Professional Documents
Culture Documents
SEPTEMBER 2022
ADDIS ABABA, ETHIOPIA
DECLARATION
This paper is a presentation of my original research work. Whenever contribution of others are
involved, every effort is made to indicate this clearly, with due reference to the literature;
information derived from the unpublished work of others has been acknowledged in the text
and a list of reference is given. And, I declare that this paper has not been submitting for any
other degree in this university or at any other university.
ii
ACKNOWLEDGMENTS
First of all my thanks go to the Almighty God for letting me to go through the whole process
of life, then I would like to express my special gratitude to my advisor W/ro Zekia Yimame for
her suggestions, assistance and advice from the start to the end of the study, I would like also
to thank staff member of Abyssinia bank for their support while distributing and collecting the
questionnaires.
Lastly but not the least, my warmest appreciation and thanks goes to all my friends for their
support and encouragement while doing this paper.
iii
LIST OF ACRONYMS AND ABBREVIATIONS
iv
ABSTRACT
This study aimed to examine the attitudes of customers towards electronic banking in the Bank
of Abyssinia. The study was conducted based on the data gathered from the customers of Bank
of Abyssinia. Mixed research approach was employed to answer the research questions that
emerged through the review of existing literature and the experience of the researcher with
respect to the E-banking system. The descriptive statistics such as tables, frequencies and
percentages were used to analyze the data obtained from the questionnaire. From the analysis
of collected data, the finding showed that ATM, Mobile Banking, Internet Banking, RTGS and
POS were the major e-banking technology used in Bank of Abyssinia. In accordance with the
result of this study, respondents had good perception towards the benefits of E-banking such
as: E-banking is the best means to reduce customer overload, best way of achieving vision,
eliminates time constraint, and better managing of finance transactions. The findings of the
study also shows the respondents’ attitudes that frequent network failure, cash replacement
when ATM is out of cash, daily cash withdrawal limit and card gets jammed were problems of
E- Banking. Based on these, it was recommended that the bank should localize languages for
its customers; familiarize its customers with the process and benefit of the system. A suggestion
was also made for the government to invest on the telecommunication infrastructure to
overcome the problem of network and Electric power interruption.
v
TABLE OF CONTENTS
Page
Declaration............................................................................................................................ ii
ACKNOWLEDGMENTS .................................................................................................... iii
List of Acronyms and abbreviations ..................................................................................... iv
Abstract ................................................................................................................................ v
List of Tables ........................................................................................................................ c
Chapter one ........................................................................................................................... 1
Introduction ....................................................................................................................... 1
1.1 Background of the Study.............................................................................................. 1
1.2 Background of the Organization .................................................................................. 2
1.3 Statement of the Problem ........................................................................................... 2
1.4 Research Questions .................................................................................................... 3
1.5 Objectives of the Study ................................................................................................ 3
1.5.1 General Objective.................................................................................................. 3
1.5.2 Specific Objectives ................................................................................................ 3
1.6 Significance of the Study ............................................................................................. 4
1.7 Scope of the Study ....................................................................................................... 4
1.8 Limitation of the Study ................................................................................................ 4
1.9 Research Methodology ................................................................................................ 4
1.9.1 Introduction........................................................................................................... 4
1.9.2 Research Approach................................................................................................ 5
1.9.3 Target Population .................................................................................................. 5
1.9.4 Sampling Technique .............................................................................................. 5
1.9.5 Sample Size Determination ................................................................................... 5
1.9.6 Source of Data....................................................................................................... 6
1.9.7 Method of Data Collection .................................................................................... 6
1.9.8 Method of Data Analysis ....................................................................................... 6
1.10 Organization of the Study .......................................................................................... 6
CHAPTER TWO .................................................................................................................. 7
LITERATURE REVIEW ...................................................................................................... 7
2.1 Theoretical Review ...................................................................................................... 7
2.1.1 Definition: E-banking ............................................................................................ 7
2.1.2 Benefits of E-banking ............................................................................................ 8
a
2.2 Empirical Review ...................................................................................................... 11
2.3 Conceptual Framework .............................................................................................. 13
Chapter three....................................................................................................................... 14
Data Presentation, Analysis and Discussion ........................................................................ 14
3.1 Introduction ............................................................................................................... 14
3.2. Response Rate .......................................................................................................... 14
3.3 Analyzing and Discussing Response of Bank Customers ........................................... 14
3.3.1 Demographic Information of Respondents ........................................................... 14
3.3.2 Customers Experience in Using E-banking .......................................................... 16
Chapter Four ....................................................................................................................... 24
Conclusion and Recommendation ....................................................................................... 24
4.1 Conclusion................................................................................................................. 24
4.3. Recommendation ...................................................................................................... 25
Reference ............................................................................................................................. vi
Appendix ............................................................................................................................ vii
b
LIST OF TABLES
c
CHAPTER ONE
Introduction
The increasingly competitive environment in the financial service market has resulted in
pressure to develop and utilize alternative delivery channels. The most recently delivery
channel introduced is online or electronic banking also known as E-banking(Daniel & Story,
1997). Banks and other financial institutions have moved to E-banking in their efforts to cut
costs while maintaining reliable customer service (Kolodinsky & Hogarth, 2001). As
technology evolves, different kinds of electronic banking systems emerge, each bringing a new
dimension to the interaction between user and bank. These include Automated Teller Machine
(ATM), Mobile and Internet (online) banking, Electronic Funds Transfer, Direct Bill Payments
and Credit Card (Gikandi & Bloor, 2010). The appearance of E-banking in Ethiopia goes back
to the late 2001, when the Commercial Bank of Ethiopia introduced automatic teller machine
to deliver service to the local users.
