Yalew Nigussie

ADDIS ABABA UNIVERSITY
COLLEGE OF BUSINESS & ECONOMICS

DEPARTMENT OF MANAGEMENT
THE IMPACT OF INFORMATION & COMMUNICATION

TECHNOLOGY ON ETHIOPIAN PRIVATE BANKS’
PERFORMANCE: THE CASE OF TWO SELECTED ETHIOPIAN
PRIVATE BANKS
A Thesis Submitted to the Department of Management of Addis

Ababa University in Partial Fulfillment of the Requirements for
the Degree of Executive Master of Business Administration
By: Yalew Nigussie
Advisor: Dr. Asmare Emerie
MAY, 2015
ADDIS ABABA
ADDIS ABABA UNIVERSITY
COLLEGE OF BUSINESS & ECONOMICS
DEPARTMENT OF MANAGEMENT
THE IMPACT OF INFORMATION & COMMUNICATION

TECHNOLOGY ON ETHIOPIAN PRIVATE BANKS’
PERFORMANCE: THE CASE OF TWO SELECTED ETHIOPIAN
PRIVATE BANKS
BY YALEW NIGUSSIE
Name and Signature of members of the Examining board
Asmare Emerie (PhD) _________________ _____________
Advisor Signature Date
______________ _________________ _____________
Internal Examiner Signature Date
______________ ________________ _____________
External Examiner Signature Date

Declaration
I declare that this study is my original work towards the Executive Masters of
Business Administration and has not been submitted for any Degree or
Diploma in any University. To the best of my knowledge, all source of materials
used for the study have been duly acknowledged. I have undertaken the study
independently with the guidance and support of the research advisor.
Signature:________________________
Yalew Nigussie
Name of Advisor: Dr. Asmare Emerie
Signature:________________________________
i
Acknowledgement
First of all I would like to praise almighty God gave me endurance and
strength throughout the duration of the program. Then I am deeply grateful
to my advisor, Dr. Asmare Emerie, for his precious comments, guidance and
unreserved support in checking and giving constructive suggestions.
I am extremely indebted to my beloved wife, Biruktawit Belete, for her

encouragement, patience and understanding since the beginning of the
program and without her it would have been difficult for me to complete the
program. In addition I would like to express my deep gratitude to my
mother, Kelemua Worku, my sisters; Fitsum, Selam and Martha, and my
brother, Bedru.
My thanks also belong to my friend, Haregewion Kebede, for her unreserved

and devoted effort to comment and edit my work throughout the project
time. My appreciation also goes to my friends who had taken the endeavor
to voluntarily administer the questionnaires on my behalf.
Finally, I would like to thank customers and employees of Dashen Bank and
United Bank for their willingness to participate in the survey study and
response the questionnaires duly.
Yalew Nigussie
May 2015
Addis Ababa
ii
Table of Content
Declaration…………………………………………………………………………………I
Acknowledgment………………………………………………………………………….II
Table of Content…………………………………………………………………………..III
List of Table………………………………………………………………………………VI
List of Figure……………………………………………………………………………….VIII
Abstract……………………………………………………………………………………..IX
1. Chapter One: Introduction………………………..…………………………………1

1.1 Background of the Study…………………………………………………….1
1.2 Statement of the Problem ………………………………………………….3
1.3 Research Questions ……………………………………………………..…..5
1.4 Research Hypothesis………………..…………………………………..…..5
1.5 Objective of the Study………………………………………………………..6
1.6 Significance of the Study ………………………………………………….6
1.7 Scope/Delimitation and Limitation ……………………………………....7
1.8 Organization of the Study…………………………………………………...7
2. Chapter Two: Literature Review……………………………………………………..9
2.1 Brief History of Banking in Ethiopia ……………….…………………….9
2.2 Importance of ICT in Financial Service Delivery………………………..11
2.2.1 Benefit of ICT in Banking Industry………………………………..11
2.2.2 Relationship between ICT and Organizational

