Assessment Of Ethiopian Financial Institutions Readiness For E- Commerce Adoption
No Thumbnail Available
Date
2018-06-01
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
The 21st century is known by the rapid growth of Information and Communications Technology
(ICT). The advancement in ICT introduced many new concepts to the world. One of these
concepts is electronic – commerce (e- commerce). E- commerce is generally defined as a way of
sharing business information, maintaining business relationships and conducting business
transactions by means of telecommunications networks. E- commerce provides advantages for
both the buyer and seller. It avoids geographical barriers and promotes trade from all corners of
the worldMany firms in the developed countries are being driven toward the adoption of e- commerce. In
only two decades, it has become the backbone for many of the prestigious firms in the world.
However, most of the firms in the developing countries have been struggling in e- commerce
adoption. Like any other businesses, the financial institutions (Banks, Insurances and MFIs)
could be benefited by adopting e- commerce in their business. They can use the technology and
business practice of e- commerce to market their products to the customers. Most of the financial
institutions in the developed world are already started using e- commerce to advertise and sell
their products online.Ethiopia, e- commerce is in its infant stage and only a few businesses are trying to adopt it.
Currently, there are 70 financial institutions including banks, insurances and MFIs, but there is
none which uses e- commerce as a business platform to sell their products online. The financial
institutions in Ethiopia stand to gain considerably from e- commerce solutions, considering that
there are various products and services that can be provided by these financial institutions to the
online customers. However, evidence on the ground shows that the promise of e- commerce has
not been realized by these institutions. The use of e- commerce in the financial institutions won’t
be an option if they want to stay competitive in the global economyThis research assessed Ethiopian Financial institutions readiness for e- commerce adoption. The
research evaluates the readiness of factors for e- commerce adoption in the selected financial
institutions (banks, insurances and MFIs) in Addis Ababa. The research used a STOPE model as,
which consisted of five e- readiness domains and sixty-four factors related to Strategic,
Technology, Organization, People and Environment. In the STOPE model factors are evaluated
individually and collectively. Each factor, at any level, would be evaluated according to a scale
of five grades. The model serves as a guide to develop questionnaire and interviews, collect and
vii
analyze data, and draw conclusion. This research is mostly a quantitative type of research;
however, it also examines qualitative data such as interviews.
To participate in the survey 6 banks of which 1 is a consortium of banks, 5 insurances, and 6
MFIs of which 1 is the association of MFIs are selected. From the total population size of 205
individuals a sample size of 76 individuals are selected. A total of eighty-five questionnaires
were distributed and seventy-six questionnaires are returned. Data encoding, cleansing and
analysis were made using SPSS v.20. The research used Alpha model to analysis the reliability
of the research questions. The Cronbach’s Alpha for the questionnaire in this study is 0.812,
which is greater than 0.70 (minimal alpha value).This study uses McConnell analysis method. Based on the mean of the manifest variables five
groups have developed: Red [1 – 1.80], Red – Amber [1.81 – 2.6], Amber [2.61 – 3.40], Amber
– Blue [3.41 – 4.20], and Blue [4.2 - 5]. Accordingly, five out of twelve factors in the Strategy
readiness are classified as Amber – Blue; six out of twelve factors are classified as Amber; one
out of twelve factors is classified as Red – Amber. Similarly, three out of twelve factors in
Technology readiness are classified as Amber – Blue; nine out of twelve factors are classified as
Amber. In Organization readiness seven out of twelve factors are classified as Amber and the
other five classified as Red- Amber. In People readiness six out of twelve factors are classified as
Red- Amber, three out of twelve factors are classified as Amber and the other three are classified
as Amber – Blue. In Environmental readiness one factor is classified as Red, four out of twelve
factors are classified as Red – Amber, six out of twelve factors are classified as Amber, and only
one factor is classified as Amber – Blue. Generally, Banks have better readiness for e –
commerce adoption than insurances and MFIs with a cumulative mean of 3.09, 2.78, and 2.78
respectively.
The quantitative analysis result supplemented with interview. The qualitative data mainly
focuses on identifying the challenges of e- commerce adoption in the financial institutions. A
number of challenges related to each of the five domains are discussed in the discussion part of
the study. The research highlighted some recommendations/ feedbacks for the successful
implementation of e- commerce in the financial sectors.
Description
Keywords
e- commerce, e- readiness, STOPE model, technology adoption