As it is stated in different E-banking literature, some of the problems related to E-banking are:
Low level of internet penetration and poorly developed telecommunication infrastructure. Lack
of suitable legal and regulatory framework for E-Commerce and E-Payment is another problem
for the practice of new technology in banking industry. Low literacy rate is a problem for the
practice of E-banking in Ethiopia as it hinders the accessibility of banking services. For citizens
to fully enjoy the benefits of E-banking, they should not only know how to read and write but
also possess basic ICT literacy (Gardachew, 2010). But risks related to security issue, lack of
competition among local and foreign banks and social awareness on the E-banking system were
not addressed.
1
the country lags behind that inhibit their E-banking practice. Therefore, to address the current
gap in the literature, this study had focused on the assessing the attitudes of customers about
Electronic Banking in Bank of Abyssinia.
The present-day Bank of Abyssinia(BOA) was established on February 1996 (90 years to the
day after the first but defunct private bank was established in 1906 during Emperor Menelik
II). BOA started its operation with an authorized and paid-up capital of Birr 50 million, and
Birr 17.8 million respectively, and with only 131 shareholders and 32 staff. In two decades
since its establishment Bank of Abyssinia has registered significant growth in paid-up capital
and total asset. It also attracted many professional staff members, valuable shareholders, and
large customers from all walks of life. In the report 2020/2021 period, the Bank’s equity has
shown considerable growth which reached Birr 8.65 billion, (BOA annual report 2020/2021).
Currently, employing state-of-art banking technology, the Bank provides excellent domestic,
international, and special banking services to its esteemed and valuable customers. It also
strives to serve all economic and services sectors via its ever-increasing branch networks
throughout the country.
By referring different literatures and looking the service provided by the banks, the banking
system in Ethiopia is underdeveloped compared to the rest of the world and, therefore, there is
an immediate need to embark on capacity building arrangements and to modernize the banking
system by employing the state of art of technology being used in anywhere in the world. With
the growing number of import-export business, and increasing international trades and
international relations, the current banking system is short of providing efficient and
dependable services. Cash is still the medium of exchange. The use of checks is mostly limited
to governmental institutions, nongovernmental organizations and some private businesses. The
country has not yet realized the full benefit of technological advances in electronic banking
system.
Even though E-banking has a lot of benefit in delivering service to customers, in Ethiopia
customers were missed to enjoy with the technological advancement in banking sector which
has been entertaining elsewhere in Africa and the rest of the world. The modern E-banking
2
methods like Automated Teller Machine (ATM), Debit Cards, Credit Cards, Internet Banking,
Mobile Banking and others are new to the Ethiopian banking sectors.
In less monetized countries, like Ethiopia, financial sector is dominated by banking industry,
effective and efficient functioning of the economy has significant role in accelerating economic
growth. To enhance the role of banks in an economy, competition is an important driving force.
In other word, insufficient competition may result in substantial social losses on account of
higher price, higher transaction cost, lower credit supply, lack of innovation and poor service
quality. Therefore, this study was intended to assess the attitudes of customers about E-banking
in Bank of Abyssinia.
Based on the above stated problems, the study focused on the following research questions:
1. What are the perceptions of customers about the benefits and challenges of using E-
banking?
➢ To know the perceptions of customers about the benefits and challenges of using E-
banking.
➢ To find out the influence of transaction efficiency of e-banking on customer
satisfaction;
➢ To know the attitudes of the customers about usage of E-banking.
3
1.6 Significance of the Study
The outcomes of this study have potential value to financial institutions; particularly they can
help banks understand the challenges related to adoption of new technology and its advantages
in providing service to their customers. In addition, this study is expected to help other
researchers who are interested in conducting further studies regarding the issue under
investigation by providing important information.
Finally, based on the findings of the study on E-banking system, the study provides
recommendations for banks about the changes needed to accelerate adoption of the system to
deliver service to customers through technological innovation.