Performance: Banking Industry……………………………………13
2.2.3 Types of Technological Facilities/Channels
In Banking Industry………………………………………………….15
2.2.4 ICT and Ethiopian Private Banking Industry…………………..18
2.3 Theoretical Framework……………………………………………………….20
2.3.1 Measuring Customer Satisfaction………………………………...20
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2.3.2 Measuring Staff Productivity………………………………………24
2.4 The Challenges of ICT Application on Commercial Banks………….26
3. Chapter Three: Methodology of the Study……………………………………….30
3.1 Introduction …………………………………………………………………30
3.2 Operationalization of the Research Topic……………………………..30
3.3 Research Design……………………………………………………… ……31
3.4 Source of Data…………………………………………………………..…..31
3.5 Target Population……………………………………………………… .…32
3.6 Sampling Design………………………………………………………… ..32
3.7 Data Collection Instrument…………………………………………… ..33
3.8 Method of Data Analysis………………………………………………… 33
4. Chapter Four: Data Presentation, Analysis and Interpretation………… …34
4.1 Introduction……………………………………………………………. 34
4.2 Demographic Data Presentation…………………………………… …34
4.2.1 Customers’ Responses………………………………………… …34
4.2.2 Employees’ Responses ………………………………………….…36
4.3 Descriptive Analysis of Data Collected ….………………………..…..37
4.3.1 Impact of ICT on Customers’ Satisfaction………………….…37
4.3.2 Impact of ICT on Employees’ Performance/Productivity ….45
4.3.3 Challenges …………………………………………………….……..52
4.4 Hypothesis Testing …………………………………………………….…53
4.4.1 Hypothesis One: Impact of ICT on
Customers’ Satisfaction…………………………………………53
4.4.2 Hypothesis Two: Impact of ICT on Employees’

Performance/Productivity ………………………………….…55
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5. Chapter Five: Conclusion and Recommendation………………………………59
5.1 Conclusion……………………………………………………………………59
5.1.1 Impact of ICT on Customers’ Satisfaction………………….…59
5.1.2 Impact of ICT on Employees’ Performance/Productivity…..60
5.1.3 Challenges…………………………………………………………....60
5.2 Recommendation………………………………………………………..…..61
Bibliography……………………………………………………………………………..…63
Appendices……………………………………………………………………………….…70
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List of Table
Table 2.1.2.1: List of Banks in Ethiopia as at June 2014.
Table 2.2.3.1: Delivery Platform available for Electronic Banking
Table 2.2.4.1: Feature of banking services rendered by Ethiopian banks
Table 2.3.1.1: Summary of Related Studies
Table 2.3.1.2: Factors Affecting Customer Satisfaction
Table 2.3.2.1: Measurements of Worker performance
Table 4.1.1.1: Rate of Respondents
Table 4.2.1.1: Customers’ demographic information
Table 4.2.2.1: Employees’ demographic information
Table 4.3.1.1: This Bank provides most of Technology-based services/products and

the services are almost available
Table 4.3.1.2: The Technology-based services/products provided by this bank works

accurately and are error-free and reliable
Table 4.3.1.3: The Technology-based services/products allows me to complete

transactions quickly and saves me a lot of time, especially when I am
pressed for time
Table 4.3.1.4: I feel the Technology-based services/products provided by this bank

are safe and the risk associated with it is low
Table 4.3.1.5: The Technology-based services/products provide precise and sufficient

information I need (account statement and balance enquiry)
Table 4.3.1.6: The Technology-based services/products provided by this bank are

easy to use and user-friendly
Table 4.3.1.7: The Technology-based services/products minimize inconvenience by

providing anywhere and anytime banking (banking at home/office at
24/7)
Table 4.3.1.8: The charges associated with Technology-based services/products are

reasonably fair and lower the transaction cost of banking
vi
Table 4.3.1.9: When I contact this bank’s customer service via e-mail, phone,
interactive website and fax, my requests are always anticipated
properly and always answered promptly
Table 4.3.1.10: This bank resolves my complaints quickly and offers a fair
compensation for its mistakes
Table 4.3.1.11: Overall, I am satisfied with the bank Technology-based services
Table 4.3.1.12: I say positive things about the bank to other people
Table 4.1.1.13: I will encourage friends and relatives to use the service offered by the
bank
Table 4.1.1.14: Summary of Descriptive statistics of impact of ICT on Customers’

