRANCH

MBA. THESIS

MEGERSA ALEMAYEHU
ADVISOR: DEREJE NEGASA (ASSISTANT PROFESSOR)

AUGUST, 2021
NEKEMTE, ETHIOPIA
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 RIFT VALEEY UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTEMENT OF MANAGEMENT

THE EFFECT OF CORE BANKING ON CUSTOMER

SATISFACTION: ACASESTUDYOFCOMMERCIAL BANK OF ETHIOPIA

KOMTO BRANCH

A THESIS SUBMITTED TOTHE DEPARTMENT OF MANAGEMENT IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

MEGERSA ALEMAYEHU

ADVISOR: DEREJE NEGASA (ASSISTANT PROFESSOR)

AUGUST, 2021
NEKEMTE, ETHIOPIA

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 APPROVAL SHEET

RIFT VALLEY UNIVERSITY

The effect of core banking on customer satisfaction: The case of Commercial bank
of Ethiopia Komto branch

A thesis submitted to the school of graduate studies, Rift valleyUniversity, College of Business
and Economics, Department of management for Partial Fulfillment of the Requirements for the
Masters of Art Degree in MBA (Masters of Business Administration)

Researcher: MegersaAlemayehu__________________________

Advisor: Assistant professor ______________________

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 RIFT VALEEY UNIVERSITY

SCHOOL OF GRADUATE STUDIES

Board of Examiners Approval sheet
As thesis research advisors, we hereby certify that we have read and evaluated this thesis
prepared under our guidance, by Megersa Alemayehu entitled “Assessment of the effect of core
banking on customer satisfaction; the case of Commercial Bank of Ethiopia komto branch.

We recommend that it be submitted as fulfilling the thesis requirement.

Board of Examiners
As member of the board of Examiners of the final M.A. Open Defense Examination, we certify
that we have read and evaluated the thesis prepared by MegersaAlemayehu examined the
candidate. We recommended that the thesis be accepted as fulfilling the thesis requirement for
the Degree of Master of Business Administration

______________ _____________ ______________

Chairperson Signature Date

______________ _____________ ______________

Internal Examiner Signature Date

_____________ __________ _____________

External ExaminerSignatureDate

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 ACKNOWLEDGMENT
I would like to forward my gratitude to my advisor DerejeNegasa Assistant professor( PhD

candidate)for his wholehearted exertion in bringing this thesis to reality. My appreciation also
goes to my lovely wife Shume Gudeta that she enforced me to learn this MBA and helped me for
any difficulties faced me.In addition my appreciation continued to staffs and customers of
Commercial Bank Ethiopia Komto branch for their valuable provision of the necessary data and
some comments. My thanks also belong to those who provided me the necessary materials for
the accomplishment of the thesis and who commented on my study and provided their assistance
in the editorial work.

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 Table of content
Contents page number
ACKNOWLEDGMENT........................................................................................iv
LIST OF TABLES...............................................................................................viii
LIST OF FIGURES.............................................................................................viii
Acronyms................................................................................................................ix
Abstract.....................................................................................................................x
CHAPTER ONE......................................................................................................1
INTRODUCTION...................................................................................................1
1.1 Background of the study..............................................................................................................1

`1.2. Statement of the problem...............................................................................3

1.3 Research question..............................................................................................................................4
1.4 Objectives of the study......................................................................................................................4
1.4.1. General objective.......................................................................................................................4
1.4.2. Specific objectives.....................................................................................................................4
4. Toassess the effect of Point of sale service on customer satisfaction...................................................5
1.5. Scope of the study.............................................................................................................................5
1.7 Organizationof the Study...................................................................................................................6

CHAPTER TWO.....................................................................................................7
LITERATURE REVIEW.......................................................................................7
2.1 Introduction........................................................................................................7
2.2. Theoretical Review...........................................................................................................................7
2.2.2. Meaning of core banking...........................................................................................................9
2.2.3. Core banking solution................................................................................................................9
2.2.4. History of core banking system in the world............................................................................11
2.3. Benefits of Core Banking...............................................................................................................12
2.3.1. Benefits to the bank.....................................................................................................................12
2.3.2. Benefits to Customers..............................................................................................................13
2.4. Threats and Risks of Core Banking................................................................................................13
2.5 Various core Banking Services........................................................................................................14

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 2.6. MeasuringCustomer Satisfaction....................................................................................................15
2.7. Empirical literature review.............................................................................................................17
2.7.1. International experience...........................................................................................................17
2.7.2. Ethiopia’s Experience..............................................................................................................19
2.8. Critical review and gap in the literature..........................................................................................19
2.9. Conceptual Framework...................................................................................................................21

CHAPTER THREE...............................................................................................22
RESEARCH METHODOLOGY.........................................................................22
3. Introduction.......................................................................................................................................22
3.1. Research design..............................................................................................................................22
3.2. Types of data..................................................................................................................................22

A. Primary data.....................................................................................................22
B. Secondary data..................................................................................................22
3.3. Study Areas.....................................................................................................23
3.4. Population of the study...................................................................................................................23
3.5sampling techniques.........................................................................................................................23
3.7Sample Size......................................................................................................................................23
3.8. Method of data collection...............................................................................................................24
3.9. Questionnaire..................................................................................................................................24
3.10Method of Data Analysis................................................................................................................24

CHAPTER FOUR.................................................................................................26
DATA PRESENTATION, ANALYSIS AND INTERPRETATION................26
4.1. Introduction....................................................................................................................................26
4.2 Customers Demographic presentation.............................................................................................27

4.3.1 Automated Teller Machines (ATM)...........................................................30

4.3.2 Mobile banking.............................................................................................31
4.3.3 Point of sale (POS) machine........................................................................32
4.4. Correlation analysis........................................................................................36
4.5: Multiple regression analysis..........................................................................37
4.5.1.1 Linearity test..............................................................................................37
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4.5.1.2 Normality test.............................................................................................38
4.5.1.3 Multi co linearity test................................................................................38
CHAPTER FIVE...................................................................................................43
SUMMARY, RECOMMENDATION AND CONCLUSION...........................43
5.1SUMMARY OF FINDING..............................................................................................................43
5.2RECOMMENDATION....................................................................................................................45
5.3 Suggestions for further research......................................................................................................46

APPENDEX...........................................................................................................54

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LIST OF TABLES
Table 2.1: Factors affecting customer satisfaction……………………………...……………….14
Table 4.1: Rate response by Respondents ………………………………….…………………....25
Table 4.2: Gender of respondents by customer…………………………….……………………26
Table 4.3: Age respondents by customer………………...………………………………………26
Table 4.4: Education level of respondents..............................................................................…...27
Table 4.5: Occupation of respondents....................................................................................…...27
Table 4.6: Marital status of respondents………...……………………………….………………28
Table 4.7: Frequency usage of technology respondents…………………………….…………...28
Table 4.8: Descriptive statistics for Automed teller machine…………..……………..…………29
Table 4.9: Descriptive statistics for Mobile banking…………..……….……………….……….30
Table 4.10: Descriptive statistics for POS machine…….……..………………..…………..……31
Table 4.11: Descriptive statistics for Internet banking……...……………...………….………...32
Table 4.12: Descriptive statistics for customer satisfaction………………..………..……….…..34
Table 4.13: Correlation of dependent and independent variables………………..………………36
Table 4.14: Linearity test………………………………………………………………………...37
Table 4.15: Normality test………………………………..………………………………..…….37
Table 4.16: Correlation table to test multicolinearity………..……………..……………..….…38
Table 4.17: Regression model summary …………...……………………………………………39
Table 4.18: Analysis of variance (ANOVA)……….………………………….…………..…….40
Table 4.19: Regression Coefficient………………………………………………………………41

LIST OF FIGURES
Figure 1. Conceptual frame work………………………………………

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Acronyms
CBE: Commercial Bank of Ethiopia

CSQ: Customer Satisfaction Questionnaire

SPSS: Statistical Package for Social Science
ICT: Information Communication Technology
ATM: Automated Teller Machine
MB: Mobile banking
POS: Point of sale
IB: Internet banking
IT: Information Communication
CBS: Core Banking Service
ERP; Enterprise resource programs
MIS; Management information system
T24 - Core Banking System
MBA-Masters of Business Administration
CORE-Centralized Online Real-time Exchange
SOA-Service-oriented-architecture
IDT- Innovation Diffusion Theory
US-united state
SMS-Short message service

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 Abstract
Customer satisfaction is essential for the success of service firms like banks. Thus, the issue of
enhancing the level of customer satisfaction has become the prime focus of service giving firms,
for this technology like: ATM, POS, Mobile banking and internet banking plays a great role. The
purpose of this study was to

assess the effect of core banking on customer satisfaction the case of commercial bank of Ethiopia
Komto branch.. The study was conducted by quantitative method of research design. The Population
of the study was all customers of commercial bank of Ethiopia Komto branch. The total number of
customers of commercial bank of Ethiopia Komto branch at the time was 10,000. Simple random
sampling was used to select representative sample sizefrom list of all customers. The representative
sample size for 10,000 customers was calculated using formula for sample size determination for finite
population and become equal to 385 customers. Required data wascollectedfrom both primary and
secondary sources of data .The primary data was collected from selected customers by survey
questionnaire and the secondary data were collected from banks registration book and
websites.Frequency tables were used for Descriptive data analysis where as the statistical data was
analyzed by correlation and multiple linear regression analysis. Based on the data analysis the
researcher was revealed the following findings. The main finding indicated that Automated Teller
Machine was one of the factors that have high effect on customer. Improving the Automated Teller
Machine by 100%; increase the customer satisfaction by 65%. The second independent variable Mobile
banking which improving the services provided by mobile banking by 100% increase customer
satisfaction by 12.8%. The third independent variable was Improving Internet banking by 90%; increase
customer satisfaction by 6.4%. The fourth independent variable of this thesis was Point of sale which has
no significant evidence that it has no effect on customer satisfaction. The recommendations were
forwarded to the bank managers and concerned bodies to increase and continue which have positive
effect for customer satisfaction and take corrective action for unsatisfactory responses based on findings
and to make strong relationship with the technology to create sustainable business

Key words; Customer, satisfaction, Core banking, Mobile banking, Automated teller machine,
Point of sale machine, Internet banking

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 CHAPTER ONE
INTRODUCTION
This chapter mainly deals with background of the study, statement of the, problem, research
question, objective of the study that contain general and specific objectives, scope of the study
and organization of the study

1.1 Background of the study

Banks play an important and active role in the financial and economic development of a country
(Malhotra, N. & Mukherjee,, 2004). An effective banking system greatly influences the growth
of a country in various sectors of the economy (Malhotra, N. & Mukherjee,, 2004). Practitioners
in the banking industry face a large number of complex challenges in the global marketplace. It
is crucial for banks to better understand changing customer needs and adopt the latest
information technology system in order to compete more effectively with global organizations.

