Professional Documents
Culture Documents
Edited Mekilit - propOSAL Lastdocx
Edited Mekilit - propOSAL Lastdocx
PREPARED BY:
MEKILIT YOHANIS
ID NO: ACC/WE/231/12
ADVISOR: ABEBAYEHU B. (Msc)
MARCH, 2024
First and foremost, I like to thank almighty God for his blessing, invaluable gift of health,
strength, believes, love, and protection throughout my life. I also thank my advisor Abebayehu
B. (Msc) for his guidance, direction, and advice throughout this research proposal and my
program. He serves as a professional mentor for me, and his support an important part of my
success.
i
TABLE OF CONTENTS
Contents Page
ACKNOWLEDGEMENT................................................................................................................i
TABLE OF CONTENTS................................................................................................................ii
ACRONYMS..................................................................................................................................iv
CHAPTER ONE..............................................................................................................................1
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 objective............................................................................................................4
1.5 Scope of the study..................................................................................................................4
1.6 Significance of the study.......................................................................................................5
1.7 Limitation of the study...........................................................................................................5
1.8 Organization of the study.......................................................................................................5
CHAPTER TWO.............................................................................................................................6
REVIEW OF RELATED LITERATURE.......................................................................................6
2.1. Theoretical Review of Literatures........................................................................................6
2.1.1- Introduction...................................................................................................................6
2.1.2 Definition of Electronic banking....................................................................................6
2.1.2 Role of E-Banking Service.............................................................................................7
2.1.4-Types of e-banking.........................................................................................................8
2.1.4.1 Automated teller machines..........................................................................................8
2.1.4.2 Electronic funds transfer system..................................................................................8
2.1.4.3 Mobile banking............................................................................................................9
2.1.4.5 POS banking..............................................................................................................10
2.1.5 Electronic Banking System in Ethiopian Banking Sector............................................10
2.1.6. Challenges in the Adoption of E-Banking Services....................................................11
2.2. Empirical literature.............................................................................................................12
ii
CHAPTER THREE.......................................................................................................................15
3. RESEARCH METHDOLOGY.................................................................................................15
3.1 Description of study area.....................................................................................................15
3.2 Research design...................................................................................................................15
3.4 Target population.................................................................................................................16
3.5. Sample Size and Sampling Technique...............................................................................16
3.7 Data Processing and Analysis..............................................................................................16
4. WORK PLAN &BUDGET BREAK DOWN...........................................................................17
4.1 Work plan............................................................................................................................17
4.2 Budget Break down.............................................................................................................18
REFERENCE................................................................................................................................19
iii
ACRONYMS
iv
CHAPTER ONE
1. INTRODUCTION
Electronic banking means 24-hour access to cash through an automatic teller machine (ATM) or
direct deposit of paychecks into checking or saving accounts. However, electronic banking
involves many different types of transactions, rights and sometimes fees. Electronic banking also
known as electronic funds transfer (EFT); is simply the use of electronic means to transfer funds
directly from one account to another, rather than by check or cash. Electronic funds transfers are
initiate through devices like cards or codes that let you, or those you authorize, access your
account. Many financial institutions use ATM or debit cards and personal identification numbers
(PINS) for this purpose. Some use other types of debit cards that require your signature or a scan.
The federal electronic fund transfer act covers some electronic consumer transactions. Automatic
teller machines (ATMS) also called 24 hours teller is electronic terminals which give consumers
the opportunity to at almost any time. To withdraw cash, make deposit or transfer funds between
accounts, a consumer needs an ATM card and personal identification number. If a fee will
charge, it must be reveals on the terminal screen or on a sign next to the e-banking (Vasu Deva,
2005).
Point of sale transfer terminals allow consumers to pay for retail purchase with a check card, a
new name for debit card. Thick card looks like a credit card but with a significant different the
money for the purchase will transfer immediately from account to the store's accounts. With
immediate transfer of the point of sale, it is easy to over draw your checking account and incur
additional charges unless you keep careful watch on spending. Personal computer banking
service offer consumers the convenience of conducting many banking transactions electronically
(Kamrul, 2009).
