Assessment of the Opportunities and Challenges for the Adoption of E-Banking Service in Ethiopia: A study with reference to selected commercial Banks

Despite the growth of e-banking adoption worldwide, Ethiopian banks continue to conduct most of their banking transactions using traditional methods. The general objective of the study was assessment of the current extent and practices, benefits realized by banks, driving forces, opportunities and challenges for the adoption of e-banking service in Ethiopia. From this general objective, five specific issues were explored. An exploratory research design was employed to conduct this study. Both primary and secondary qualitative data were collected for the purpose of this study from the IT manager’s of each bank 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 an analysis of the collected data, the findings revealed that: balance inquiry, cash withdrawal, funds transfers, statement printing are among the major practice of e-banking among those banks that are providing the service to the customer. The different e-banking channels by which banks are using to provide these services to the customer are ATM card, debit card, credit card, salary card, visa card, master card, Internet banking and Mobile or SMS banking. Cost reduction, coverage of wide geographical area, customer satisfactions etc are among the benefits of adopting the system from the viewpoint of the bank. Among the different driving forces that initiate banks to adopt e-banking services: 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 for the adoption 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.