CHALLENGES AND OPPORTUNITIES OF ELECTRONIC BANKING IN ETHIOPIAN BANKING INDUSTRY: THE CASE OF CBE NIFAS SILK DISTRICT

Abstract

The study evaluates the adoption and development of challenges and opportunities of electronic banking technology in Commercial Bank of Ethiopia. From 74 city branches of CBE which are located within Nifas Silk Addis Ababa city ten branches were selected. To select these branches, systematic random sampling methlod was employed to draw the samples from the total population of the study. Mixed research approach was used to answer the research questions that emerge through the review of related literature in respect of the E-Banking system in Ethiopia. The study was statistically analyzed by using data’s obtained from the survey questionnaire. To analyze data the study used descriptive statistics method. Result of the study indicated that recently the E-Banking practice is growing rapidly and CBE is also trying to support such activity by introducing different payment infrastructure including service called Cardless banking. The main challenges were organizational, and environmental factors. The study also identified service and operational benefits that CBE realized by adopting and extending of electronic banking. Additionally there are internal and external motives that initiates CBE to adopt and develop E-banking technology. Internal motives were such as reducing transaction costs, improving customer service, improving organizational performance, and enhancing relationship with customers and external motives were such as covering wide geographical area, existence of high competition, and existence of legal frame works. The study also indicated existing opportunities for electronic banking adoption and growth such as rapid growth of mobile user, improvement in the banking habit of the society, late adoption of electronic-banking system, commitment of the government to facilitate the expansion of ICT infrastructure and commitment of the government to strengthen the banking industry. The study recommended CBE to facilitate proper and continuous training for its employees, increasing security for electronic-banking products, create deep customer awareness to the community while the government should support the Commercial Bank of Ethiopia by facilitating sufficient ICT infrastructure development and issue clear and workable legal frameworks for the adoption and growth electronic-banking technology.