In recent years, it is essential for banks to establish a sturdy and solid loyal customer base to weather
tougher economies and more intense competition. Now a day, to be able to survive the prevailing intense
competition in the banking industry, what most of the bank attempt to do is to create convenient banking
activities for their customers. Such activities include for customer; provide the Automated Teller Machine
(ATM), Money Transfers Banking via Mobile Phone, to use POS machine Internet banking, etc.to control
and do their business(Endalkachew Abebe[Book]. - 2013.

In addition new age business environment is very dynamic and undergoes rapid changes as
resultof technological innovation, increased awareness and demands from customers.
Businessorganizations, especially the banking industry of the 21 stcentury operates in a
complexand competitive environment characterized by these changing conditions and
highlyunpredictable economic climate. Information and Communication Technology (ICT) is
atthe center of this global change(Jensen, 2009).

A strategic use of ICT helps an organization gain a competitive advantage through its
contribution to the strategic goals of an organization and/or its ability to significantly increase
customer satisfaction and productivity. Us a result of this many banks in different countries
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changes their operation to the uses of advanced technologies that will enable them to compete
with the growing tastes and perceptions of the customers (http://ethiopiaembassy.eu/cbes-core-
banking-projec). Banking system occupies an important place in a nation’s economy. It plays a
vital role in accelerating the rate of economic growth by mobilizing the existing or potential
savings and by making the disbursement of credit to commercial undertaking and priority areas.
Banking industry is marked by aggressive competition and ever-changing customer demands. As
a result, banks need to adopt themselves to the changing environment. It is essential for the banks
to adopt appropriate various strategies to merge as the preferred bank of customers. Timely
introduction of various products to suit the diverse needs of customers is a functional necessity to
the banks. Technology gives the cutting edge to come out with customer centric products and
delivery channels in time (Biju K.Devandhiran, D. & Sreehari, R., 2012).

In Ethiopia, the use of core banking IT System in the various banks is drastically changing the
way banking activities are being organized. Almost all banks in Ethiopia are in the process of
transforming their legacy banking systems to modern banking systems in which they can offer
efficient and globally competent services to their customers and get customers satisfaction in
return. Moreover, the National bank of Ethiopia has required all banks to implement core
banking solutions to facilitate the National payment system in which payments and settlements
between two financial institutions will be effective(Guide, 2011).The general belief in the
business organizations is that investment on Information Technology will add value to the
firm(Adewoye, 2007). But every business decision has to be made by considering its impact on
the goal of the firm in this regard the investment on information technology has to be seen in
terms of its likely contribution to the goal of the firm.(Jensen, 2009). A company may pursue
different goal, but for a business whose main objective is generating profit from its operations
maximizing the value of the firm is by far an appropriate goal to pursue and several studies have
suggested that IT investments carry significant long term business which implications and
financial measures clear advantages over measurementof financial evaluation systems in
accordance with accounting system. In this regard it is imperative to evaluate what significant
effect core banking system has on customer satisfaction of commercial bank of EthiopianKomto
branch?

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`1.2. Statement of the problem
According to Gardachew (2010), the banking industry in Ethiopia is underdeveloped and therefore,
there is an all immediate need to embark on capacity building arrangements and modernize the
banking system by employing the state of the art of technology being used anywhere in the world.
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.

The financial service industry is undergoing significant transformations. Mergers, consolidation,

expansion, shifting customer preferences, emerging nontraditional competition and a
continuously evolving complex regulatory environment are just some of the issues on the minds
of bankers worldwide(Yonatan, 2016). With change coming this rapidly, banks must quickly
accept the new world order and accelerate growth to stay a step ahead of the competition. This
requires shedding away the complexity which has grown significantly across business functions
and operations .The increasing customer expectations pressure to control cost of business
operation, infrastructural deficiency such as electric power supply and communication link need to
exercise sound practices are some control on business and regulatory practice are some of the
main challenging being faced by bank industry today.

The satisfaction of the customer especially in the service business had a great importance
because the satisfaction of the customer directly linked with the customer loyalty or the
repetition of using the services the modern banking has provided. The capacity to fulfill
customer expectation is needed to bring strong loyalty to the service of banks. Therefore it is
mandatory to understand and realize the customers need for measuring the level of customer
satisfaction (Amudha, 2012) . Core banking is one of the modern technology in which banks use
it in order to provide better services and solutions to the demanding customers by maintaining
the competitive advantage through the degree of customer satisfaction in this dynamic market
arena. The competition in banking sector become stiff and reshaped due to the introduction of
ATM, POS, Internet banking and mobile banking which are the major milestones of electronic
banking Wolde,J (2013). It is believed that by providing core banking system service it is
possible to reduce the number of customers that visit bank branches every day and maximize

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customer satisfaction as well. Thus it is important to check whether the customers are satisfied
with the provision of core banking service or not.

Even though many studies have been conducted on effect of ICT on customer satisfaction but
limited studies are available in Ethiopia that investigate the effect of core banking information
technology system on customer satisfaction of commercial banks in Ethiopian. Cohen
A(2013)Studied on effect of core banking on bank performance. Hence, more studies are still
required to understand the relevance of core banking systems on customer satisfaction in
Ethiopia.
Generally it is imperative to evaluate what significant benefit core banking system has conferred
to the bank and leaving the question what significant investment in core banking information
technology system on customer satisfaction? Therefore the researcher investigated the effect of
core banking system on customer satisfaction of Commercial Bank of EthiopiaKomto branch.

1.3 Research question

The study answers the following questions:
1. To identify the effectofinternet banking practice on customer satisfaction of CBE Komto
branch
2. To examine the effect ofATM practice on customerssatisfaction of CBE Komto branch
3. Does Mobile banking have any effect on customer satisfaction on CBE Komto branch?
4. Does POS machine affect the customer satisfaction on CBE Komto branch?

1.4 Objectives of the study

1.4.1. General objective
The general objective of this research project was assessed the effect of core banking on
Customer Satisfaction in Commercial Bank of Ethiopia KomtoBranch.

1.4.2. Specific objectives

The specific objectives of core banking at CBE komto branch on customer satisfaction are the
following:
1. To assess the effect of internet banking on customer satisfaction.

2. To determine the effect of automated teller machines on customer satisfaction

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3. To evaluate the effect of mobile banking on customer satisfaction

4. Toassess the effect of Point of sale service on customer satisfaction

1.4.3 Hypothesis
Ho Internet banking has no effect on customer satisfaction
H1 Internet banking has effect on customer satisfaction
Ho ATM has no effect on customer satisfaction
H1 ATM machine has effect on customer satisfaction
Ho Mobile banking has no effect on customer satisfaction
H1 Mobile banking has effect on customer satisfaction
Ho POS machine has no effect on customer satisfaction
H1 POS machine has effect on customer satisfaction

1.5. Scope of the study

This study was undertaken to evaluate effect of core banking on customer satisfactionon CBE
Komto branch. Therefore it was delimited to the changes that come after the introduction of core
banking in the bank. Moreover, the project focused area was onlyCBEKomto branch; the result
was not extended to other branches of CBE
1.6Limitation of the study
According to Best and Khan (2013)) limitations are those conditions beyond the control of the
researcher that will place restrictions on the conclusions of the study and their application to
other situations.

The major limitations of the study at the time to found latest literature review were security
problem, network problem and internet access problem.

Few respondents were not able to return a questionnaire in due time and it was a difficult task to
wait until all return as intended. So it was due to this that 35 questionnaires were not collected
out of total questionnaires distributed.

The last limitation of this study is the lack of fund. The researcher as an individual student has to
manage his meager income in under taking this study. It is a known fact that there is lack of
financial support for research.

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1.7Organizationof the Study
The study is organized into five chapters. Chapter one consisted of the background of the study,
statement of the problem, research objectives, research questions, scope of the study. Chapter
Two looked at available literature done on effect of core banking on customer satisfaction and
evaluation systems by scholars who were study the subject in other monitoring and evaluation
contexts. The chapter provided a conceptual framework which outlines the relationship between
the dependent and independent variables identified in the subject of study. Chapter Three was
covered the research methodology of the study. The chapter describes the research design,types
of datapopulationof the study, sampling size, sampling techniques, sampling frame, and
studyarea,data collection, and finally data analysis. Chapter Four covers data presentation, data
analysis, data interpretation and discussion. Data from the field is presented intheform of tables.
Finally Chapter five was covered the study findings, conclusions and recommendations for
further studies.