satisfaction
Table 4.3.2.1: Information and Communication Technology helps employees to

achieve a larger number of tasks
Table 4.3.2.2: Information and Communication Technology helps to lesson workload

of employees

deliver output timely
Table 4.3.2.4: Information and Communication Technology helps employees to reduce

errors

perform their work within the required specifications

improve work continuously
Table 4.3.2.7: Information and Communication Technology helps employees to deliver

consistent output even in high work pressure

improve their effort to learn more and apply new knowledge
Table 4.3.2.9: Information and Communication Technology helps to achieve greater

flexibility in work
Table 4.3.2.10: Overall, Information and Communication Technology enhance

performance of bank employees
vii
Table 4.3.2.11: Information and Communication Technology has made work easier
and interesting
Table 4.3.2.12: Information and Communication Technology improve effectiveness of

communication flow (via internet or intranet) and decision making process
Table 4.3.2.13: Summary of Descriptive statistics of impact of ICT on employees’

performance
Table 4.3.3.1: Summary of descriptive statistic of Challenges
Table 4.4.1.1: One sample Statistic
Table 4.4.1.2: One sample Test
Table 4.4.1.3: Simple Linear Regression model Summary
Table 4.4.2.1: One Sample Statistic
Table 4.4.2.2 One Sample Test
Table 4.4.2.3: Simple Linear Regression Model Summary
List of Figures
Fig 2.2.2.1: Conceptual framework relating ICT to the performance of Banking
Industry
viii
Abstract
This research aimed at finding out the impact of Information and Communication
Technology (ICT) on performance of Ethiopian Private Banks using Dashen Bank S.C.
and United Bank S.C. as a case study. It used customers’ satisfaction and employees’
performance/efficiency as independent variables to measure performance of the banks.
In addition the research tried to investigate major challenges encountered by
customers in using Technology-based services/products. Structured questionnaire was
used to collect relevant data for the research. The data gathered through the
questionnaire was analyzed by Statistical Package for Social Science (SPSS) version 16.
T-statistic test was carried out to determine the significance of the independent
variables on dependent variable. Simple linear regression analysis was also carried out
to determine the effect of the independent variables on dependent variable. It was
found from the research that Information and Communication Technology indeed has a
positive significance impact on performance of Ethiopian Private Banks in respect
with satisfying their customer and improve their employees’ performance. The simple
linear regression analysis also showed a positive coefficient of 0.803 and 0.725 for
customer satisfaction and employees performance respectively, which simply mean
that there is strong positive relationship between Information and Communication
Technology and customers’ satisfaction and employees’ performance of the banks. The
research also identified that the major challenges discouraging customer to use
Technology-based services/products of the banks are; mobile and internet connectivity
problem and lack of Information and Communication infrastructures. In general,
Information and Communication Technology has positively impacted performance of
Ethiopian private banks.
Key Words: ICT, Customer satisfaction, Employee performance, bank

