Challenges and Opportunities of Electronic Banking in Ethiopian Banking Industry (Evidence from Selected Private Commercial Banks)

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Addis Ababa University


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



Banking industry, E-banking, Adoption and developmen, E-banking technology.