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 CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
Like any business, banks often find it hard to keep up with change. First, they need the ability to
spot it. This means tracking countless variables. Then, they need to take the right action. This can
be especially tough in today’s banking world. Change is coming at banks from many directions
(Sauders.Lewis and Thournbill, 2011). And each change can trigger many more. Delayed or
inadequate responses often make it even harder to overcome threats and capture opportunity.
However, banks that reach this stage of core system transformation can start to dynamically
respond to change. They can also sharpen those responses, reducing labor and capital costs while
improving results. So this chapter mainly focus on theoretical review,benefits of core banking,
threats and risks of core banking, various core banking services, measuring customer
satisfaction, empirical literature review, critical review & gaps in the literature and conceptual
frame works

2.2. Theoretical Review

2.2.1 Innovation Diffusion Theory

This hypothesis created by Roger in (2013) discloses people's aim to embrace a technology as a
methodology to perform a customary action. The basic elements that focus the appropriation of
advancement at the general level are the accompanying: relative favorable position, similarity,
complexity, trial ability and perceptibility. It is concerned with the way in which another
innovative thought, antique or procedure, or another utilization of an old one, relocates from
creation to utilize. As per (IDT) hypothesis, mechanical development is imparted through
specific channels, after some time, among the individuals from a social framework. The stages
through which a mechanical advancement passes are: information (presentation to its presence,
and comprehension of its capacities); influence (the shaping of a good state of mind to it); choice
(duty to its selection); execution (putting it to utilize); and affirmation (support taking into
account positive results from it). Early users for the most part are all the more very educated
have higher economic wellbeing, are more open to both broad communications and interpersonal
channels of correspondence, and have more contact with change specialists. Broad

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communications channels are relatively more imperative at the information stage, while
interpersonal channels are relatively more essential at the influence stage. Development choices
may be discretionary (where the individual or organization has a genuine chance to receive or
reject the thought), aggregate (where a choice is come to by accord among the individuals from a
framework), or power based (where a choice is forced by someone else or organization which
has essential force, status or specialized ability). Vital qualities of a development include:
relative advantage (the extent to which it is seen to be superior to anything what it supersedes);
similarity (consistency with existing qualities, past encounters and needs); multifaceted nature
(trouble of comprehension and utilization); trial ability (the extent to which it can be tried
different things with on a constrained premise); observability (the perceivability of its outcomes).

Diverse adopter classifications are distinguished as: pioneers (venturesome); early adopters
(respectable); early dominant part (think); late lion's share (incredulous); slow pokes
(customary). Prior adopting individuals tend not to appear as something else in age, but rather to
have years of education, economic wellbeing and social versatility, be in larger organizations,
have prominent empathy, low dogmatism, a more noteworthy capacity to manage abstractions,
more noticeable rationality, prominent intelligence, a prominent capacity to adapt to uncertainty
and risk, higher goals, more contact with other individuals, more noteworthy presentation to both
broad communications and interpersonal correspondences diverts and participate in more
dynamic data looking for. Imperative parts in the development procedure include: opinion
leaders (who have generally visit casual effect over the conduct of others); change operators
(who emphatically effect advancement choices, by intervening between the change organization
and the applicable social framework); change associates (who supplement the change specialists,
by having more concentrated contact with customers, and who have less skill believability yet all
the more accurately or reliability validity). The change operators capacities are: to build up a
requirement for change with respect to the customer; to set up a data trade relationship; to
analyze the customer issues; to make purpose to change in the customer; to make an
interpretation of this expectation enthusiastically; to balance out reception and avoid
discontinuance; and to move the customer from dependence on the change specialists to
confidence.(Adjei, 2013)

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2.2.2. Meaning of core banking
Core means Basic hence the basic services provided by the inter-networked branches of bank is
called Core Banking´. Core Banking is normally defined as the business conducted by a banking
institution with its retail and small business customers. Many banks treat the retail customers as
their core banking customers, and have a separate line of business to manage small businesses.
Larger businesses are managed via the Corporate Banking division of the institution. Core
banking basically is depositing and lending of money. Nowadays, most banks use core banking
applications to support their operations where CORE stands for Centralized Online Real-time
Exchange (Israa Mustefa awadallah,Sarah &Tebia, 2013).This basically means that all the bank’s
branches are throughout the world. These applications now also have the capability to address
the needs of corporate customers, providing a comprehensive banking solution. A few decades
ago it used to take at least a day for a transaction to reflect in the account because each branch
had their local servers, and the data from the server in each branch was sent in a batch to the
servers in the data center only at the end of the day. Normal core banking functions will include
deposit accounts, loans, mortgages and payments. Banks make these services available across
multiple channels like ATMs, Internet Banking, and branches.

2.2.3. Core banking solution

Core Banking Solution (CBS) is networking of branches, which enables Customers to operate
their accounts, and avail banking services from any branch of the Bank on CBS network,
regardless of where he maintains his account. The customer is no more the customer of a Branch.
He becomes the Bank‟s Customer. Thus CBS is a step towards enhancing customer convenience
through anywhere and anytime banking. Core Banking System or Core Banking Solution is a
term that we hear very often these days .For IT and Banking folks, this doesn’t need any
explanation but for those who want to know a bit, here’s a brief overview of what it means.
Previously a bank’s core operations such as keeping a ledger of various transactions, maintaining
customer information, interest calculation of loans and deposits, adjustments to accounts on
withdrawal and deposits of funds etc. were done manually. With the advent of ICT (Information
Communication Technology), efforts were done to automate various banking processes using
software applications so as to make them simple, efficient, effortless and cost effective (Geetha,
C. S and Ramanarayanan,, 2015). Thus, the platform where ICT is used to perform the core

9
operations of a bank, like those mentioned above, is known as Core Banking System. Thus, Core
Banking System has radically changed the way in which banks function. The greatest advantage
of having a Core Banking System is that new features and functionalities can be easily added to
the system that customers will have a whole lot of services that they can use. Electronic funds
transfer between banks, online trading in the stock markets etc. are examples of this, which were
unheard of in banks pre Core Banking System era.

Core Banking and Run the Bank are synonymous for most part. Core Banking is the meeting
point of the largest banking services augment namely Retail and Commercial Banking, cutting
edge Information Technology and the advancing Communication Technology. It is the heart of a
modern financial service organization and is all about providing the banking customers with the
right products at the right time through the right channels 24 hours a day 7 days a week through a
multi-location, multi branch network. Core Banking Solution are banking applications on a
platform enabling a phased, strategic approach the lets people improve operations, reduce costs,
and prepare for growth. Implementing a modular, component-based enterprise solution ensures
strong integration with your existing technologies (Chairlone, S. G, 2009). An overall service-
oriented-architecture (SOA) helps banks reduce the risk that can result from multiple and entries.
Core Banking Solutions is new jargon frequently used in banking circles. The advancement in
technology, especially internet and information technology has led to new ways of doing
business in banking. These technologies have cut down time, working simultaneously on
different issues and increasing efficiency.

The plat form where communication technology and information technology are merged to suit
core needs of banking is known as Core Banking Solutions. Here, computer software is
developed to perform core operations of banking like recording of transactions, passbook
maintenance, to interest calculations on loans and deposits, customer records, balance of
payments and withdrawal. This software is installed at different branches of bank and then
interconnected by means of communication lines like telephones, satellite, internet etc. It allows
the user (customers) to operate account from any branch if it has installed core banking solutions.
This new platform has changed the way banks are working. Normal core banking functions will
include deposit accounts, loans, mortgages and payments. Banks make these services available

10
across multiple channels like ATMs, Internet banking, and branches. Previously a bank’s core
operations such as keeping a ledger of various transactions, maintaining customer information,
interest calculation of loans and deposits, adjustments to accounts on withdrawal and deposits of
funds etc. were done to automate various banking processes using software applications so as to
make them simple, efficient, effortless and cost effective. Thus, the platform where ICT is used
to perform the core operations of a bank, like those mentioned above, is known as Core Banking
System (Israa Mustefa awadallah,Sarah &Tebia, 2013) .In Core Banking System, software
applications record transactions, maintain customer information, calculate interest on loans and
deposits etc. The data, instead of huge ledgers, are stored in backend databases in digital form.
Now, the same software can be installed in various branches of a bank and can interconnect
through the internet or telephone lines to form a core banking network of the bank.
The advantage, a customer can operate on his account from any branch of the bank and if the
bank owns Internet Banking or ATM facilities, then the customer can operate on his account
from virtually anywhere (Rojo, 2012).

2.2.4. History of core banking system in the world

The first core banking solutions appeared in the 1970s in the United States. Most of them ran on
mainframe computers and were designed by the banks themselves or by third parties in
conjunction with the large US banks. Limitations to exporting these systems outside the US were
customized by top tier banks, but these efforts consistently failed. In the 1980s, we saw package
solutions coming from other parts of the world, primarily Europe, Asia and Australia. Vendors
with a different but comparable background also entered the arena, for example the private
banking solutions developed in countries such as Switzerland and Luxembourg. Because -due to
the nature of their business - these were more customer focused than the transaction- oriented,
transaction-crunching engines available before, they had natural fit with the customer centricity
that was coming increasingly into focus. Limitations of these systems mainly had to do with the
ability to handle large volumes. The 1990s saw new players emerging in India, benefiting from
the opening up of the Indian economy, the availability of English language skills, and the huge
pool of highly skilled engineers. i-flex solutions (and its legal predecessor CITIL) can be
considered as the first successful software product company from India that managed to sell
outside the Indian subcontinent few years later by Oracle(through the acquisition of i-flex

11
solutions and Siebel and aligning these to their technology and application strategies(Israa
Mustefa awadallah,Sarah &Tebia, 2013).

2.3. Benefits of Core Banking

2.3.1. Benefits to the bank

Centralized Accounting
All the transactions of the bank directly impact the General Ledger and Profit and Loss Account.
This provides a real time total picture about the financial position and situation of the bank. This
helps for timely effective decision making for financial management; a very critical and dynamic
function in today’s banking (Kulkarni K, Kalkundrikar S, 2012).
Centralized Product Control & Monitoring
Centralization helps in better product analysis, monitoring and rollout. Aspects like interest rate
modifications, product modification and interest application can be done centrally from one
place for all the branches. Bank can quickly respond to market scenario and customer needs.
This gives competitive edge to the bank (Kulkarni K, Kalkundrikar S, 2012).
Introduction of Technology Based Services
Service channels such as ATM, either on-site or off- site, can be started.
ChequeDepositMachines (CDM) can be installed. Such machine in WAN connectivity can allow
anycustomer to deposit the cheque for collection at any branch (Kulkarni K, Kalkundrikar S,
2012).
Centralized Customer Account Management
Any customer becomes the customer of the bank rather than of a branch. With unique ID account
Number the accounts of the customers can be viewed centrally by the bank. As such, customer
profile, details of the services availed by him and customer behavior about business of the bank
can be well understood. Such customer view gives the bank opportunity to decide directions for
business development and marketing strategies (Kulkarni K, Kalkundrikar S, 2012).
Centralized Reporting
Presence of centralized data constantly live up-dated at any time ensures comprehensive report
statement generation. This tremendously helps in decision making as well as submission to
various authorities. Operational efficiency of the bank gets increased dueto quick report
generation for bank as a whole (Kulkarni K, Kalkundrikar S, 2012).