Initially, this study focused on the attitudes of customers towards e-banking at Bank of
Abyssinia, Meskel flower branch. Later on, the study confined itself to five E-banking
technologies. These were: ATM, Mobile Banking, Internet Banking, and Point of Sale (POS)
and RTGS and it excluded E-banking technologies. The reason behind this was that E-banking
technologies are highly and frequently used types of E-banking in Ethiopia. The other reason
was that there were time and cost constraint to cover all elements of E-banking.
When conducting this study, there were a number of limitations that hindered the study. The
first challenge was getting the necessary data. Because of this, the researcher depended on
limited number of variables. The second challenge was, getting branch customers at a certain
time due to this reason the researcher repeatedly visited the bank. And the other challenge was,
since I am student researcher, the nature of the course I am attending, led me to time constraint.
Therefore, such limitation might have adversely affected the finding of the study
1.9.1 Introduction
Designing appropriate research methodology is a prerequisite in order to conduct a good
research work. Accordingly, this section focuses about the methodology by which the
researcher used to conduct this study. Thus, research approach, target population, sample size
4
and sampling technique, source of data, method of data collection and method of data analysis
are presented below:
N
𝑛=
1 + 𝑁 (𝑒 2 )
5
N = Total number of study population,
e = level of precision to have in the data or degree of freedom which is 90% for this study.
1652
𝑛 = 1+1652(0.12 ) = 94.29
Therefore, out of 1652 branch customers 94 customers was selected randomly. The study did
not considered BOA customers those who have a passbook other than Meskel flower.
The research paper is divided into for chapters. Chapter one presents the introduction part,
which contains, back ground of the study, background of the organization, statement of the
problem, research questions, objectives, significance of the study, scope and limitation of the
study and research methodology. The second chapter is about review of related literature.
Chapter three presents data analysis and presentation. The final part, chapter four, is about
conclusion and recommendation of the paper.
6
CHAPTER TWO
LITERATURE REVIEW
Electronic banking is defined as an "online interface through which consumers may access
many types of financial services ranging from bill payment to making investments"
(Pikkarainen et al, 2004). Aside from cash withdrawals, electronic banking allows clients to
conduct a variety of financial transactions with the click of a mouse (De Young, 2001) With
the advent of globalization and fiercer competition, the use of electronic banking as a means of
financial institution distribution has evolved into a competitive instrument rather than merely
a means of achieving a competitive advantage of preference (Flavián et al, 2004; Gan and
Clemes, 2006).
Electronic banking (Timothy, 2012) refers to the use of the Internet as a remote delivery
channel for providing services such as establishing a bank account, moving cash between
accounts, and electronic bill presentation and payment. This can be done in one of two ways.
A bank with physical locations can create a website and offer these services to its customers in
addition to the traditional methods of payment. The second option is to set up a virtual bank,
with the PC server placed in an office that acts as the bank's legal location. Banks provide their
customers with the ability to deposit and withdraw cash using ATMs (Automated Teller
Machines) or other remote conveyance channels claimed by various foundations, for which a
fee is charged (Ahasanul et al., 2009) Electronic banking is a new way of receiving banking
services.
There are several definitions for e-banking, all of which explain the same concept. Some of
these definitions are shown in the next section. E-banking is a type of banking service in which
monies are exchanged between financial institutions using electronic signals rather than cash,
cheques, or other negotiable instruments (Kamrul, 2009).
7
E-banking, often known as electronic money transmission, is a type of online banking (EFT).
It's simply the use of electronic means to transfer funds from one account to another instead of
using a check or cash (Malak, 2007). Online/internet banking, often known as e-banking, is the
use of the internet as a remote delivery route for financial services (Furs t& Nolle, 2002, p.5).
There are number of reasons for which customer’s satisfaction on e-banking has been
improved.
Customers may withdraw and transfer funds at any time and from any location. Technological
advancements have increased accessibility by allowing clients to do business from their homes
and offices. It makes banking transactions and operations very simple to comprehend. Direct
control with the bank is not required because services may be performed anywhere the
consumer desires. It has decreased the customer's waiting time; there is no need to stand in a
large line. Employee availability is not necessary at all times because these services are
available 24 hours a day, seven days a week. Internet-based services have allowed corporate
and retail consumers to do business from their homes, offices, and while on the road. Online
fund transfer allowed customers to move monies at the same time from one bank to another or
inside the same bank. E- banking has enhanced communication and engagement between the
bank and the client. In general, we can say that e-banking has become a popular way to conduct
financial transactions and improve consumer satisfaction.
Electronic banking has created a global open door for banks and businesses, as seen by the
manner they handle financial transactions (Michael and Jen 2006). Customers who use
electronic banking may check their accounts, transfer money, and use a variety of banking
goods and services. Customers are not required to visit banks in order to do business (Cheng
et al., 2006).