performance, challenges.
ix
x
CHAPTER ONE
Introduction
1.1 Background of the Study
Today‟s business environment is very dynamic and intense as a result of technological
advancement and introduction of information and communication technology as a competitive
advantage of any organization. Information and communication technology (ICT) is the
automation of processes, controls, and information production using computers,
telecommunications, software and other gadgets that ensure smooth and efficient running of
activities. It is a term that largely covers the coupling of electronic technology for the
information needs of a business at all levels (Agbolade, 2011). Laudon and Laudon (2012) define
Information Technology as all the hardware and software that a firm needs to use in order to
achieve its business objectives. Therefore, it can be explained in business context as “a set of
interrelated components that collect (or retrieve), store, and distribute information to support
decision making and control in an organization” (Yeboah et. al, 2013).
In the last few decades, application of information technology in business strategies has become
at the very heart of the competitive process. As economy moves from lower to higher stages of
development, business processes are shifting from simpler to modern and complex techniques of
production. In this regard information technology has played a great role in changing input-
output relationship of production activities. Business organization, especially the banking
industry is operating in a complex and competitive environment characterized by changing
conditions and highly unpredictable economic climate with ICT being at the center of the change
curve (Agbolade, 2011).
Moreover, the rapid diffusion of the ICT in the current business environment during recent
decades has affected many organization‟s business process and organizational strategies. Many
studies have shown that world organizations have been inspired by the rapid and persistent
upgrading of technology and scientific knowledge. Rapid changes in computer and
communication technologies have altered the way organizations do business and decision
making process which is reflected on their operational effectiveness. In this regard Chakrabarty
(2011) argued that technology has revolutionized every industry in the world by rendering faster
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and cost effective delivery of products and services to customers, who in the normal course could
not have afforded the same. At the same time it also enhanced producers of goods and services to
remain viable and profitable.
With increasing global competition and quick spreading of knowledge, the future of many
businesses depend upon their ability to innovate (Talegeta, 2012). Information technology is one
of the most important tools along with innovations in organizations and it plays a critical role in
development of new products and services. Rai, et. al. (1996) concurred that, IT provides new
forms of customer services, new distribution channels, new information based products,
improved productivity, and has the capacity to influence industry structure. According to
Agrawal and Jain (2013), the major impetus for innovation has been globalization of financial
system, deregulation, and great advances in technology. Thus, in increasingly integrated
financial systems facing higher volatilities, more competition and wide varieties of risks,
financial innovation has become an essence to provide new products and strategies to better suit
different circumstances of time and market and to meet different requirements of participants in
financial system.
Banks, like other business organizations, are deploying innovative products and services to
ensure their future survival and meet the changing expectation of their customers. In this intense
globally competitive market, banks should strive to satisfy the needs of their customers through
providing quality customer service and improve their customer relation management. According
to Agrawal and Jain (2013), while banks are striving to strengthen customer relationship and
move towards „relationship banking,‟ customers are increasingly moving away from the confines
of traditional branch banking and seeking the convenience of remote electronic banking. In this
regard Information technology and the communication networking system have revolutionized
the working of banks and financial entities all over the world.
Indeed, there is no doubt that the majority of business organizations, particularly banks, consider
computer technology as core competency measure to gain their competitive advantage. In this
regard Jalal-Karim and Hamdan (2010) concurred that in recent years, the utilization of
information technology has been increased in service industries, particularly, the banking
industry, which by using information technology related products such as internet banking,
electronic payments, security investments, information exchange, can deliver high quality
2
services to clients with less effort. Theoretically, alternative banking channels/e-channels will
enhance good performance of banking services and increase the level of customer satisfaction by
providing anytime, anywhere and multi way banking services including varieties of services,
conveniences, speed, efficiency, security and cost effectiveness (Kumbhar, 2011). Therefore
every bank should accentuate the impact of technology on their customers‟ satisfaction and
employees‟ performance.
Banking in Ethiopia began in 1905 with the bank of Abyssinia, a private company controlled by
the bank of Egypt (Asefa, 2011). However introduction of information technology into the
banking industry is the last decade phenomena. Currently most of Ethiopian Banks have started
providing Technology-based services/products like ATM (payment cards), Mobile banking,
Internet Banking, SMS banking and Electronic fund transfer to their customers. Gemechu
(2012), argued that technology innovation play a crucial role in Banking industry by creating
