Adoption of Electronic Banking System in Ethiopian Banking Industry: Barriers and Driver

Abstract

This thesis aims to examine adoption of E-banking in the Ethiopian banking industry with respect to the barriers which can influence firms from taking advantage of E-banking system and expected benefits derived by adopting the system. The study was conducted based on the data gathered from four banks in Ethiopia; three private banks (Dashen bank, Zemen bank and Wegagen bank) and one state owned bank (commercial bank of Ethiopia).

A mixed research approach was used to answer the research questions that emerge through the review of existing literature and the experiences of the researcher in respect of the E-banking system in Ethiopia. The study statistically analyse data obtained from the survey questionnaire. A research framework developed based on technology-organization-environment framework and Technology acceptance model to guide the study.

The result of the study indicated that, the major barriers Ethiopian banking industry faces in the adoption of Electronic banking are, security risk, lack of trust, lack of legal and regulatory frame work, lack of ICT infrastructure and absence of competition between local and foreign banks. The study also identified perceived ease of use and perceived usefulness as a driver of adopting E-banking system.

The study suggests a series of measures which could be taken by the banking industry and by government to address various challenges identified in the thesis. These measures include: establishing a clear set of legal frame work on the use of technology in banking industry, supporting banking industry by investing on ICT infrastructure and banks needs to be focused on technological innovation competition rather than traditional bases of retail bank competition.

Keywords: E-banking, Technology-organization-environment frame work (TOE), Technology Acceptance model (TAM)