8
Customer Satisfaction
Although there are numerous articles on customers’ satisfaction, there is no unique or common
definition in theoretical literature. According to Jamal, (2004) noted that during the last four
decades, satisfaction was considered as one of the most important theoretical and practical
subjects for most of the marketers in this field. Generally, there are two different perceptions
for customers’ satisfaction: cumulative satisfaction and exchange satisfaction (Olsen &
Johnson 2003). Cumulative satisfaction means that customers’ satisfaction is not only based
on recent shopping experiences, but also customer evaluation on all of his/her shopping
experiences (Johnson, M. D., & Fornell, C, 1991). Exchange satisfaction refers to customers’
satisfaction of product evaluation based on recent experiences (Oliver, 1997). Today,
cumulative satisfaction is used in most customers’ satisfaction research (Gupta, S. & Zeithaml,
V. (2006).
When companies conduct satisfaction surveys, they often question customers if their product
or service met or surpassed their expectations. As a result, one of the most important factors in
determining happiness is expectations. When customers have high expectations and the reality
falls short, they will be disappointed and will likely rate their experience as less than satisfying.
Cumulative satisfaction has more influence in the banks performances and services and is
necessary for predicting the behavior of customer shopping (Parasurman et al., 1998). By
considering these two perceptions, there are many definitions for customers’ satisfaction. In 13
academic literature, customers’ satisfaction is defined as a function of the difference between
past experiences and current perceptions based on shopping (Churchill, G.A. J. & Surprenant,
C. 1982). Based on Jamal and Nasser (2003) also defined customers’ satisfaction as a feeling
or attitude in the customer related to one service or product after using it. Customers’
satisfaction can be defined as evaluating one product or service based on customer needs and
perceptions (Oliver, 1980). As such, customer satisfaction is the customer perception of
9
meeting his/her expectations after using the product which influences future behavior
(Adamson et al., 2003)
Minimum price with maximum use and profit always leads to a greater degree of satisfaction
(Jamal and Kamal, 2004), as mentioned in (Afsar, 2010). Dissatisfaction is common when price
does not match the demands of the customers. Interest rates on loans, fees for using online
services such as ATM machines, and the processing fee are all important sources of contention
between banks and their clients in the banking sector. Customers switch if they believe the
prices are more than they should be for their requirements. The banking sector is currently
extremely competitive, as it has become far too easy to create an account with any other bank,
resulting in very low switching costs. However, if a client is happy, loyalty develops naturally,
and the consumer stays with their present banker for longer and longer periods of time (Fox &
Poje, 2002). (Afsar , 2010).
10
other alternatives and other items against which the organization's offerings can be compared
(David, 2010).
It is also widely acknowledged that, due to the specific characteristics of services, assessing
service quality is more challenging than measuring product quality. The following are the
primary features of services in general and financial services in particular (Parasuraman,
Zeithmal, and Berry, 1988):
The majority of researches discovered that service quality is a predictor of customer happiness
(Bedi, 2010; Kumar et al., 2010; Kumar et al., 2009; Naeem and Saif, 2009; Parasuraman et
al., 1988). Customer service and happiness are widely acknowledged as the most essential
criteria in attracting and keeping bank customers (Jamal, 2004; Armstrong and Seng, 2000;
Lassar et al., 2000). One of the important success elements that influences an organization's
competitiveness is service quality. By offering high-quality service, a bank may set itself apart
from its competitors. Over the last decade, one of the most appealing areas for studies in the
retail banking business has been service quality (Avkiran, 1994; Stafford, 1996; Johnston,
1997; Angur et al., 1999; Lassar et al., 2000). Customer satisfaction, according to (Tse &
Wilton, 1988), is the consumer's reaction to the perceived disparity between past expectations
and the product's actual performance.
Several relevant investigations are being carried out by various researchers in various regions
of the world. However, just a few research on e-banking technologies have been done in
Ethiopia. In particular, (Gardachew, 2010) investigated the benefits and drawbacks of e-
banking in Ethiopia. The research looked into the current state of electronic banking in
Ethiopia, as well as the key obstacles and possibilities associated with developing an e-banking
system. The author conducted a survey on banks' current operating styles and identified some
barriers to using the e- banking system, including a lack of appropriate legal and regulatory
frameworks for e-commerce and e-payments, political instability in neighboring countries,
high rates of illiteracy, and the lack of financial networks that connect different banks.
Wondossen & Tsegai (2005) looked at the problems and potential of e-payments in Ethiopia,
with the goal of learning more about e-payment practices in poor countries. The authors used
interviews and on-site observation to investigate e-payment challenges in Ethiopia, and
discovered that the main barriers to the development of e-payments are a lack of customer trust
11
in the initiatives, a lack of payment laws and regulations, particularly for e-payments, a lack of
skilled manpower, and frequent power outages. A proper legal structure and security
environment, according to Wondwossen & Tsegai it might encourage the usage of e-payments,
which contradicts the previous study's findings.
The research recommends a number of steps that the banking sector and government might
take to solve the issues identified. These steps include providing a clear legislative framework
for the use of technology in the banking business, investing in ICT infrastructure to support the
banking industry, and focusing banks on technological innovation competition rather than
conventional retail bank rivalry.