12
Centralized System Administration
Centralized system / I. T. administration enhances system security and user management. There
is reduction in man-power need and cost. Due to single point resource available ITman power is
utilized properly (Kulkarni K, Kalkundrikar S, 2012).
Growth opportunities
Efficiency gains
Risk mitigation for aging systems

2.3.2. Benefits to Customers

Customer can operate his account from any of the branch of the bank.
More service channels can be made available to the customer.
Customer gets immediate credit if the transaction is between the branches of thebank. Even
extension counters can provide all services to the customer.
Customer gets full attention and service satisfaction at the branches as the branchesare freed
from all back office functions, clearing functions and almost all accountingfunctions.
Customer can get SMS alerts on his mobile or e-mail alerts through net fortransaction taking
place in his account. This gives him comfort and security.
Customer service improvements

2.4. Threats and Risks of Core Banking

Total dependency on technology
Any failure on technical ground can halt the working with uncertainty aboutrestoring normalcy
Stoppage of work has adverse effect on bank’s image and reputation
Technical person/s leaving the bank poses serious problem
Network problem can discontinue the operation
If not mitigated by generating profit out of benefits of core banking therecurring costs are heavy

13
2.5 Various core Banking Services
1. Automated Teller Machines (ATMs)
It is an electronic terminal which gives consumers the opportunity to get banking service at
almost any time. An ATM combines a computer terminal, record keeping system, and cash vault
in one unit, permitting customers to enter a financial firm`s bookkeeping system with either a
plastic card containing a personal identification number (PIN) or by punching a special code
number into a computer terminal linked to the financial firm`s computerized records 24 hours a
day. Once access is gained into the system, cash withdrawals may be made up to pre specified
limits, and deposits, balance enquiries, and bill paying may take place.(Alam, 2006)
2. Point-of-Sale Transfer Terminals (POS)
Computer facilities in stores that permit a customer to instantly pay for goods and services
electronically by deducting the cost of each purchase directly from his or her account are known
as Point-of-Sale (POS) Terminals. The customer presents an encoded debit card to the store clerk
who inserts it into a computer terminal connected to the financial firm`s computer system. The
customer`s account is charged for the purchase and funds are automatically transferred to the
store`s deposit account.(Alam, 2006)
3. Internet Banking
It is an electronic home banking system using web technology in which Bank customers are able
to conduct their business transactions with the bank through personal computers. Use of internet
to carryout financial transactions is certainly one of the most promising avenues today for linking
customers with financial service providers.
4. 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 (SMS). As more cell phones
appear and are linked technologically with the internet and with credit and debit card accounts,
the cell phone literally becomes a “Portable Bank” (Alam, 2006).Furthermore, by combining cell
networks with the power of the internet to convey vast amounts of information at high speed, the
cell phone and text messaging technology seem to offer the potential to promote worldwide use
of debit and credit card accounts and make purchases and payments from anywhere on the
globe(Alam, 2006).

14
2.6. MeasuringCustomer Satisfaction
Customer satisfaction can be defined as the company’s ability to fulfill business, emotional, and
psychological needs of its customers. In other word it is a summary of psychological state
resulting when the emotion surrounding disconfirmed expectations is coupled with the
consumer’s prior feeling about the consumption experience (Ahmad, 2013). However (Kumbhar,
2012) argued that a customer satisfaction is an ambiguous and abstract concept. He continued
that, actual manifestation of the state of satisfaction will vary from person to person, product to
product and service to service.

Available literature shows that, the customer satisfaction is measured via service quality and
service quality measured by various measurement tools and instruments developed by various
researchers and marketing consultancy organizations (Kumbhar, 2012). Based on (Kumbhar,
2012) models and using principal component analysis he identified the following factors that
affecting customer’s satisfaction in banking
Table 2.1: Factors Affecting Customer Satisfaction

S.No

Construct/Factors
Description

1
System Availability
Up-to-date equipment and physical facilities- Full Branch computerizatio

No table of figures entries found.n, ATM, POS, internet banking, mobile

banking, SMS alerts, credit card, EFT, ECS, E-bill pay
2
E-Fulfillment
Scope of services offered, availability of global network, digitalization of business information,
Variety of services

15
3
Accuracy
Error free e-services through e-banking channels

Efficiency
Speed of service (clearing, depositing, enquiry, getting information, money transfer, response
etc.), immediate and quick transaction and check out with minimal time.

Security
Trust, privacy, believability, truthfulness, and security, building customer confidence. freedom
from danger about money losses, fraud, PIN, password theft; hacking etc.

Responsiveness
Problem handling, recovery of the problem, prompt service, timeliness service, helping nature,
employee curtsey , recovery of PIN, password and money losses
7
Easiness
Easy to use & functioning of ATM, Mobile banking, internet banking, credit card, debit card etc.
8
Convenience
Customized services, any ware and any time banking, appropriate language support, time saving

16
9

Cost Effectiveness
Price, fee, charges, - i.e. commission for fund transfer , interest rate, clearing charges, bill
collection and payments‟, transaction charges, charges on Switching of ATM, processing fees
etc. price, charges and commissions should be reduce and charges taken by Telecommunication
Company, devise designer company, internet service providers
10
Problem Handling
It refers to problem solving process regarding computerized banking services
11
Compensation
It refers to recover the losses regarding to problems and inconvenience occurred in using e-
banking channels.
12
Contact
Communication in bank and customer or customers to bank, Via e-mail, SMS, Phone, interactive
website, postal
13
Brand Perception
Customers overall perception according to promises given by bank for banking services

14

Perceived value
Consolidated perception from banking service in term of perceived quality and money expended
for getting banking services

17
Source :kumbhar (2011)

2.7. Empirical literature review

2.7.1. International experience

Conducted researches in foreign countries indicate that various indexes such as efficiency have
been applied to evaluate the implementation of information technology systems special core
banking IT services in the banks‟. A sum of their findings can be explained in the following
manner (ABEBE.E, 2013) “The effects of using automation systems on human resource
productivity (Case study of Mazda YadakCompany)”. The results suggested that there is a strong
direct relationship between efficiency and effectiveness.

Similarly, (Nigussie.Y, 2015) examined the impact of information technology on organizational

effectiveness in the Organization of Libraries, Museums, and documents Centers. The results
indicated that the employment of IT systems has increased the effectiveness of the organization
(Ombati, 2010) concluded that direct relationship exist between technology and service quality
in banking industry. (Siam, 2006)assessed the role of the electronic banking services on the
profits of Jordanian banks, and concluded that electronic banking services negatively affect bank
profitability in the short term, while they have a positive influence in the long term, since bank
investments are all with regard to infrastructures.(Geetha, C. S and Ramanarayanan,, 2015)Study
on the impact of Core Banking Services in SBM bank and clearly indicates that the customers
were for the CBS because of its ease of operations, instantaneous, timely response and cost
effectiveness. As CBS offers any time any where banking facility, customers are surely
benefitted out of it and after the introduction of CBS the operational efficiency of banks has
certainly improved.(Rono, nov.2012) The purpose of his study was to: determine factors leading
to replacement of core banking systems in commercial banks in Kenya; establish the challenges
that commercial banks in Kenya encounter in the process of core banking systems replacement;

18
and determine the effect of core banking systems replacement on customer satisfaction and the
Findings also indicated that replacing core systems has a significant positive effect on customer
satisfaction. (Heskett, 2011)Attempted to examine a contribution of various dimensions of
service quality in customers‟ satisfaction. A result of the study indicates that, all variables were
found significant and were good predictors of overall satisfaction in core banking. However, A
result of principle component analysis indicates that, perceived value, brand perception, cost
effectiveness, easy to use, convenience, problem handling, security/assurance and responsiveness
are important factors in customers satisfaction in core banking it explains of variance. Contact
facilities, system availability, fulfillment, efficiency and compensation are comparatively less
important because these dimensions explain of variance in customers‟ satisfaction.
Responsiveness, easy to use, cost effectiveness and compensation are predictors of brand
perception in core banking and fulfillment, efficiency, security/assurance, responsiveness,
convenience, cost effectiveness, problem handling and compensation are predictors of perceived
value in e-banking.
Therefore, banker and core banking service designers should think over these dimensions and
make possible changes in the core banking services according to the customers‟ expectations and
need of the time It will help to enhance service qualityof e-banking and increase the level of
customers‟ satisfaction. In core banking According to (Shaukat. M. and Zafarullah, 2009).Local
banks in Pakistan are more committed to invest and use new technology than foreign banks.
Their employees are able to produce more because new technology enables them to perform
multi task. A user who is working on electronic fund transfer can simultaneously work on
clearing or on account opening. User is not supposed to stop or close one transaction in order to
complete the second one. Similarly, built-in security checks in system are the user to perform
their functions without error.(Adjei, 2013)Investigated the effect of new banking technologies on
the organizations‟ agility. They did their research with the help of academics and banking
experts. Findings of this study indicate that the staffs‟ knowledge and skills in the application of
new banking technologies have the most correlation with seven dimensions of flexibility,
accountability, speed, integration and low complexity, core competencies, high quality, product
improvement, and culture of change. Furthermore, the staffs‟ knowledge and skills are
significantly associated with electronic banking indexes, widespread networks of information
exchange between customers and bank, and aforementioned dimensions..Baradaran.(2009)

19
assessed the effect of using bank cards among the customers of Bank Melli in East Azerbaijan,
and found that this usage can increase the customers‟ satisfaction and feeling of security
(Cohen.A, 2010) did a research with regard to all banks in Barbados and found that ATMs were
not profitable at first, since training customers how to use them was expensive. But when it was
educated, efficiency increased from 3% to 17%. Salman and (Obiri-Yeboah, 2013) study of
electronic banking in Pakistan revealed that reliability, learning and feedback are very important
for the satisfaction of the customers. This study also revealed those customers are not satisfied by
the downloading time of website banks in Pakistan. If clients are not happy with the banking
products, prices or services offered by a particular bank, they are able to change their banking
partner much more easily than in the physical or real bank-client relationship.

