CHALLENGES AND PROSPECTS OF E-BANKING IN ETHIOPIAN COMMERCIAL BANKS

Abstract

In the face of rapid expansion of electronic payment (E-payment) systems throughout the developed and the developing world, Ethiopian’s financial sector cannot remain an exception in expanding the use of the system (Gardachew, 2010). The general objective of the study was to find out the challenges and prospects of E- banking in Ethiopian Commercial Banks. From this general objective, five specific issues were explored. An explanatory research design was employed to conduct this study. Both primary and secondary qualitative data were collected for the purpose of this study from the E-banking department of each selected commercial banks at the head office level and bank web sites respectively. The collected data was analyzed by using descriptive analysis such as tables and percentages. From the analysis of the collected data, the findings revealed that using E-banking banks provide different banking service to their customer. On the View point of the bank Cost reduction, coverage of wide geographical area, customer satisfactions are some of the benefits of using E banking. The driving forces that initiate banks to adopt E-banking services are : existence of high competition in the banking industry, desire to improve organizational performance, desire to reduce transaction cost, desire to cover wide geographical area, and desire to build organizational reputation are among others. Chances of risk, Lack of suitable legal and regulatory framework, absence of financial networks that links different banks, Low level of internet penetration and poorly developed telecommunication infrastructure, high cost of internet, security concerns are among the major challenges of E-banking service in the country. However, late adopter opportunities, improvement in the banking habit of the society, commitment of the government to facilitate the expansion of ICT infrastructure and willingness among banks to cooperate in building infrastructure are the major opportunities for the adoption of the system in the banking industry