Furthermore, at two private banks in Gondar city, (Assefa, 2013) did research on the influence
of e-banking on customer satisfaction. This study was confined to clients of two private banks,
and the researcher used descriptive and inferential statistics to analyze it. The study's findings
indicated that the majority of e-banking users are young, educated, salaried, and students, that
business men and women are not actively using the service, that e-banking is currently
available only for saving and current account holders, that e-banking reduced the frequency of
bank hall visits for banking services, that e-banking reduced customer waiting time, that e-
banking enabled customers to control their account movements, and that there is a significant
opportunity to expand e-banking
The study by (AlaEddin & Hasan, 2011) on e-banking functionality and customer satisfaction
results in Jordanian commercial banks seeks to evaluate the adoption of e-banking functionality
and the impact of e-banking on customer satisfaction outcomes in Jordanian commercial banks.
Customers with the required demographic parameters (e.g., gender, age, and computer use),
prior internet experience levels, and product-related knowledge were recruited using a
purposive sample approach. The study found that e-banking adoption (accessibility,
convenience, security, privacy, content, design, speed, fees and charges) improved consumer
satisfaction at Jordanian Commercial Bank. In their study in Singapore, Gerrard and his
colleagues found that risk is a significant element in Internet Banking adoption. All of the
12
respondents who did not utilize online banking had a poor impression of the security of the
service. When utilizing the internet, the respondents said there were several security concerns.
They were concerned about their privacy, believing that all of their financial information may
be compromised
Customer happiness is heavily influenced by service quality (Cronin and Taylor, 1992).
Customer satisfaction, in turn, is thought to influence post-purchase behavior, perception, and
future decisions. The link between service quality factors and customer satisfaction may be
illustrated as follows, based on the literature review. The five Service quality dimensions used
in this conceptual model were chosen from Parasuraman’s study in (1988) using 10 service
quality characteristics, Parasuraman et al. (1985) performed study on several service
organizations (Bank, Hotel, Electrical Corporation, Hospital, Transportation) (tangibility,
reliability, responsiveness, communication, access, competence, courtesy, credibility, security,
and knowledge). Later study was done by Parasuraman et al., (1985), and the 10 dimensions
were purified and refined into five dimensions (tangibility, reliability, responsiveness,
assurance and empathy). The applicability of each service quality component to diverse service
companies was the rationale for reducing the 10 aspects to five. Therefore, this convinced the
researcher to use the model of Parasuraman et al., (1988)
Service
Security Service
Transaction
Performance
Efficiency
13
CHAPTER THREE
3.1 Introduction
This chapter provides the presentation, the analysis, and the discussion of the result. Data was
collected through questionnaire. A descriptive data analysis method was used to present,
analyze and interpret the data, about attitudes of customers towards E-banking. Frequency
tables along with frequencies and percentages were used to present and analyze the response
of respondents’ e-bank customers of Bank of Abyssinia.
Nineteen questionnaires were distributed for BOA customers. All of the questionnaires, 100%
response rates were returned properly. They were valid and properly filled.
The majority of E-banking customers are between the ages of 18-35, as seen in the table 78 %.
Males made up the majority of the participants 67%, while females made up 33 %. Bachelor's
degree, university students, Secondary school or less, Diploma and master's degree/PHD
holders accounted for 34.04 %, 30.85%, 13.83%, 12.77% and 8.51% of the respondents'
academic qualifications, respectively. Furthermore, 34 (35%) respondents were university
students, 25(26%) did their own job, 21(22%) respondents were private employees and 16
(17%) respondents were government employee.
In summary, the majority of the respondents were within age group 18-35 having
predominantly bachelor's degrees and university students 65% from total population and have
different job occupation 92% of respondents were either student, own worker or private
14
employee. When the researcher connect it with the objective of the study, researcher could
identify the youngsters have good attitude toward e-banking. In this case, the bank should have
to go the elderly and other age groups in order to duplicate its service. According to the
researcher males were near to usage of e-banking technology than females.
15
3.3.2 Customers Experience in Using E-banking
In this section the attitudes of customers towards the benefits and challenges of using
e-banking were discussed. The analysis and presentation was made using statistical tools such
as frequencies percentage and tables.
This implies that nearly half of the sampled customers were using e-banking for 4-6 years.
Even though ATM was launched in BOA in 2010, it has not been fully provided to users.
16
Bank of Abyssinia has launched e- banking services to customers. In the above data 94 (100%)
respondents were users of ATM and Mobile banking, 31 (32.97 %,) respondents were users of
POS machine, 26(27.66%) respondents were users of a new technology RTGS (Real-time gross
settlement) and 5 (5.31%) customers operated using internet banking. Here respondents were
allowed to answer more than one answer.
