BARRIERS AND BENEFITS OF ADOPTING E-BANKING SYSTEM IN ETHIOPIA

Abstract

This study aimed analyzing the barriers and benefits of adopting E-banking system in Ethiopia. Electronic banking is a generic term for delivery of banking services and products through electronic channels, such as telephone, Internet, cell phone, etc. So far this study focused on three selected commercial banks (Commercial Bank of Ethiopia, Dashen Bank and Abay Bank) that are providing E-banking services. The technique that the study used is purposive sampling by adopting a research framework developed based on Technology-Organization-Environment framework and Technology Acceptance Model to guide the study. The relevant data was gathered through structured questionnaire, interviews & secondary data from purposely selected banks in Addis Ababa through descriptive data analysis. The result of the study indicated that adopting E-banking has a lot of benefits to the economy, to the banks and to the customers too. Banks can benefit from lower transaction costs, less paper work, less staff and less physical bank branches .E-banking leads to higher level of customers’ satisfaction & retention due to conveniences, speed and access to the bank account from any part of the world at any time. In Ethiopia E-banking faced many barriers such as lack of trust, security risk, lack of legal and regulatory frame work, lack of internet infrastructure and absence of competition between local and foreign banks. The study also identified that easy to use and its usefulness as a benefit of adopting E-banking system. Therefore, the researcher suggests some recommendations such as the Ethiopian government should be encouraged to initiate suitable steps to remove legal & regulatory barriers for E-Banking services and effective cooperation among banks has to be developed. In addition, banks should have to develop policy and procedures to oversight the risks of E-banking services & all E-Banking operated in Ethiopia should have to make an association of E-Banking so that efficiency will be improved. Generally, this study needs the attention of the government and the management of the banking industry, because Ethiopian banks today have no other choice than adopting E-Banking so as to coup up with the new technological innovation in the banking industry.