CHALLENGES AND PROSPECTS OF ELECTRONIC BANKING; THE CASE OF DASHEN BANK

Abstract

The purpose of this study is to evaluate the implementation and expansion of E-banking technology in Dashen bank. Dashen bank employees in Addis Ababa are the target population. Purposive sampling technique was used to select the sample from the target population. Accordingly the total sample size for the study is 172 employees from selected six branches found in east district. Descriptive research design was employed to conduct this study by using questionnaire. The result of the study indicated that, existence of high competition in the banking industry and rapid change of customer needs and preferences were the main push factors for implementation and expansion of E-Banking technology in Dashen bank, in which mean score are founded 4.67 and 4.52, respectively. The study identified service and operational benefits from implementation and expansion of E-banking technology and as operational benefits it reduces paper work; enhance foreign currency generation and increase reliability and reducing errors and as service benefit E-banking is convenient, in terms of 7 days and 24 hours service i.e. accessibility (Mean = 4.72), Enhance accessibility of the bank's service (in terms of place) (Mean = 4.55) and Improve customer service (Mean = 4.30). The major challenges Dashen bank faces in the implementation and expansion of E-banking technology are, cost of ICT equipment and network, software and re-organization and lack of technical and managerial skills, absence of financial networks that links different banks, lack of law mandating the bank to adopt E-banking technology, loss of audit trail and lack of confidence with the security aspects. The study also indicated existing opportunities for E-banking implementation and expansion such as increment of educated potential customer, improvement in the banking habit of the society, late adopter opportunities and the existence of high demand for E-banking service. Finally 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 implementation and expansion of E-banking technology