To conclude the results, all the sampled customers were ATM and Mobile banking users,
because ATM was a pioneer e-banking service in Ethiopia and Mobiles on every customers
hand simplify transactions therefore, customers have realized and like those services. They also
have accustomed the use of POS machine service to make a transaction. Even though Internet
banking is introduced prior to RTGS, unignorably number of customers were interested and
are used in the new technology real time gross settlement.
Source: Questionnaire
17
The attitude of customers about E-banking varies for various reasons. The above Table (3.4),
shows that 86 or (91.49%) respondents strongly agreed that e-banking service was good for
better management of financial transaction, and 8 (8.51%) respondents normally agreed on the
issue, And there were no customers who is neutral, disagreed or strongly disagreed about the
service of e-banking for managing financial transaction. Since customers were able to check
their balance, transfer money to any commercial banks in Ethiopia using RTGS by mobile
application technology, pay different bills, recharge mobile phone and know daily foreign
currency rate, at any time easily and they were able to get the bank statement that shows their
balances, most of the respondents appreciated the e-banking service.
“E-banking services enabled users to complete banking activities more easily”. According to
the above table, 78(82.29)% of customers agreed strongly and said that e-banking, services
enables users to complete banking activities more easily. 14(14.89) customers normally agreed
that E-banking services enabled users to complete banking activities more easily, whereas two
customer were neutral and they said nothing about the issue in question. And no customer were
disagree or strongly disagree about it.
The next item in the table was about “E-banking technology eliminates time constraint”. With
regard to this issue, 81 or 86.17% respondents strongly agreed and said that E-banking
technology eliminated time constraint, 11 or (11.7%) normally agreed and said that e-banking
eliminated time constraint, two or (2.13%) respondent was neutral or he or she was not sure
about it and the other respondent said still there are many peoples around ATM machine
spending long time.
This shows 97% of the sampled respondents agreed that E-banking technology eliminated time
constraint. Banking services were available 24 hours through ATM and Mobile application.
This solved the time constraint. In addition, there were alternative means of getting service
from the bank through e-banking. The customer waiting time in the bank branch significantly
reduced.
The last issue in the table 3.4 was “E-banking is more convenient to users than visiting a bank‟.
Basically, one of the big significance of using e-banking is the convenience it provides to its
users. On the basis of this issue, 81.91% of respondents strongly agreed that E-banking was
18
more convenient than visiting a bank, and 17.02% of respondents normally agreed with this
issue. 1.1% of respondents were not sure about it and they were neutral. No respondent
disagreed. This shows 98% of the sampled customers agreed that E-banking was more
convenient than visiting a bank.
This shows that the degree of agreement between customers was different but in general
customers have good attitude towards this benefit of e-banking because 98% of customers
agreed to this benefit of e-banking.
Additionally, the researcher asked customers to list down other benefits of e-banking and to
rank their agreement level. Accordingly almost all customers forwarded the following benefits
of e-banking and all of them “strongly agreed‟ and/or “agreed‟ to the following benefits.
✓ E-banking helped them to facilitate their run their day to day activities
✓ E-banking enabled them to withdraw cash even if the bank branch was closed
✓ E-banking enabled them to transfer money to one account to the other account
or person,
✓ E-banking enable them transfer money to one account to the other account in
different competitive bank customer.
19
Table 3. 5: Attitudes of Customers towards the Challenge of e-banking
Source: Questionnaire
The most serious problem in using e-banking was electric interruption and network failure.
According to the data in table 3.5 above, 12 (12.77%) respondents strongly agreed that network
failures were serious problem to use E- banking. The other 42 (44.68%) of the respondents
normally agreed that network failures were serious problem to use E- banking. Ten respondents
are neutral and nothing to say about it. 26.6% disagree and 5.32% strongly disagree network
failure are a serious problem to use E-banking. This implies that all 58% of the sampled
customers agreed that the network failure was the challenge in using e-banking. Network
failure frustrated customers to use e-banking and to deposit money in the bank because they
were not sure they got their money back when they wanted the money for their immediate need.
As a result, they preferred to hold their cash in their pocket to avoid such problem. This exposes
customers to thieves and robberies.
20
In table 3.5, 7.45% of the respondent strongly agreed that security was a serious problem in
using E-banking. 5.32% of the respondents normally agreed that security was serious problem
in using e-banking. 1.06% respondents was neutral or didn’t say anything about whether e-
banking was secured or not. 50% of the respondents disagreed with the existence of security
problem in using e-banking. And the other, 34 or (36.17%) of the respondents strongly
disagreed with this issue. As the response shows, 86% of the sample were disagreed that
security is a “serious problem in using E-banking”. This shows security was not the major
problem in using e-banking.
Even though, Innovation and adopting of new technology may create security problem
respondents of the sample believe that carrying/holding cash is easily exposed to robbers and
thieves. They believed that if they keep ATM cards and their passwords secretly at different
places e-banking is more safe than holding cash on hand or bag.