2.7.2. Ethiopia’s Experience

Conducted researches in Ethiopia indicate that various indexes such as efficiency have been
applied to evaluate the implementation of information technology systems special core banking
IT services in the banks. A sum of their findings can be explained in the following manner.
(Shaukat.M., 2010)Study the impact of information & communication technology on Ethiopian
private banks‟ performance he concluded that adoption of information and Communication
Technology has a significant impact on customers‟ satisfaction. Furthermore, it can be deduced
from the linear regression model that there is a strong positive relationship between adoption of
Information and Communication technology and customers satisfaction. it can also be concluded
that the impact of Information and Communication Technology on accuracy, problem handling
process and complains resolving process of the banks was the least three among the factors
affecting customers satisfaction . (Adewoye.J, 2007)The study entitled “Capital Investment
Decisions on IT And Its Impact on Corporate Value Maximization” has investigated the impact
of IT on profitability and cost efficiency in six private commercial banks.(Beyene.t.t, 2014) He
study presents what impact electronic banking has on customer satisfaction and based on the
result of the study he concluded that core banking has impact in improving customer satisfaction,
impact in reducing waiting time for customers to get bank service and impact in improving
customers to control their account movements bank service and impact in improving customers
to control their account movements

2.8. Critical review and gap in the literature

20
Commercial banks assaulted by the pressure of globalization and competition from non-banking
new ways to add value to the services. The question of what drives satisfaction is at the top in
understanding superior customer satisfaction and hence striving for it. Substantial research
efforts have gone into addressing this question, starting from the strategic level and going down
to operational details. A key study bench marking the strategies of leading retail banks was
carried out by the bank strategies of leading retail banks (Yonatan, 2016). This study is based on
the opinions of heads of retail banks at commercial bank of Ethiopia established the linkage
between marketing, operations, organizing excellence. This finding led to the formulation of the
service management strategy encapsulated in the trail operational capabilities service quality
performance (Negash.Z, 2014). The capabilities service quality-performance trail is, in turn, a
focused view of the service profit chain described by (Negash.Z, 2014 p. 25)based on their
analysis of successful service organizations. However for the case of Ethiopian in spite of banks
trying to enforce the core banking services and still faced with come challenges which need to be
addressed in order to promote effective and efficient customer satisfaction and these are: The
development of an efficient monetary transfer system in Ethiopian has been hampered by so
many factors.
Ethiopian is faced with infrastructural deficiency such as electric power supply and
communication link in some areas, inadequate skills requisite tools on end users and client
systems, high charge or cost for the e-payment terminals.So the banking legislation should set
out standard charges for core banking services. Hence these factors are believed to hampered
core banking services in the country affecting banks client satisfaction and reason behind the
investment made by commercial bank of Ethiopia on core banking information technology
system was to bring operational effectiveness and efficiency. This intern effect on customer
satisfaction. From this research mainly focus on the impact that the core banking brings for the
effectoncustomer satisfaction after implementation that has to be measured to get to good track.
Even though many studies have been conducted on effect of ICT on banking performance but
limited studies are available in Ethiopia that investigate the effect of core banking information
technology system on customer satisfaction of commercial banks in Ethiopian and more studies
are still required to understand the relevance of core banking systems in Ethiopian banks and to
give a better insight for decision makers of the industry

21
2.9. Conceptual Framework
A conceptual framework is a set of broad ideas and principles taken from relevant fields
of enquiry and used to structure a subsequent presentation (Kombo and Tromp, 2009).
Based on many related literature reviews, the conceptual framework of this study is
rooted on the incorporation of core banking information technology facilitated products
and services (technology-based services and products) into banking operation and how
they impacted on customers‟ satisfaction of commercial bank of Ethiopia Komto branch.
The study is governed by Innovation Diffusion Theory and the specific objectives of the
study, for the reason there is strong relationship between these theory, specific objectives
and Customer Satisfaction. The figure 1 below emphasizes independent variables for this
study i.e. ATM, Internet banking, Mobile banking, POS and the dependent variable
Customer Satisfaction that there is significant relation between them.

Independent variablesDependent variable

ATM

Mobile Banking
Customer Satisfaction
Internet Banking

POS Machine

Figure 1 Conceptual Framework

22
My own source

CHAPTER THREE
RESEARCH METHODOLOGY

3. Introduction
This chapterwaspresented details of the research design and methodology. This includes
theresearch design, sample size and sampling technique, data source and collection method,
procedure of data collection, and questionnaire. At the end the dataanalysis was presented.

3.1. Research design

This thesis employed quantitative method of research design. The quantitative research has
strengths in enabling the research and description of social structures and processes that were not
directly observable, well-suited for quantitative description, comparisons between groups and,
for analysis and explanation of dependencies between social phenomena. The quantitative data
was gathered using survey instrument. The study basically used quantitative data for statistical
analysis and for estimates from empirical models and incorporated actual cases from participants
of the study.

3.2. Types of data

A. Primary data
According to (Endalkachew, 2013), Primary data are fresh data that was gathered for the first
time and thus happened to be original in character. Primary data of the study was information
gathered from customers of the bank. Questionnaire that have both openend and closed end
question that was prepared and delivered to customers and employees in order to gatherthe
primary data.
B. Secondary data
The secondary data was collected from different sources such as, websites, books, andjournals,
periodicals released by the bank and articles national and internationalnewspaper and magazines.

23
3.3. Study Areas

Commercial Bank of Ethiopia Komto Branch is located in Nekemte town, working in financial
services and Finance for other banks activities. This study covered the effect of core banking on
customer satisfaction in case study of Commercial bank of Ethiopia Komto branch.

3.4. Population of the study

The general population of this project was all customers of Commercial Bank of Ethiopia,
Komto branch. Numerically, the total number of the branch was 10,000 and all one time
customers of the bank till January 2021

3.5sampling techniques
The sampling technique that was used for the study was probability sampling techniques. In
order to acquire sufficient information on quality and quantity, the researcher wereemployed
instratified sampling by transduction techniques.
3.6Sampling Frame
The sampling frame for this study was the list of all customers of CBE Komto branch, which
were 10,000 in number.

3.7Sample Size
In order to determine sample size; the researcher was used formula for calculating the required
sample size in two sampled bank accounts. The formula was developed byTaro(Yamane, 1967).
.It is calculated as
n= N
1+N (e) 2
n= 10,000 =384.6 ≈ (385)
1+10,000(.05)2
Where; n is the sample size
N is the population size (10,000)
e is sampling error (0.05) .Hence; the total sample size is 385

24
3.8. Method of data collection
Data collection method that was used in this research was self-administered questionnaire hat
comprises both open end and closed end question.

3.9. Questionnaire
The questionnaire was containing Customer Satisfaction Questionnaire (CSQ).This questionnaire
.measured customer satisfaction level by using a five point Likert response scale which includes
strongly disagree (1), disagree (2), neither agree nor disagree (3), agree (4) and strongly agree (5)
customer satisfaction items wasdeveloped in the questionnaire

3.10Method of Data Analysis

In order to reach on meaningful facts and conclusions, the research provided explanation on
effect of core banking information technology system on customer satisfaction for commercial
bank of Ethiopia Komto branch and answered the basic questions of the research Statistical
Package for Social Science (SPSS) software version 22.0 was employed to analyze the effect of
Core banking (ATM, Internet Banking, Mobile Banking, and POS) on customer satisfaction and
present the data. Namely descriptive analysis, correlation and multiple regression analysis
were used
a) Descriptive analysis
The descriptive statistical results were presented by frequency distributions tables which were
computed for each variable in this study.
b) Pearson Correlation analysis
In this study Pearson’s correlation coefficient was used to determine the relationships between
independent variables (ATM, Internet banking, Mobile banking and POS machine) and
customer satisfaction. Before testing the correlation of dependent variable and the independent
variables the researcher tests overall reliability of items using the most common measure of scale
reliability Cronbach Alpha analysis.
c) Multiple Regression Analysis
To investigate the effect of ATM, Internet banking, Mobile banking, and POS on Customer
satisfaction the researcher was used multiple regression analysis.

25
d) Regression functions
Before the multiple linear regressions tested the multiple linear regression assumptions such as
linearity & normality.
The equation of multiple linear regressions was generally built around two sets of variables, the
dependent variable (customer satisfaction) and independent variables (ATM, Internet banking,
Mobile banking, and POS machine). By using regression equation on this study the researcher
was able to more effective at describing, understanding and controlling the stated variables.
Regression equation:
Yi = A + B1X1 + B2X2 + B3X3 + B4X4 + E
Where: Y is the dependent variable- customer satisfaction.X1, X2, X3, and X4: where the
explanatory variables or independent variables ATM, Internet banking, Mobile banking, and
POS.
A: is the intercept term- it gives the mean or average effect on Yif all the variables excluded
from the equation, or it is the average value of Ywhen the stated independent variables are set
equal to zero. Β1, β2, β3, and β4: refer to the coefficient of their respective independent variable
which measures the change in the mean value of Y, per unit change in their respective
independent variables.
E: refers to the error term

26
 CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1. Introduction
In the previous chapter as the study attempted the effect of core banking information technology
system on the customer satisfaction on commercial bank of EthiopiaKomto branch. Therefore,
the findings of the study has been presented and analyzed in this chapter. The questionnaire were
developed in five scales ranging from five to one; where 5 represents Strongly agree, 4 agree, 3
Neutral, 2 disagree, and 1 strongly disagrees. These five scales were treated as interval scale to
conduct statistical analysis. Likert scale items were created by calculating a composite score
(sum or mean) from four or more type Likert-type items; the composite score for Likert scales
can be analyzed at the interval measurement scale. Descriptive statistics recommended for
interval scale items include the mean for central tendency and standard deviations for variability.
The effect of core banking on customer satisfaction was discussed by a descriptive analysis, a
correlation analysis, and a multiple regression analysis. Therefore the questionnaire developed
for this study was likert scale in nature.
Table 4.1: Rate of Responses by Respondents

Customer
Questionnaire Respondents Valid percentage Valid Percentage
Returned 350 88.60% 88.40%
Not Returned 35 11.40% 100%

Total 385 100% 100%

Source: own survey 2021
From the above table 4.1 the rate of responses by respondents were 88.60% for customer that
was responded that counts 350 and 11.40% were not returned that counts 35.

