ASSESSMENT OF CHALLENGES AND BENEFITS OF ADOPTING ELECTRONIC BANKING SYSTEM IN ETHIOPIA (CASE STUDY COMMERCIAL BANK OF ETHIOPIA AND DASHEN BANK)

Abstract

The purpose of this study is to identify factors that affect adoption of E-banking and benefits of adopting E-banking in the Ethiopian banking industry. The study was conducted based on the data gathered from two banks one private bank (Dashen Bank) and one state owned bank (Commercial Bank of Ethiopia).This study used questionnaire, interview and secondary data as instrument of data collection. Stratified sampling method was used to select samples from the target population. The research framework developed based on technology-organizationenvironment model (TOE).The study employed quantitative survey research designed to gather data from a total of 200 employees. Semi structured interview was also used to gather the qualitative information from the CBE E-payment manager and team leader of Dashen bank to find out the management view on adoption of E-banking system. After the required data are collected descriptive (i.e. frequency, percentage) analysis were used to analysis the data using SPSS version 20. The results of the study indicated that adopting E-banking has a lot of benefits to the banks, to the customers and to the economy. The result of the study is also indicated that the major challenges of Ethiopian banking industry faces in the adoption of Electronic banking are: limited knowledge of customers on E-banking services, security risk, Lack of availability of ICT infrastructure, lack of trust, lack of legal and regulatory frame work, and absence of competition between local and foreign banks. Therefore, the researcher suggests some recommendations such as to successfully facilitate E-banking services in Ethiopia, National Bank of Ethiopia (NBE) needs to establish a clear set of legal framework, supporting banking industry by investing on ICT infrastructure and effective cooperation among banks has to be developed, Ethio-telecom should also make different effort in order to improve network services to increase E-banking services and also to enhance the confidence of the adopters of E-banking system in Ethiopia. Generally, this study needs the attention of the government and the management of the banking industry.