Challenges and Opportunities of Electronic Banking in Ethiopian Banking Industry (Evidence from Selected Private Commercial Banks)
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Date
2016-02
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Addis Ababa University
Abstract
The study evaluates the adoption and development of E-banking technology in the Ethiopian
banking industry. Population of the study consist all 19 commercial banks that have operated
in 2015. The study was conducted based on the data gathered from six private commercial
banks in Ethiopia. Purposive sampling method was employed to draw the sample from the
population. A mixed research approach was employed to answer the research questions that
emerge through the review of existing literature and the experiences of the researcher in
respect of the E-banking technology in Ethiopia. The study statistically analyzed data
obtained from the survey questionnaire. A research framework developed based on
technology-organization-environment framework to guide the study. The result of the study
indicated that, the major challenges Ethiopian banking industry faces in the adoption and
development of E-banking technology are, high cost of implementation of E-banking, lack of
customer awareness, limitation in network infrastructure and internet related support
services, low levels of computer literacy, low level of ICT infrastructure, lack of sufficient
government support, legal and regulatory differences with cross-country security risk and
lack of trust. The study identified operational and services benefits from adopting and
developing of E-banking technology such as increase productivity, reduces paper work,
reduce transaction cost, generate foreign currency, increase reliability and reducing errors
as operational benefits and facilitate development of new products, facilitates marketing and
market access, improve customer service, reduce long queues in banking halls, increase
accessibility of the bank services, create good relation among banks and clients and
encourages price transparency as services benefits. Among the different driving forces that
initiate Ethiopian banks to adopt and extend E-banking technology: desire to improve
performance, desire to improve the relationship with customers, rapidly changing customers’
needs and preferences, desire to improve organizational performance, desire to cover wide
geographical area, desire to build organizational reputation and desire to reduce
transaction cost are among others. The study also indicated existing opportunities for E-
banking adoption and growth such as improvement in the banking habit of the society, late
adoption of E-banking, commitment of the government to facilitate the expansion of ICT
infrastructure and commitment of the government to strengthen the banking industry. The
study recommended banks to facilitate proper and continuous training for their employees,
increasing security for E-banking products, create deep awareness about E-banking
technology to the community while the government should support banking sector by
facilitating sufficient ICT infrastructure development and issue clear and workable legal
frameworks to ease the adoption and growth of E-banking Technology in Ethiopia.
Keywords: - Banking industry, E-banking, Adoption and development of E-banking
technology
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Keywords
Banking industry, E-banking, Adoption and developmen, E-banking technology.