27
4.2 Customers Demographic presentation
Table 4.2 Gender of respondents
Valid Cumulative
Frequency Percent Percent Percent
Valid Male 231 66.0 66.0 66.0
Female 119 34.0 34.0 100.0
Total 350 100.0 100.0
Source: own survey 2021
As it was shown from the above table 4.2 from 350 customers most of respondents were male i.e.
231 respondents which contain 66% and 34% of respondents that counts 119 are females. This
implies more awareness for females are needed
Table 4.3 Age of respondents in year
Valid Cumulative
Frequency Percent Percent Percent
Valid below 30
115 32.9 32.9 32.9
years
31-40 years 118 33.7 33.7 65.7
41-50 years 112 32.0 32.0 98.6
>51 5 1.4 1.4 100.0
Total 350 100.0 100.0
Source: own survey 2021
As stated from the above table which represents the ages of respondentsmajority of them were
between 30-40 that contains 33.7% followed by below 30 years that consists 32.9%.The least
aged are above 51years that counts 5 with 1.4% followed by between 41-50 with 32.0%.This
implies more awareness for young societies and for more than 50 years aged societies

28
Table 4.4Educational level of respondents

Valid Cumulative
Frequency Percent Percent Percent
Valid primary school 14 4.0 4.0 4.0
secondary school 79 22.6 22.6 26.6
Certificate 28 8.0 8.0 34.6
Diploma 85 24.3 24.3 58.9
first degree and
142 40.6 40.6 99.4
above
Illiterate 2 .6 .6 100.0
Total 350 100.0 100.0
Source: own survey 2021
From the above table 4.4 explained the majority of customers degree holder and above
educational level that consist 40.60% that counts 142 followed by Diploma holder that shares
(85)24.3% and the secondary school contains(79) 22.6%,certificate contains(28)8% and primary
school holds the share of (14)4% of returned response. The least share were illiterate which
contains (2)0.6%.This shows most of respondents are educated and can understand the
technology easily
Table 4.5 Occupation of respondents

Frequenc Valid Cumulative

y Percent Percent Percent
Valid Unemployed 20 5.7 5.7 5.7
Student 89 25.4 25.4 31.1
Employed 151 43.1 43.1 74.3
Private 90 25.7 25.7 100.0
Total 350 100.0 100.0
Source: own survey 2021 From the above table most of the respondents were
employed that contains 151(43.1%) followed by private that covers 90(25.7%) and 89(25.4%)
shares students while the lastly unemployed consists 20(5.7%) .This implied it is needed more
expand to private and studentthis bank product

29
Table 4.6marital status

Frequen Valid Cumulative

cy Percent Percent Percent
Valid Single 140 40.0 40.0 40.0
Married 207 59.1 59.1 99.1
Divorced 1 .3 .3 99.4
Widowed 2 .6 .6 100.0
Total 350 100.0 100.0
Source: own survey 2021
From the above table 207(59.1%) of them were married that follow
140(40%) of them were single. Widowed and divorced were 2(6%) and
1(3%) respectively from top to down. This tells us more awareness
creation for unmarried respondents
Table 4.7 Frequency of usage
Valid Cumulative
Frequency Percent Percent Percent
Valid Daily 4 1.1 1.1 1.1
Week 111 31.7% 31.7% 33.7
twice
114 32.6 32.6 65.4
weekly
Monthly 121 34.6 34.6 100.0
Total 350 100.0 100.0
Source: own survey 2021
Regarding the frequency of usage,121(34.6%) are using monthly and 32.6% that counts 114 out
of 350 respondents were using twice a week where as weekly and daily usage were
111(31.7% )and 4(1.1% )respectively. It directed us to advertise to make to increase the
frequency of usage.
4.3 Effect of Core Banking on Customer Satisfaction
Descriptive Analysis

30
This is to describe the effect of core banking such as ATM, Internet banking, Mobile banking
and POS on customer satisfaction based on the selected participants respond filled on survey
questionnaires

4.3.1 Automated Teller Machines (ATM)

This part of the study analyses the effect of Automated Teller Machines (ATM) on customer
satisfaction using table to describe the mean score value of respondents to drew conclusion
Table 4.8 Automated Teller Machines (ATM)

Minimu Maximu Std.

N m m Mean Deviation
ATM is easy to use 350 1 5 4.27 .626
Using ATM I can withdraw
350 1 5 1.98 .887
the amount I need
ATM is cheap cost to use 350 3 5 4.00 .679
ATM is believable system
350 2 5 4.06 .718
to use
ATM is free from danger 350 2 5 4.20 .840
ATM reduced time spent in
350 3 5 4.36 .711
the bank
Any technical failure
350 2 5 4.69 .503
hesitate customer
Network problem can
350 3 5 4.81 .457
discontinue the operation
Total 350 1 5 4.05
Source: own survey 2021
From the above table, the responds of selected customer on ATM related questionnaires like,
easy to use, cheap cost to use, withdraw the amount want, believable system to use, free from
danger, reduce time spent in the bank, any technical failure hesitate customer and network
problem discontinue the operation. The study sought to establish the view of the respondents
regarding the effect of ATM on customer’s satisfaction of commercial bank of Ethiopia Komto
branch. The findings of the study conducted on the level of ATM affecting customer satisfaction
that the mean score value for the category in average was 4.05 which falls on an agree of
agreement. This implied that the overall average response for the ATM system affecting
customer satisfaction was agreed by the respondents. All the questions under the category have

31
got relatively high rate as explained by mean scores of each of network problem discontinue the
operation (4.81), any technical failure hesitate customer (4.69), ,ATM reduce time spent in the
bank(4.36), easy to use(4.27), free from danger(4.20), believable system to use (4.06),cheap cost
to use(4.00)andcan withdraw the amount needed(1.98) respectively from top to down.
From this response of respondents, ATM reduced time spent in the bank, free from danger,
believable system to use and cheap cost to use.But the network problem discontinue the
operation, any technical failure hesitate customer and it not possible to withdraw the amount as
customer want.
4.3.2 Mobile banking

Eight questionnaire statements were posed to selected customer to know their

opinion on effect of Mobile banking on customer satisfaction
TABLE 4.9Descriptive Statistics for mobile banking

Std.
N Minimum Maximum Mean Deviation
I can use Mobile banking
350 3 5 4.52 .627
anywhere and any time
Mobile banking helps for
350 1 5 4.20 .949
quick transfer of fund
Mobile banking is easy to use 350 2 5 4.71 .537
Mobile banking is free of
350 3 5 4.33 .482
charge
Network problem can
350 4 5 4.35 .476
discontinue the operation
Mobile banking is believable
350 3 5 4.10 .814
system to use
Moble banking help us to
350 2 5 4.41 .754
follow my transaction
Exposing security pass word
350 3 5 4.58 .609
to other have great risk
Total 350 1 5 4.4
Source: own survey 2021
From the above table the responds of selected customer on Mobile banking related
questionnaires like, easy to use, can use mobile banking anywhere and anytime, helps quick
transfer of funds, free of charges, network problem discontinue the operation, believable system

32
to use, help to follow once transaction and exposing security password to other have great risk.
The study sought to establish the view of the respondents regarding the effect of Mobile
bankingon customer’s satisfaction of commercial bank of Ethiopia Komto branch. The findings
of the study conducted on the level of Mobile banking affecting customer satisfaction that the
mean score value for the category in average was 4.4 which falls on an agree of agreement. This
implied that the overall average response for the Mobile banking system affecting customer
satisfaction was agreed by the respondents. All the questions under the category have got
relatively high rate as explained by mean scores of each of. easy to use(4.71), Exposing security
pass word to other have great risk (4.58),can use mobile banking anywhere and anytime(4.52),
help to follow once transaction(4.41),network problem discontinue the operation (4.35,free of
charges(4.33),quickof funds(4.20) and the system is believable system to use(4.10) respectively
from top to down. From this response of respondents, Mobile banking is easy to use, can use
mobile banking anytime and anywhere helps to follow account transaction free of charges, the
system is believable to use helps for quick transfer of fund. But the network problem discontinue
the operation andexposing security pass word to other have great risk

4.3.3 Point of sale (POS) machine

Five questionnaire statements were posed to participant customer to know their opinion on effect
of POS machine on customer satisfaction
Table 4.10 Descriptive Statistics for Point of sale (POS)

Minimu Maximu Std.

N m m Mean Deviation
Any power interruption of
POS machine can hesitate 350 3 5 4.69 .553
customer
POS machine is free of
350 1 4 2.38 .666
charge
POS is eay to use 350 2 5 4.27 .997
Network problem can
350 3 5 4.36 .711
discontinue the operation
I can get POS machine
350 1 5 2.97 1.261
anywhere and anytime
Total 350 1 5 3.7

33
 Source: own survey 2021
As stated from the above table the responds of selected customer on POS machine related
questionnaires like, free of charge, can get POS machine anywhere and anytime, any power
interruption hesitate customer, network problem discontinue the operation. The study sought to
establish the view of the respondents regarding the effect of POS machine on customer’s
satisfaction of commercial bank of Ethiopia Komto branch. The findings of the study conducted
on the level of POS machine affecting customer satisfaction that the mean score value for the
category in average was 3.7 which falls on an agree of agreement. This implied that the overall
average response for the POS machine system affecting customer satisfaction was agreed by the
respondents. All the questions under the category have got relatively high rate as explained by
mean scores of each of any power interruption hesitate customer(4.69), network problem
discontinue the operation (4.36),easy to use(4.27),can use POS machine anywhere and
anytime(2.97and free of charge2.38), respectively from top to down.

From this response of respondents, POS machine is easy to use,. But the network problem
discontinues the operation, any power interruption hesitate customer, we can’t use POS machine
anywhere and anytime and the system posed charge for service used.