value for banks and customers, that it enables customers to perform banking transaction without
visiting a brick and mortar banking system. However, banks in Ethiopia still engaged in
aggressive branch expansion and extended hour‟s office services. Indeed as Asefa (2011)
contend, the electronic banking in Ethiopia is facing lot of challenges due to lack of software,
awareness, fear of risk and lack of trained persons in the industry. Nevertheless, in order to
surmount local and global competition, Ethiopian private banks need to appreciate the role of
information and communication technology on their performance and properly ascertain the
challenge thereon.
1.2. Statement of the Problem
Information and communication technology (ICT) has in particular brought a complete paradigm
shift on the bank‟s performance and on the customer service delivery in the banking industry
(Aliyu and Tasmin, 2012). Nowadays the banking system is slowly shifting from traditional
banking towards relationship banking. Traditionally the relationship between the bank and its
customers handled by face to face interaction in a branch, whereas, in contemporary banking,
customers are demanding more flexible and accessible services everywhere and anytime.
Technology has made a lot of impact on banking services owing to its role in gathering and
analyzing information. The 21st century has witnessed a lot of technological innovation in
banking sector. Some of the services that technology is providing to the financial services are:
3
ATMs, Mobile Banking, Branch network, Telephone Banking, Internet Banking just to mention
a few (Yeboah et. al, 2013). In general ICT allows the present day banks to meet the expectation
of their more demanding customers who are more techno-savvy compared with their
counterparties of the yester years.
In today‟s fast changing world, banking environment has become highly competitive and banks
are required to respond quickly to the dynamics of fast changing customers‟ expectations. To be
able to survive and exceed in this changing market, banks are striving to improve their customer
service delivery and productivity through adaptation of electronic banking. Electronic banking is
generally an extension of traditional banking, using the internet as an electric delivery channel
for banking products and services. The banking today is redefined and re-engineered with the use
of IT and banks start offering more sophisticated services to customers with continuous product
and process innovation (Tiwari and Kumar, 2012). Today‟s dynamic and stiff market
competition forced banks to spend all their resources on improvement of service delivery and
value added activities in order to survive and become productive. Yeboah et al, (2013) believes
that total automation of banking is an imperative need for all banks to attract more customers,
provide efficient and quality services, and survive in the emerging new competition, apart from
the profit motive which is the primary objective of the banks.
Information technology has become inevitable and is seen as the only way for banks to survive in
the increasingly competitive banking arena (Benerjea & Dawinji, 2011). Thus, it just doesn‟t
make sense to put off investment in these most basic of technology that lay the foundation for the
very future of banking. It is absolutely critical for future revenue and engagements of banks
(King, 2013). In fact, many organizations have invested their time and resources for the
betterment of their services and products. Yeboah et. al, (2013) argued that Banks, in particular
have invested huge sums of money in IT, having their products and services basically supported
by it. Identifying the IT investment and its role in the banking industry is very crucial point for
the success of the modern banks and Yeboah et, al (2013) insisted that banks should properly
understand the impact of ICT on their efficient service delivery, customer satisfaction and
employees‟ productivity in order to maximize the return on its investment. On the other hand,
Agbolade (2011) claimed that the most significant shortcoming in the banking industry today is a
wide failure on the part of senior management in banks to grasp the importance of technology
4
and incorporate it into their strategic plans accordingly. In addition to this, the management is
oblivious to the current banking situation that requires their determination to fully address all the
challenges related with ICT.
Even though many studies have been conducted on impact of ICT on banking performance,
limited studies are available in Ethiopia that investigate the impact of ICT on performance of
Ethiopian Private Banks and the challenges thereon. Hence, more studies are still required to
understand the relevance of ICT in Ethiopian Private Banks and to give a better insight for
decision makers of the industry.
Therefore, this study seeks to examine the impact of information and communication technology
on performance of Ethiopian Private Banks and to assess the challenges they encounter in
providing Technology-based services/products to their customers.
1.3 Research Question
Based on the statement of the problem and review of related literature, this study seeks answers
for the following questions:
 To what extent does ICT have any effect on customers‟ satisfaction in Ethiopian Private
Banks industry?
 To what extent has ICT affected employee performance/productivity in discharging their
duties and responsibilities?
 What are the main challenges that discourage customers to use Technology-based
products and services provided by the banks?
1.4 Research Hypothesis
The study proposes the following hypotheses for empirical testing.
Hypothesis 1:
The adaptation of Information and Communication Technology has a significant impact on
customers‟ satisfaction in Ethiopian Private Banks‟ Industry.
5
Hypothesis Two:
Application of Information and Communication Technology has affected employees‟
performance in Ethiopian Private Banks industry.
1.5. Objective of the study
1.5.1 General Objective