E-banking has undoubtedly become the main attention of banks and financial institutions
internationally. However, most Authors conduct their research on the topic of E-Banking service
on the basis of the implementation, challenges, motives, impacts and also factors affecting them
in different places and time. For instance, the research is conducted on the motivation and
1
challenges on implementing E-Banking in Vietnam (Dao Phong Nam, 2014), Factors influencing
and customers‟ acceptance on E-Banking service also in Nigeria(Awara Anyadighibe) and the
effect of E-Banking in Banks Profitability in Kenya(Njogu Joseph, 2012). As well as in Ethiopia
also the research conducted on factors affecting the adoption of E-Banking system (Ayana
Gemechu, 2014) and the Opportunities and challenges of E-Banking (Michael Adbib, 2013).
And these researches provide their suggestions and solutions for providing further success on E-
Banking service.
Technological innovations play a crucial role in banking industry by creating value for banks and
customers, that it enables customers to perform banking transactions without visiting a brick and
mortar banking system. On the other hand E-banking has enabled banking institutions to
compete more effectively in the global environment by extending their products and services
beyond the restriction of time and space (Turban, 2008).
Electronic Banking has been widely used in developed countries and is rapidly expanding in
developing countries. In Ethiopia, however, cash is still the most dominant medium of exchange,
and electronic payment systems are at an embryonic stage. In the face of rapid expansion of
electronic payment systems throughout the developed and the developing world, Ethiopia’s
financial sector cannot remain an exception in expanding the use of the system. All banks in
Ethiopia are too late to move with technological advancement and they should clearly chart out
the time schedule for their integration and technological advancement. Some of the banks even
today do not have their own websites which can help them to provide at least the information on
financial services offered by them (Gardachew, 2010).
2
1.2 Statement of the problem
Business organizations may face many problems in relation to electronic banking systems such
as lack of technological advancements of e-banking and lack of customer’s awareness because of
lack of skill man power and late adoption of the technology (Zhao, 2017).
The bank has a problem on E-banking that is related from or steamed from four main points
which are the organization, employees, technology and custom m mers. From the organization
point, a lack of training and updating the employees to the system and give a proper training and
utilization of the system by the responsible department. The training do not concern on how to
use the system and how to teach the system to real customers (Girma, 2016). Moreover, internet
banking needs a clear knowledge of using computers and internet to making transaction, in
recent time mobile banking used by each individual to make transaction that is easy to know and
apply at all their cell phone, can be accessed in English language only and also in ATM there is
no language problem because it can be accessed in other local languages. From the point of
technology, all technologies are not managed by the bank it is related to other stakeholders like
Ethio-telecom who manages the entire country network infrastructure. Most of the time
especially in weekends there are high failure of network and customer cannot access their
transaction properly (Kassahun, 2016).
According to Beza 2014 all banks are too late to move with technological advancement. Every
bank customer was dissatisfy by the disappointing status of the financial development in the
country and was try to assess the adoption of services of Internet banking only and finds to
assess driving forces towards the adoption of Internet banking and benefits realize by the bank in
the adoption of Internet banking. However, this study was focused on assessments of electronic
banking as a whole including mobile banking, Internet banking, ATM and other e-banking
services of Wogagen Bank Sodo Kawo Tona branch. Hence, the researcher was try to answer the
following basic research questions.
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 technology being used anywhere in the world. With a growing number of
3
import-export businesses, and increased international trades and international relations, the
current banking system is short of providing efficient and dependable services and therefore all
banks operating in Ethiopia should recognize the need for introducing electronic banking system
to satisfy their customers and meet the requirements of rapidly expanding domestic and
international trades, and increasing international banking services. Low level of internet
penetration and poorly developed telecommunication infrastructure, lack of suitable legal and
regulatory framework for e-commerce and e-payment, high rates of illiteracy, high cost of
Internet, absence of financial networks that links different banks, lack of reliable power supply,
and Cyber security issues are the most important challenges for development of e-banking in
Ethiopia. (Milkesa and Demis, 2012).
1.3Research question
In this study, the study tries to answer the following research questions.
1. What are the prospect and challenges of electronic banking system in Wogagen
Bank?