About the replacement of cash to the ATM machine when the machines were out of cash,
respondents had given various responses. According to table 3.5, out of 94 respondents 19 were
strongly agree that “when machine is out of cash, replacement of cash to ATM Machine on
time is a serious problem to use e-banking”. 70 respondents normally agree that replacement
of cash to ATM Machine on time is a serious problem to use e-banking. 3 respondents were
disagree and 2 respondents strongly disagree “replacement of cash to ATM Machine on time
is a serious problem to use e-banking.” None of the respondents were neutral.
Since 89 respondents out of 94 were agreed on “when the ATM machine is out of cash,
replacement of cash on time is a serious problem”. This implies that when ATM machines is
out of cash customers tries looking for other competitors service and may remain there. This
may harm the bank by losing its customers.
Regarding the daily limit of cash withdrawal from ATM, respondents had given various
responses. According to table 3.5 above 35.11% strongly agree and 59.57% of the respondents
agreed that “The limit of daily cash withdrawal are a serious problem”. Three or 3.19% were
neutral to this idea. He/she said, “the amount Birr per day is more than enough for me”, the
other respondent said “the limit is important because to serve many more customers at a time.”
21
1.06% respondent disagreed and strongly disagree that the limit of daily cash withdrawal are a
serious problem. This shows that 95% of the respondents agree that the limit of daily cash
withdrawal from ATM machine is a serious problem.
In addition to the above stated challenges of e- banking, the researcher asked customers to list
other challenges and to state their agreement level, accordingly approximately all customers
forwarded the following challenges of e-banking and all of them said that they strongly agreed
and agreed to the corresponding challenges.
22
Table 3.6 shows the satisfaction level of customers using e-banking. Out of 94 respondents 43
were strongly agree that “I’m satisfied by e-banking service”, 46 respondents agreed, 4 were
neutral didn’t said anything about it and one respondent disagree that “I’m satisfied by e-
banking service”.
This implies that 95% of respondents were satisfied by e- banking service. There fore e-banking
service should be given all places in the city to maintain satisfaction of customers.
From table 3.6 above can also see that, 14.89% respondents strongly agree and 78.72 %
respondents were agree to the response “I’m satisfied by the security service of e-banking” ,
2.13 % were neutral didn’t say anything, 4.26% disagree and 2.13% strongly disagree to the
response “I’m Satisfied by the security service of e-banking.” This implies 93% of the
respondents agreed to the response “I’m satisfied by security service of e-banking.” This result
agree with “security is not the problem to use e-banking.”
About the transaction efficiency, from table 3.6 above, 11.07% respondents were strongly
agree, 54.26% respondents were agree to the response “I’m satisfied by transaction efficiency
of e-banking”. Two respondents were neutral didn’t say anything about it. 30.85% respondents
were disagree and one respondent was strongly disagree to the response “I’m satisfied by the
transaction efficiency of e- banking”. This implies that 65 % of the respondents are satisfied
by the transaction efficiency of e-banking.
At last, respondents were asked the overall performance of e-banking and they respond as
follows. 46.81% respondents were strongly agree and 44.68% respondents were normally agree
to the response” I’m satisfied by the overall performance of e-banking service”. Eight
respondents were neutral to the response “I’m satisfied by the overall performance of e-
banking”. This implies that 90% of the respondents are satisfied by the overall performance of
the e-banking service given.
In conclusion 86% of the sampled population were satisfied by e-banking service given. The
should identify and solve the factors affecting the satisfaction level of customers by using
technology and other means.
23
CHAPTER FOUR
This chapter concludes by giving the main findings and by suggesting important
recommendations.
4.1 Conclusion
The study aimed at investigating the attitudes of customers towards e-banking in Bank of
Abyssinia. To address these objectives, a mixed research approach was applied and the primary
data was collected through survey questionnaires from the customers of the Bank of Abyssinia.
The study shows that the most commonly used e-banking service was ATM and Mobile
banking. This was because ATM was the pioneer e-banking instrument in Ethiopia and mobile
phone now a days considered as one of basic need in urban. As a result, almost all e-banking
customers of the bank know the benefits and functions of ATM and Mobile application
banking.
In Bank of Abyssinia electronic banking gives various functions and benefits to the customers.
The following important benefits of e-banking have been identified from the findings and
discussion.
▪ E-banking was the best means to reduce customer’s load. But only educated people used
e-banking. Mostly people who came to banks are uneducated people and they were not
e-banking users. Usually illiterate people did not use e-banking.
▪ E-banking technology helped customers. It saves time and energy. E-banking users need
not to go to banks to get bank services frequently. All types of services are available via
mobile or ATM card. Customers could check their accounts from where they were.
▪ Bank of Abyssinia had designed various strategies to achieve its vision. One of them was
e-banking. E-banking services enabled users to complete banking activities more easily.