The general objective of the study is to examine the impact of Information and communication
technology on performance of the Ethiopian private banking industry.
1.5.2 Specific Objective

 To examine the impact of Information and Communication Technology on customers‟
satisfaction in Ethiopian private banks industry.
 To examine the impact of Information and Communication Technology on employees‟
performance in Ethiopian private banks industry.
 To investigate the main challenges those discourage customers to use Technology-based
services/products of the banks.
 To recommend appropriate measures to be taken to maximize every drop of investment
banks made on Information and Communication Technology.
1.6. Significance of the study

In today‟s more competitive global market environment, adoption and use of Information and
Communication Technology in banking operation is not just an optional decision for banks to
ensure their profitability and survival in the future. It is believed that only banks that overhaul
the whole of their customer service and delivery system and apply Information and
Communication Technology to their operations are likely to survive and prosper in the
contemporary business environment. Even though applying Information and Communication
Technology into their operation is a recent phenomenon in Ethiopian banking industry, Ethiopian
banks should re-examine their service and delivery system in order to cope up with the
dynamism of Information and Communication Technology. Thus, senior managers of banks
should adequately understand and be able to measure the impact of Information and
6
Communication Technology on betterment of their performance in general and customer service
quality and staff productivity in particular.
However, there are only few studies that examined the role of Information and Communication
Technology on banking services in Ethiopia and its challenges thereon. Hence, the purpose of the
present study is to explore the role of ICT in the Ethiopian Banking Industry based on selected
cases. The result of the study helps bankers, bank managers and any relevant decision maker to
be aware of the role Information and Communication Technology plays on performance of
Ethiopian private banks. Moreover, the result of the study may provide additional research
insight into how Information and Communication Technology affects the performance of
banking and inspires other researchers to conduct more researches in the area.
1.7 Scope/Delimitation and limitation of the study
This study is confined only to know the impact of ICT on customers‟ satisfaction and
employees‟ performance/productivity of selected Ethiopian private banks. The study was
conducted based on Dashen Bank and United Bank; for they are pioneers to move towards
adopting Information and Communication Technology and networking their branches and to
move to core banking which is the platform for all Technology-based services/products. The
participants of the study were also selected from Addis Ababa branches of the two selected
banks.
The first limitation of the study relates to the sampling procedure i.e. convenience sampling,
which limits the generalizability of the research findings. The second limitation relates to the
sample size for primary data sources; the number of participants included in the sample may not
be good representative of the population. As last limitation, the study failed to measure the
financial impact of adoption and use of the ICT in the banking industry. Future research is,
therefore, recommended to address the above stated limitations.
1.8. Organization of the Study
The study consists of five chapters. Chapter one is the introduction chapter which presents
background of the study, statement of the problem, research question, research hypothesis,
7
objective of the study, significance of the study, scope and limitation of the study. The second
chapter deals with review of related literatures regarding the topic of the study. The third chapter
discusses the research methodology and methods employed by the current study. Chapter four
presents the data analysis results and their interpretation. Finally, based on the analysis and
interpretation of the findings, chapter five presents the conclusion and recommendation.
8
CHAPTER TWO
Literature Review
2.1 Brief History of Banking in Ethiopia
Modern banking in Ethiopia started in 1905 with the establishment of Abyssinian Bank which
was based on a fifty years agreement with the Anglo-Egyptian National Bank. In 1908, a new
development bank and two other foreign banks were also established. These banks were
criticized for being wholly foreign owned (Abera, 2012). In 1931 Abyssinian Bank was
liquidated and replaced by the Bank of Ethiopia, which was the bank of issue until the Italian
invasion of 1936. During the Italian occupation, bank of Italy bank notes formed the legal tender.
In 1943, the State Bank of Ethiopia was established, with two departments performing the
separate functions of an issuing bank and a commercial bank. In 1963, these functions were
formally separated and the National Bank of Ethiopia (the central and issuing bank) and the
Commercial Bank of Ethiopia were formed (Vijay and Asefa, 2011).