34
4.3.4 Internet banking
Five questionnaire statements were posed to participant customer to know their opinion on effect
of on internet banking on customer satisfaction

Minimu Maximu Std.

N m m Mean Deviation
Internet banking is easy
350 2 4 3.42 .549
to use
Internet banking has
350 4 5 4.69 .465
helping nature
Internet banking helps
for payment of 350 2 5 4.01 .822
different bills
Network problem can
discontinue the 350 1 5 4.66 .543
operation
Internet banking
provides more flexible 350 3 5 4.65 .490
services
Total 350 1 5 4.29
Source: own survey 2021 As stated from the above table the responds of selected customer
on internet banking related questionnaires like, easy to use, has helping natures, network problem
discontinue the operation, helps for payment of different bills and provides more flexible service.
The study sought to establish the view of the respondents regarding the effect of Internet banking
on customer’s satisfaction of commercial bank of Ethiopia Komto branch. The findings of the
study conducted on the level of internet banking affecting customer satisfaction that the mean
score value for the category in average was 4.29 which falls on an agree of agreement. This
implied that the overall average response for the Internet banking system affecting customer
satisfaction was agreed by the respondents. All the questions under the category have got
relatively high rate as explained by mean scores of each of had helping nature (4.69), network
problem discontinue the operation (4.66),provides more flexible service(4.65),helps for payment
of different bills (4.01),easy to use(3.42) respectively from top to down.

35
From this response of respondents, Internet banking has helping nature, provides more flexible
services. But the network problem discontinue the operation and it is not easy to use the system

4.3.5 Descriptive Statistics for Customer satisfaction

Five questionnaire statements were posed to participant customer to know their opinion on the
overall customer satisfaction on core banking
Table 4.12Descriptive Statistics for customer satisfaction

Minimu Maximu Std.

N m m Mean Deviation
I am satisfied to ATM
350 1 5 4.24 .946
service
Core banking is the latest
technology that I am 350 3 5 4.64 .492
satisfied of
Core banking is challenge to
350 1 5 4.28 .864
adopt technology
I am satisfied to service
350 1 5 4.65 .786
provided by POS machine
I am satisfied with client of
350 1 5 4.08 .911
this bank
Total 350 1 5
Source: own survey 2021

As stated from the above table the responds of selected customer on overall customer satisfaction
related questionnaires like, satisfaction to ATM, is core banking was the latest technology, is
core banking was challenging to adapt, are you satisfied to POS machine and are you satisfied to
the client of this bank . The study sought to establish the view of the respondents regarding the
overall customer satisfaction of commercial bank of Ethiopia Komto branch. The findings
implied that the overall average response for the overall customer satisfaction was agreed by the
respondents.

36
4.4. Correlation analysis

According to (Field, 2009) it is possible to add up variables to form new variable using SPSS
transformation command. It likes a calculator to add variables. The basic idea is that you type a
name for a new variable in the area labeled Target. Variable and then you write some kind of
command in the command area to tell SPSS how to create this new variable. You use a
combination of existing variables selected from the list on the left and numeric expressions.
(DENY, 2009). Based on this idea the researcher made the eight items prepared under ATM to
be transposed to ATM by adding them up; the five items under Internet banking to be transposed
to Internet banking, the eight items under mobile banking to be transposed to mobile banking,
the five items under point of sale to be transposed to point of sale and the five items under
customer satisfaction to be transposed to customer satisfaction. So, then the researcher could test
correlation for only the main variables since all the items were transposed.
Table 4.13Correlations of dependent and independent
VARIABLE Pearson Correlation Sig. (2-tailed) N
ATM .854** .000 350
**
IBANKING .431 .000 350
MBANKING .518** .000 350
POS .195** .000 350
**
Correlation is significant at the 0.01 level (2-tailed).
Independent Variable CUSTOMER SATISFACTION
Source: own survey 2021
The Table 4.13 above presented the correlation between the predictor variables and the
dependent variable. As it observed from the table there is positive and significance relation
between the independent variable ATM and dependent variable customer satisfaction (Pearson
correlation = .854**and p<0.01). Similarly the correlation between internet banking and customer
satisfaction is positive and significance (Pearson correlation= .431 **and p<0.01). The correlation
between mobile banking and customer satisfaction also shows that there is positive and
significance correlation (Pearson correlation= .518 **and p< 0.01). There is also positive and
significance correlation between POS and customer satisfaction (Pearson correlation= .195 **and
p< 0.01).

37
In general, the result of the above shows that there is positive and significance correlation
between customer satisfaction and the four variables ATM, internet banking, mobile banking and
POS.
1, ATM .854 i.e0.75-1 is 0.75-1.00 strongly correlated with customer satisfaction
2, Internet banking is.431 is 0.5-0.074.99 moderately correlated with customer satisfaction
3, Mobile banking is .518-is0.074.99 moderately correlated with customer satisfaction
4, POS .195 is0.074.99 moderately correlated with customer satisfaction

4.5: Multiple regression analysis

4.5.1 Multiple regression assumptions test

Before the multiple linear regressions tested the multiple linear regression assumptions such as
linearity, normality and multico-linearity were tested.

4.5.1.1 Linearity test

Linearity test aims to determine the relationship between independent variables and dependent
variable is linear or not. Linearity test is a required in the linear regression analysis. Good
research in the regression model there should be a linear relationship between the free variable
and dependent variable.
Table 4.14Linearity

Variables Sig of deviations from linearity

ATM*Customer satisfaction .053
Internet banking* Customer satisfaction .078
Mobile banking* Customer satisfaction .034
POS* Customer satisfaction .719
Source: own survey 2021
Based on the table 4.15 above the sig of deviation from linearity of all independent variables
were > 0.05 except mobile banking. As a result the researcher concluded the relation between the
independent variables and dependent variable is linear.

4.5.1.2 Normality test

38
Table.4.15 normality test
Variables Asymp. Sig.(2 tailled)
Customer Satisfaction .070
ATM .045
Internet banking .066
Mobile banking .056
POS .016

Source: own survey 2021

Based on table 4.16 above theOne-sample Shapiro-Wilkasymp.sig for most variables were>0.05.
As a result the researcher concluded that the data were normally distributed.

4.5.1.3 Multi co linearity test

The researcher used correlation table to determine whether there is multi co linearity between the
independent variables. If the magnitude of correlation between independent variables is >.8 it
show that the independent variables were multi co linearity.

TABLE 4.16CORRELATION TABLE

39
 Correlations
CSATISFACTI ATM INTERNT MOBILEB POS
ON BANK ANKIN
Pearson Correlation 1 .854** .431** .518** .195**
CSATISFA
Sig. (2-tailed) .000 .000 .000 .000
CTION
N 350 350 350 350 350
** ** **
Pearson Correlation .854 1 .320 .370 .144**
ATM Sig. (2-tailed) .000 .000 .000 .005
N 350 350 350 350 350
Pearson Correlation .431** .320** 1 .544** .214**
INTERNTB
Sig. (2-tailed) .000 .000 .000 .000
ANKING
N 350 350 350 350 350
Pearson Correlation .518** .370** .544** 1 .253**
MOBILE
Sig. (2-tailed) .000 .000 .000 .000
BANKING
N 350 350 350 350 350
Pearson Correlation .195** .144** .214** .253** 1
POS Sig. (2-tailed) .000 .005 .000 .000
N 350 350 350 350 350
**. Correlation is significant at the 0.01 level (2-tailed).
Source: own survey 2021
The table 4.17 above show that there is no correlation magnitude >.8 between the independent
variables of the thesis. Therefore the researcher concluded that there is no multi co linearity
among the independent variables of the thesis

4.5.2: Regression model summery

The model summary provides the overall predictive capacity of the model. The R value (pearson
product moment correlation coefficient) indicating the strength and direction of the linear
relationship between the dependent and independent variables in the model. The R square was
obtained from the R, which was the correlation coefficient

Table 4.17 Regression model summary

Model Summary

40
 Mode R R Square Adjusted R Square Std. Error of the Durbin-
l Estimate Watson
1 .884a .781 .779 1.439 2.037
a. Predictors: (Constant), POS, ATM, IBANKING, MBANKING
b. Dependent Variable: CSATISFACTION
Source: own survey 2021

The table 4.18 above shows the regression model summery of the thesis. Based on (Field, 2009)
the R Square reflects the percentage of variance in the dependent variable that is explained by the
variation in the independent variable(s). The rule of thumb is to report adjusted R Square when it
substantially differs from R Square. In this model depicted in the regression table above, the
difference is very small. Therefore, we can report the unadjusted R Square. The unadjusted R
Square value in the table above is 0.781. Therefore, we can conclude that in this study 78.1%, the
variation of customer satisfaction is explained by the variation in the independent variables

4.5.3 Analysis of variance (ANOVA) test

The ANOVA table is used to test the significance of overall model.
Table 4.18Analysis of variance (ANOVA)

Model Sum of Squares Df Mean Square F Sig.

Regression 2771.212 4 692.803 334.569 .000b
1 Residual 776.525 375 2.071
Total 3547.737 379

Source: own survey 2021

a. Dependent Variable: CUSTOMER SATISFACTION
b. Predictors: (Constant), POS, ATM, IBANKING, MBANKING

In.this.analysis the P- value is well below 0.05(P < 0.001), and therefore we can conclude that R,
R square, and adjusted R for the multiple regression conducted predicting customer satisfaction
based on the linear combination of ATM, Internet banking, mobile banking and POS is
statistically significant. Hence, we can conclude that the overall linear regression model is
significant

41
4.5. 4 Regression analyses
In this study, the relationship between explanatory variables (independent variables) and
outcome(customer satisfaction) was described by a mathematical model, the regression equation
which relates the explanatory variables denoted by ATM, Internet banking, Mobile banking, and
POS with the outcome variable denoted by customer satisfaction. The model used in the study
was linear model. This means that ATM, Internet banking, Mobile banking, and POS variables
combine in a linear fashion to predict customer satisfaction.
Thus an equation of the form: Yi = A + B1X1 + B2X2 + B3X3 + B4X4 + E
This means;
: Customer satisfaction = α+ β ATM+ β Internet banking + β Mobile banking + β POS + e
Where: α =constant, it is the average value of Y when the stated independent variables are set
equal to zero.
Β =refer to the coefficient of their respective independent variable which measures the
change in the mean value of Y, per unit change in their respective independent variables.