24
The study also showed that attitudes of customers towards e-banking services of Bank of
Abyssinia:
▪ Frequent power and network interruptions were obstacles to smoothly running e-banking.
This problem was common in our country due to the low level of infrastructural facilities
to run better functioning of e-banking.
▪ High rate of illiteracy of customers and lack of enough awareness on the benefit of e-
banking were also the major challenges of e-banking service.
▪ In general, the result of this study, respondents had good perception towards the benefits
of E-banking such as: E-banking is the best means to reduce customer overload, best way
of achieving vision, eliminates time constraint, and better managing of finance
transactions. The findings of the study also shows the respondents’ attitudes that frequent
network failure, cash replacement when ATM is out of cash, daily cash withdrawal limit
and card gets jammed were problems of E- Banking. On overall performance of e-banking
respondents are satisfied.
4.3. Recommendation
Electronic banking service is a new financial development in Ethiopia and it is very important
issue because it has a great impact on the whole banking activity, at the same time, it is
demanding and needs a lot of efforts to be adopted and accepted by customers of Abyssinia
Bank S.C.
Based on the above conclusions, the researcher forwarded the following recommendations:
▪ Bank of Abyssinia should consider the capacities and skills, and knowhow of the customers
about e-banking by using different menses such as brochure, media and website in different
local languages.
▪ Bank of Abyssinia should ensure security and privacy of its customers. The bank currently
using OTP (one time password) sent from center through SMS for security in addition to
customers password, that makes user confident and the bank should proceed on that means
of security. E-banking users are more favorably inclined towards using it when they perceive
that the information provided during the banking transactions is secured, and third parties
shall not have access to it.
25
▪ In order to exploit the benefits of E-banking services, Bank of Abyssinia needs to establish
a strong link with its customers by providing the required information that will enable
them to use electronic banking services in the future.
▪ Bank of Abyssinia should continuously review and upgrade the existing system of security
to the level that minimize risk and lets the customers know the status for their decision
and confidence in adoption of new innovation.
▪ Banks should pay special attention to deliver service to their customers by using e- banking
system, which can be easily accessible.
▪ The study showed that the daily limit on ATM cash amount is a problem so the bank
should work on that.
▪ Control the interruption of electric power and network failure even if those are external
factors, the bank should try to choose other options in order to keep the interests of its
customers.
26
REFERENCE
Classes, J. (2002). On the security of today‟s online electronic banking systems: Computer and
security Vol.
Creswell, W. (2003). Research design: qualitative, quantitative and mixed approach. 2nd
Edition: California, United states.
Daniel, E., & Story, C. (1997). Online banking: strategic and management challenges paragon.
Furst, K., & Nolle, D. (2000). Internet banking: developments and prospects. Working paper
from office of the comptroller of the currency, Administration of national banks.
Gikandi, J.W., & Bloor, C. (2010). Adoption and effectiveness of electronic banking in Kenya:
electronic commerce and research and application.
Jayawardhena, C. & Foley, P. (2000). Change in the banking sector: the case of internet
banking in the UK, internet research: electronic network application and policy.
Kamrul, H. (2009). Electronic banking in Bangladesh: the future of banking school of business.
Kolodinsky, J., & Horgath, J.M. (2001). The adoption of electronic banking technologies by
American consumers: consumer interests annual.
Malak, J. (2007). Readiness of the Palestinian banking sector in the adoption of electronic
banking system: MA thesis, the Islamic Uuniversity of Palestine.
Yang, Y. (19997). The security of electronic banking: a research paper presented at national
formation systems security conference U.S.A.
Zhao, (2008). Perceived risk and Chinese consumer‟s internet banking service adoption:
international journal of bank marketing.
vi
APPENDIX
Dear respondent,
I am kindly requesting you to participate on the survey questioner to assess the attitude of
customers towards e-banking in the case of bank of Abyssinia, Meskel flower branch. All data
included in this questionnaire will be used only for academic research and will be used as
primary data for partial fulfilment of the requirement for the Bachelor degree in Accounting
and Finance. Your response in this study is completely voluntary. Your genuine response and
cooperation is vital for this study. All your responses are strictly confidential and data this
research will be reported only in the aggregate. I would like to express my heartfelt gratitude
in advance for your kind participation.
Kefyalew Tefera
vii
PART TWO: Main Questions
Instructions: Put a tick mark (√) under the appropriate column which shows your choice
against each statement.
5. What type/s of electronic banking service you use? (more than one answer is possible);
ATM Mobile Banking Internet banking POS RTGS
No. Description
Disagree
Strongly
Strongly
disagree
Neutral
Agree
agree
Benefit of E-banking
Challenge of e-banking
viii
13 Limit of daily cash withdrawal from ATM
machine is a serious problem to use e-
banking.
Satisfaction of customers
________________________________________________________
_______________________________________________________.
19. List other challenges (if any) of e-banking by ranking them your agreement.
____________________________________________________
________________________________________________________
_______________________________________________________.
ix