2. Does the expansion of electronic banking make easy access to use money?
3. What are the impacts of e-banking on the customer service quality?
The general objective of this study is to assesst of prospect and challenges of electronic banking
practices in wogagen bank (case of wolaita sodo branch)
4
service from the viewpoint of the bank.
5
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1. Theoretical Review of Literatures
2.1.1- Introduction
This chapter reviews literature that is relevant to the study. The purpose of reviewing literature
is to explore research works and other secondary data relevant to the study. The study explores
on the challenges and prospects in the adoption of E-banking services.
Different authors have defined it in different ways based on their understanding of the
application of electronic banking. According to Daniel (2013), electronic banking is electronic
connection between the bank and customer in order to prepare, manage and control financial
transactions.
In the opinion of Daniel (2013), e-banking is online banking (or Internet banking) which allows
customers to conduct financial transactions on a secure website operated by their retail or virtual
6
bank, credit union or building society. This implies that E-banking is a service that allows an
account holder to obtain account information and manage certain banking transactions through a
personal computer via the financial institution web site on the internet.
4. Easier expansion
Conventionally, when a bank wanted to expand geographically it had to expand new branches,
7
thus incurring high startup and maintenance costs. E-channels, such as the ATM, POS, mobile
banking and other has made this comparatively unnecessary in many circumstances. Now banks
with a traditional customer base in one part of the country or world can attract customers from
other parts, as most of the financial transactions do not require a physical presence near
a customer’s working place (Shah & Clarke, 2009).
2.1.4-Types of e-banking
An automated teller machine (ATM), also known as automated banking machine (ABM)
or cash machine is a computerized telecommunications device that provides the clients of a
bank with access to banking transactions in a public space without the need for a cashier,
human clerk or bank teller. While using modern ATMs, the customer is recognized by
inserting a plastic ATM card with a magnetic chip that contains a unique card number
and some security information such as an expiration date (Thompson, 1997). According to
Thompson (1997), authentication is provided by the customer entering a personal
identification number (PIN).
ATM banking enable customers to access their bank accounts in order to make cash withdrawals,
check their account balances, furthermore, as the ATMs continue when human tellers
stop, therefore, there is continual productivity for the banks even after banking hours (Yosef,
2017). The primary advantages of ATMs are they save the customer’s time in service delivery
and it is cost efficient way of yielding higher productivity per period than human tellers.
8
initiated through an electronic terminal, including credit card, ATM, and POS transactions.
Mobile banking is a system that allows bank customers to conduct different financial
transactions through a mobile device, being the newest service in electronic banking; mobile
banking relies on WAP (wireless application protocol) technologies since a mobile device
requires a WAP browser installed in order to allow access to information (Driga&Isac, 2014).
In developing countries where modern telecommunication infrastructure is not well
advanced, mobile technologies is transforming accessibility to the internet based services
(Driga&Isac, 2014).
Currently almost all commercial banks in Ethiopia are making significant investments in
mobile banking systems to deliver a wide range of banking service, to reach on increased
efficiency, cost reduction, improved operational effectiveness and improved customer service
and to achieve the aim of financial inclusion (NBE, 2015).
Mobile banking may be described as the newest channel in our country electronic
banking channel to provide a convenient way of performing banking transaction using
mobile devices (Tigist, 2018).
9
“branchless,” or “internet only” bank, with a computer server at its heart that is housed
in an office that serves as the bank’s official address. Simpson, further explained internet only
banks may offer customers the ability to make deposits and withdraw funds at automated
teller machines or other remote delivery channels owned by other institutions.
The emergence of electronic banking in Ethiopia goes back to the late 2001, when the largest
state possessed, commercial bank of Ethiopia (CBE) pioneered ATM to deliver service to
the local users. Besides eight ATM located in Addis Ababa, CBE has had visa membership
since November 14, 2005. Then, due to lack of appropriate arrangement it failed to reap the fruit
of its membership. Irrespective of being, the pioneer in introducing automatic teller
machine based payment system and attained visa membership, CBE covered behind
Abisinya bank, which operated aggressively to continue its’ leading in e-payment system
(Gardachew, 2010).