E =refers to error term

Table 4.19 Regression Coefficients

42
 Un standardized Standardized 95.0% Confidence Interval
Coefficients Coefficients for B
Std.
Model B Error Beta T Sig. Lower Bound Upper Bound
1 (Constant) - .531 -2.704 .007 -2.479 -.392
1.435
ATM .65 .023 .754 28.650 .000 .607 .696
IBANKING .064 .023 .082 2.796 .005 .019 .109
MBANKIN .128 .019 .189 6.284 .000 .084 .160
G
POS .019 .021 .021 .855 .393 -.024 .060
Source: own survey 2021 a. Dependent Variable: CSATISFACTION

Based on the equation for multiple linear regressions; the researcher derived formula for the table
above as follow.
Yi = A + B1X1 + B2X2 + B3X3 + B4X4 + E
Customer satisfaction = constant+ β ATM+ β Internet banking + β Mobile banking + e
Customer satisfaction= -1.435+.651ATM+.064 Internet banking+.128 Mobile banking+ e
In this case, the un standardized regression coefficient (β) provided us with information on how
much change can be expected with a one unit change in each independent variable. Based on the
equation indicated above the regression coefficient shows that the value of un standardized
coefficient (β) of independent variable ATM, Internet banking and Mobile banking were
.651, .064 and .128respectively. That is, hundred percent improving providing ATM services to
the customer leads to 65.1% increase in customer satisfaction and hundred percent improving
providing Internet banking services to the customer leads to increase 6.4% in customer
satisfaction and hundred percent improving providing Mobile banking services to the customer
leads to increase 12.8% in customer satisfaction.
But based on this study result there is no significant evidence that show the effect of POS on
customer satisfaction.

43
CHAPTER FIVE
SUMMARY, RECOMMENDATION AND CONCLUSION
In this era the banking industry in our globe is vied information and communication ` technology
as part of business strategy for enhancing customer satisfaction and creating competitive with
other banking institution. As technology expands in bank the satisfaction and expectation of
customer increases that intern increases the growth and profitability of the institution. The
purpose of this study is to assess the effect of core banking on Commercial Bank of
EthiopiaKomto branch. The study particularly focused on the role of core banking technology on
customer satisfaction

5.1SUMMARY OF FINDING
In line with the objective of this research to effect of core banking information system on
customer satisfaction on commercial bank of EthiopiaKomto branch, the researchers used
questionnaires to gather information from respondents of different age group, level of education,
field of study, marital status and frequency usage of service Then the reliability and validity was
taken to realize the consistence of the data. The reliability was tested through statistical package
for social sciences (SPSS) and cronbach alpha correlation coefficient was used to satisfy the
reliability tests. The study sample had 385 questionnaires and distributed to respondents .From
this questionnaires88.60% or 350 questionnaireshave returned and 45(11.40%) was not returned.
This shows response rate of 88.60%was good according to (Sauders.Lewis and Thournbill,
2011).
As researcher studied from responses of respondentsthe descriptive analysis shows ATM
reduced time spent in the bank, free from danger, believable system to use and cheap cost to use.
But the network problem discontinue the operation, any technical failure hesitate customer and it
not possible to withdraw the amount as customer want. The correlation analysis for ATM also
shows that there was positive and significant relation (Pearson correlation = .854 **and p<0.01)
between Automated Teller Machines and Customer satisfaction. The multiple linear regression
analysis result of unstandardized Beta for variable Automated Teller Machines show that .650. It
revealed that if providing Automated Teller Machines services to the customer improved by
100% it increases the customer satisfaction by 65%. That is, Customer satisfaction is high if

44
Automated Teller Machines problem like, the withdrawal amount limit, technical failure and
network connection problems solved
The descriptive analysis for Mobile banking is easy to use, can use mobile banking anytime and
anywhere, helps to follow account transaction, free of charges, the system is believable to use,
helps for quick transfer of fund. But the network problem discontinue the operation, Exposing
security password to other have great risk.The correlation analysis for this variable shows that
there is positive and significant relation (Pearson correlation = .518 **and p<0.01) between mobile
banking and customer satisfaction. The multiple linear regression analysis of unstandardized
Beta for this variable is .128 and significant. It revealed that if customer Mobile banking services
providing improved by 100% it increases the customer satisfaction by 12.8%. That is, Customer
satisfaction is high if Mobile banking problem like, network connection solved
The descriptive analysis for Internet banking has helping nature, provides more flexible services.
But the network problem discontinues the operation and it is not easy to use the system. The
correlation analysis for this variable shows that there is positive and significant relation (Pearson
correlation = .431**and p<0.01) between internet banking and customer satisfaction. The multiple
linear regression analysis result of unstandardized Beta for variable Internet banking shows
that .064. It revealed that if providing Internet banking services to the customer improved by
100% it increases the customer satisfaction by 6.4%. That is, Customer satisfaction is high if
Internet banking problem like, awareness creation and network connection solved
The descriptive analysis for POS machine is easy to use. But the network problem discontinues
the operation, any power interruption hesitate customer, we can’t use POS machine anywhere
and anytime and the system posed charge for service used Internet banking has helping nature,
provides more flexible services. But the network problem discontinues the operation and it is not
easy to use the system. The correlation analysis for this variable shows that there is positive and
significant relation (Pearson correlation = .195**and p<0.01) between Point of Sale and customer
satisfaction. The multiple linear regression analysis shows no significant evidence that Point of
Sale has any effect on customer satisfaction.
Generally, the findings of the study conducted on the level of customer satisfaction towards
independent variables. ATM, Mobile banking, Internet banking and POS machine by descriptive
analysis. Correlation and regression shows that the respondents overall average response have
positive effect.

45
5.2RECOMMENDATION
Based on the findings and conclusions of the study, the researcher forwards the following
recommendations to the management of the banks and suggestion for other researchers and this study
raised a number of research questions. The purpose of the study was to assess the effect of core
banking information technology system on customer’s satisfaction on commercial bank of Ethiopia
Komtobranch. Based on the conclusions drawn above the following recommendations are forwarded
for the concerned bodies:
 The managers and staff of the bank expected to teach the society and expand the
technology, because the system is challenging to adapt.
 The managers and staff of the bank expected toincrease the satisfaction of customer for
ATM,mobile banking, internet banking, and strictly advice customer to keep their
password security confidentially
 The bank managements are expected to plan to distribute data base to district and
branches in addition to head office and increase the capacity of date base
 Since technical failure can hesitate customer the managers of the bank need to be
employee technician for each branch
 The bank managements are expected to buy qualified UPS to adapt power interruption
 To get many clients the bank must investigate the customers want from bank like
mortgages to low income society, reduce criteria of loan and adjust working time
 The management of the bank is expected to work to publicize to be free of any political
interference and sell shares to private individuals

46
5.3 Suggestions for further research
The research was concern on the effect of core banking on customer satisfaction on commercial
bank of Ethiopia Komto branch. It is better if it will be studied on other financial institution. This
can show the effect of core banking in financial institution in country basis
Finally, the researcher believes that this paper is not all in all that could provide all lists of topic
researched. However, it gives a bird-eye view on topic and it is open for further studies.

47
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 APPENDEX
MBA Program
Questionnaire for respondents
Dear respondents
These questioners are designed to gather information aboutimpact of core banking on customer
satisfaction of commercial bank of Ethiopia case of Komto branch. All responses will be used to
conduct a study for partial fulfillments Masters of Business Adminstration.I would like to assure
you that you will be guaranteed anonymity as I do not ask your name here and your responses
will not be used for any other purposes other than the intended purpose. Beside this survey
should only take about 10 minutes of your time. I am grateful for your cooperation in advance.
NB Please put √ marks to all responses in the circle provided for each alternative

I Demographic information of respondents

1GenderA male □ B female □

2. Age A below 30 □ B 31-40 □C 41-50 □D above 51 □

5. Education level. <10 □ preparatory □ Diploma/TVET □ BA/BSC Degree□ Master

Degree □ Doctorate and above □

4. Occupation: Unemployed □ Student □ Employed □ private □ other □
5. Marital status: Single □ Married □ Divorced □ Widowed□

55
4. Frequencies of usageA□Daily □B Weekly□C twice a week □D Monthly □ E more

than one month □

II Core banking Questionnaire for customer
The followings are questions that can best show how much the application of core
Banking brings customer satisfaction.

No. Item description SD DA N A SA

g g
III ATM
1 ATM is easy to use

2 Using ATM I can withdraw the amount I need

3 ATM is cheap cost to use
4 ATM is believable system to use
5 ATM is free from danger
6 ATM reduced time spent in the bank
7 Any technical failure can hasitate customer
8 Net work problem can discontinue the
operation
IV Mobile banking
9 I can use mobile banking any time and any
where
10 Mobile banking helps for quick transfer of
fund

11 Mobile banking in easy to use

12 Mobile banking is free of charge

13 Network problem can discontinue the

operation
14 Mobile banking is believable to use
15 Mobile banking helps to follow my
transaction
V POS machine
16 Any power interruption can hesitate customer
17 POS is free of charges
18 POS is easy to use
19 Net workproblem can discontinue the
operation

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 20 We can use POS machine anywhere and any
time
VI Internate banking
21 Internet banking is easy to use
22 Internet banking has helping nature
23 Internet banking helps for payment of
different bills
24 Network problem can discontinue the
operation
VII Customer satisfaction Questioners
25 Internet banking provides more flexible
services
26 I am satisfied to ATM
27 The service provided by internet banking is
satisfied me
28 Core banking is the latest technology that I
am satisfied of
29 Core banking is challenge to adopt
technology
30 I am satisfied to service provided by POS
machine
31 I am satisfied with the client of this bank

Where; SD is strongly dis agree,Dag is disagree,N is neutral,Ag is agree and SA is strongly agree

57