According to Abera (2012), following the declaration of socialism in 1974 the nationalized banks
were reorganized and one commercial bank (CBE), a national Bank (recreated in 1976) and two
specialized banks i.e. the Agricultural and Industrial bank, renamed recently as the Development
Bank of Ethiopia (DBE) and a Housing and Saving Bank, renamed recently as Construction and
Business Bank (CBB) were formed.
Following the demise of the Dergue regime in 1991, the Ethiopian People‟s Revolutionary
Democratic Front declared a liberal economy system. In line with this, Monetary and Banking
proclamation of 1994 established the National Bank of Ethiopia as a judicial entity, separated
from the government and outlined its main functions. Monetary and Banking proclamation No.
83/1994 and the Licensing and Supervision of Banking Business No. 84/1994 laid down the
legal basis for investment in the banking sector (Ayele, 2012).
Currently there are 16 private commercial banks and three government banks in the Ethiopian
banking industry (see Table 2.1.2.1). There are no foreign banks in the country, and the system
remains isolated from the effects of globalization. It seems that policy-makers fear that inviting
foreign banks to invest will lead to loss of control over the economy (Vijay and Asefa, 2011).
9
Despite a rapid increase in the number of local financial institutions since financial liberalization,
the Ethiopian banking system is still underdeveloped compared to the rest of the world and cash
is still the most dominant medium of exchange. The use of check is mostly limited to
government institutions, NOGs and some private business and share companies (Worku, 2010).
Table 2.1.2.1: List of Banks in Ethiopia as of June 2014
Establish
No. of No. of Card
No. Name of Bank ment No. of POS
ATM Users
Year
1 Commercial Bank of Ethiopia 1963 433 244 973,762
2 Awash International Bank 1994 84 20 48,128
3 Bank of Abyssinia 1996 - - -
4 Construction & Business Bank 1975 - - -
5 Dashen Bank 1995 170 827 303,040
6 Development Bank of Ethiopia 1901 - - -
7 Nib International Bank 1999 20 100 22,349
8 United Bank 1998 51 10 23,527
9 Wegagen Bank 1997 92 136 64,710
10 Cooprative Bank of Oromia 2004 - - -
11 Lion International Bank 2006 - - -
12 Oromia International Bank 2008 - - -
13 Zemen Bank 2008 30 - 20,515
14 Buna International Bank 2009 - - -
15 Birhan Bank 2009 4 - 1,333
16 Abay Bank 2010 - - -
17 Addis International Bank 2011 - - -
18 Debub Global Bank 2012 - - -
19 Enat Bank 2012 - - -
Source: www.nbe.gov.et
10
2.1 Importance of ICT in Financial Service Delivery (Conceptual Framework of the
Study)
2.1.1 Benefit of ICT in Banking Industry
In recent years, the utilization of information technology has been magnificently increased in
service industries, particularly, the banking industry, which by using information technology
related products such as internet banking, electronic payments, security investments and
information exchange, can deliver high quality services to clients with less effort (Jalil-Kerim
and Hamdam, 2010). The famous quote of Bill Gates says that “banking is vital to a healthy
economy, but banks themselves are not” highlight the crucial nature of electronic forces that are
affecting banks more than any other financial service provider group. This transaction of
business operation by banks have created new mode of operation called E-Banking (Mai et. al.,
2007). Web based banking service or E-Banking, the latest generation of electronic banking
transaction has opened up new opportunity to the existing banks and financial institutions. It
permits business process re-engineering, service borderless market, to achieve zero latency
leading to improvements in customer service levels and better risk management because of real-
time settlement (Agrawall& Jain, 2013).
According to Ayanda et. al. (2011), it is imperative for bank‟s management to intensify
investment in Information Technology products to facilitate speed, convenience and accurate
services, or otherwise they may lose out customers to other competitors. Agrawal and Jain
(2013) also agreed that, intense competition among the banks has redefined the concept of the
entire banking system; the banks are looking for new ways not only to attract but also to retain
their customers and gain competitive advantage over their competitors. They continued that,
while banks are striving to strengthen customer relationship and move towards „relationship
banking‟ customers are increasingly moving away from the confines of traditional branch
banking and seeking the convenience of remote electronic banking. Information technology and
the communication networking systems have revolutionized the working of banks and financial
entities all over the world.
Batra and Bhatia (2014) stated the three-directional advantages that have been achieved by
advancement of IT in banking sector:
11
For the Customer:
 Self-inquiry Facilities
 Remote banking
 Anytime banking
 Telebanking
 Electronic banking
 Efficient single-window service
For the Bank:
During the last decade, banks applied IT to a wide range of back and front office tasks in
addition to a great number of new products. The major advantages for a bank to implement IT
are:
 Availability of a wide range of inquiry facilities, assisting the bank in business