According to Wondwossen and Tsegai (2005), in 2005 commercial bank of Ethiopia (CBE) were
offered ATM service with eight ATMs in Addis Ababa. These ATMs enabled customers to
withdraw limited amount of money from their account on per day basis. The ATMs were also
enabled customers to check their account balance. However, depositing money through ATM is
10
impossible until now, due to the outdated nature of ATM available in our country’s
banking industry. In order to get ATM services, customers need ATM cards and secrete PIN
codes. The ATM card is a smart card used for security purpose only. The ATM card coupled
with a PIN code provides state-of-the-art authentication scheme called two-factor authentication.
Controlling its leadership with advanced banking technology, Abisinya bank started to use ATM
machine to deliver service to its customers in 2006, and the bank adopts mobile banking
(Modbirr) in the year 2009 (Ayana, 2012). Abisinya bank signed an agreement with iVery, a
South African e-payment technology company, for the introduction of mobile commerce in April
21, 2009. According to the agreement, ivery payment technologies have licensed its
gateway and micard e-payment processing solution to Abisinya bank. While Abisinya
bank is pioneer in channeling new technology, the younger United bank was the first to
introduce mobile and internet banking systems by the end of 2008 (Ayana, 2012).
However, in true sense, E-banking includes activities like payment of bills and invoices, transfer
of funds between accounts, applying for a loan, payment of loan installments, sending funds to
third parties via emails or internet connections regardless of where the client is located as
investigated by Ibrahim (2009) using exploratory study, the following are among the critical
challenges of E-banking.
11
by unavailability of information communication technology infrastructure. Most rural areas
where majority of small and medium scale industries are concentrated have no access to
internet facilities and information communication technology equipment.
Costs- where available, the cost of information communication technology is a critical factor
relative to per capital income. This makes the cost of entry higher compared to developed
countries.
Regulatory and Legal Issues -inexistence of proper legal and regulatory framework.
Non-readiness of banks and other stake holders- even though some have shown
impressive willingness, some banks are still not fully ready to for this new payment regime.
Resistance to changes in technology among customers and staff due to:
Lack of awareness on the benefits of new technologies
Fear of risk among banks and
Tendency to be content with the existing structures
There are a number of researches conduced with e-banking all over the world. Daniel (2000), the
provision of electronic banking service in the UK and Scandinavia in this research .Mail
questioner was used for data collection, according to Daniel the majority of both rejoin
respondents are already either developing or providing electronic banking system. The finding of
this study was the provision of electronic service is a corporate vision of the future in which the
banking system become ever more competitive and customer demand greater convenience. It
shows the reality currently e-banking has most widely used in the world. Andrea (2002),on the
issues in electronic banking views using electronic channels for banking services and products
has become increasingly in recent year. Electronic banking makes it possible to offer banking
services around the world 24 hours a day. The dependence of technology for providing the
services is with the necessary security, and the cross-border nature of transactions involves
12
additional risks for banks and new challenges for banking regulators and supervisors.
Prince (2015) the effects of e-banking on customer service delivery in Kumasi metropolis the
study adopted exploratory research design and purposive sampling technique used from three
selected branches of three banks. Mohammad and Alhamadani (2011) conducted a research to
explore the adoption of E-banking functionality and investigate the impact of E-banking on the
outcomes of customer satisfaction in Jordan. The research adopts exploratory approach and a
multiple regression modeling approach was proposed as an effective method for studying the
relationships. The finding of the study concluded that accessibility, convenience, security,
privacy, content, Assessment of customer satisfaction and challenges in electronic banking
system.
Moreover, a research by Namugeraw (2013) on the title Electronic banking & customer
satisfaction in Commercial Banks case study of Centenary Bank in Uganda discovered that
service quality, customer needs, flexibility, good working environment, and effective
communication highly determine customer satisfaction and are crucial in order to make
customers come the next time. Kwashie (2012) the impact of E-banking on service delivery to
customer of Ghana commercial bank Ltd, ho polytechnic branch .Non probability sampling
technique used .To investigate the research one hundred sixty six customer were sampled. He
concludes that there is a positive relationship between e-banking and service delivery. Kwashie
(2012) recommend that management of Ghana commercial bank invests massively in IT in order
to further promote efficient and smooth service delivery there is also the need to extensively
develop more e-banking products and to do extensive customer education to enable more
customer patronize.
More over a research conducted by Anuwar (2015), assessment of factors affecting adoption of
agent banking and electronic banking in Ethiopia the finding of the study was the main
challenges of banking industry in Ethiopia adoption of agent banking and e-banking are lack of
adequate national ICT infrastructure, lack of skilled IT personnel, lack of government support,
security risk, and lack of competition between local and foreign banks.
13
Michael ( 2013), challenges and opportunities of electronic banking a case Abisinya bank and
Nib international bank according to Michael the major challenges for the development of e-
banking in Abisinya and Nib security, lack of information ,lack of trust lack of legal and
regulatory framework, lack of infrastructure ,shortage of skilled professional and lack of
awareness the study also identified perceived ease of use and perceived usefulness as a benefit
for the development of e-banking in Ethiopia. Thus most of the previous research conducted the
same area which is adoptability, opportunity and challenges of e-banking.
14
CHAPTER THREE
3. RESEARCH METHDOLOGY
This chapter describes in detail, how the study will be carried out, what activities to be do,
research design, subjects or data sources, sample size, sample method, the instruments for data
collection, and the reason for choosing particular procedures.
3.1 Research Approach
The research that spans the steps from broad assumption to detailed methods of data
collection ,analysis and interpretation. The decision involves which inductive approach will be
used the to study . because the researcher brings to data collection,research design, research
method.
15
3.5. Sample Size and Sampling Technique
Sampling is the process of choosing from a much large population. In order to make the sample
population manageable, it is necessary to determine and identify number of sample respondents
that will be serving as representative sample to generalize the finding of the study population.
The study will be conducted in Wogagen bank branch. In the study bank, 2 branch managers, 6
customer service officers and 12 other staffs members. Since the population size is manageable
to administer questioners’ the researcher will be conducted census. In other ways, since the size
of the population is small the researcher takes all the population as sample. Therefore, the less
number of employees will be selected as sample for the successful accomplishment of this study.
3.6 Method of Data Collection
The researcher will be prepared both questionnaire and interview in order to collect sufficient
and relevant data from employees of Wogagen Bank Branch. Questionnaire will be prepared to
employees of the bank in order to gather relevant information and it includes both open-ended
and close-ended questions. Interviews are also prepared to gather additional information from the
top level management of Wogagen Bank Branch.
MARCH
APRIL
JUNE
JUNE
MAY
RY
16
1 Research proposal
2 Proposal defense
3 Questionnaires design
4 Date collection
5 Organize data
6 Analysis data
7 Interpret data to adviser
17
total 68 61 18.50 103
18
REFERENCE
Al-Abed,S.A.(2003). Electronic Banking, available at http: //www.bankersonline.com
/technology/gurus_tech081803d.html
Ayana Gemechu,( 2014). the research conducted on factors affecting the adoption of E-Banking
Azam, Md. Shah, (2007). Implementation of B2C E-commerce in Bangladesh.
Daghfous and Toufaily (2007). on the success and critical factors in adoption of E-banking by
Lebanese banks
Dave Chaffey, (2009). Electronic business and electronic commerce management, 4 th Edition.
Prentice Hall.
Singh & Malhotra (2004). Adoption of electronic banking: underlying consumer behavior
and critical success factors
Basel committee report on banking supervision, Risk management for electronic banking money
activities, Switzerland; Bank of international settlement, (1998).
19
Buses, S. and Tiwari, R., (2010), mobile banking stages a remarkable comeback, press release.
Dave Chaffey, (2009), Electronic business and electronic commerce management, 4 th Edition.
Prentice Hall.
John C. Hulls, (2012), Risk management and financial institution, 3 rd Edition. Sharda offset
press, Delhi.
Rose Peter. S, (2008), Bank management and financial service, 8 th Edition. McGraw- HALL
international edition.
Daghfous and Toufaily (2007) on the success and critical factors in adoption of E-banking by
Lebanese banks (GadiseGezu, &TekabeSintayehu, 2017).
Journal of Internet Banking and Commerce, August 2010, vol. 15, no.2
20