development and follow-up
 Immediate replies to customer queries without reference to ledger-keeper as terminals are
provided to managers and chief managers.
 Automatic and prompt carrying out of standing instructions on due date and generation of
reports.
 Generation of various MIS reports and periodical return on due dates.
 Fast and up-to-date information transfer enabling speedier decisions, by interconnecting
computerized branches and controlling office (core banking).
For the Employees:
IT has increased their productivity through the following:
 Accurate computing of cumbersome and time-consuming jobs such as balancing and

interest calculations on due dates.
 Automatic printing of covering schedules, deposit receipts, pass book/pass sheet, freeing
the staff from performing these time-consuming jobs, and enabling them to give more
attention to the needs of the customers.
12
 Signature retrieval facility, assisting in verification of transactions sitting at their own
terminal.
 Avoidance of duplication of entries due to existing of single-point data entry.
2.2.2 Relationship between ICT and Organizational Performance: Banking Industry
Most of the initiatives regarding technology are aimed at providing better and more efficient
customer service by offering multiple options to the customer. The death of distance, which is a
by-product of technology, has become a reality in the banking sector. Technology is also playing
a key role in banks‟ strategies for gaining a competitive edge (R.K. Uppal, 2008). According to
Alalade et. al. (2014), the application of information and communication technology concepts,
techniques, policies and implementation strategies to banking service, has become a subject of
fundamental importance and concern to all banks and indeed a prerequisite for local and global
competitiveness. ICT directly affects how managers decide, how they plan and what products
and services are offered in the banking industry.
According to R.K. Uppal (2008), the relationship between IT and banking is fundamentally
symbiotic. In the banking sector, IT can reduce costs, increase volumes, and facilitate
customized products; similarly, IT requires banking and financial services to facilitate its growth.
Alalade et. al. (2014) argued that the most significant shortcoming in the banking industry today
is a wide spread failure on the part of senior member of management in banks to grasp the
importance of technology and incorporate it into their strategic plans accordingly. He continued
that banks should re-examine their service and delivery systems in order to properly position
them within the framework of the dictates of the dynamism of information and communication
technology. Many studies agreed that there is a positive relationship between ICT and
performance of banking in terms of quality service delivery, customer satisfaction and attraction,
employees‟ productivity, cost reduction, profitability, and effective decision making.
The advancement in technology has played an important role in improving service delivery
standards in the banking industry. In its simplest form, Automated Teller machine and deposit
machines now allow consumers to carry out banking transactions beyond banking hours. With
online banking, individuals can check their account balances and make payments without having
to go to the banking hall. There is also, mobile banking which allows individuals to check their
13
account balance and make fund transfers using their mobile phones. This is gradually creating a
cashless society where consumers no longer have to pay for all their purchase with hard cash
(Wisdom, 2012). He finally conceded that the growth in the application and acceptance of
internet-driven technology means that delivering an enhanced service is more achievable than
ever before.
Many industries embark on improving customer satisfaction by getting the latest machines to
improve their organization‟s performance. They believe that acquisition of latest technology will
improve operating practices and the quality and quantity of their goods and services (Dauda and
Akingbade, 2011). Banks provide customer - convenient and inexpensive access to the bank 24
hours a day and 7 days a week. Online banking extends the relationship with the customers
through providing financial services right into their home and office. The bank may also enjoy
the benefit in terms of increasing customer loyalty and satisfaction (Shaikh, 2014). According to
Wisdom (2012), online banking ensures customer satisfaction as it extends financial services to
customers outside the banking hall. Similarly, e-banking has provided banks with a large
customer base as it has resulted in increased customer loyalty and satisfaction.
Labor productivity is also used as an indicator of the economic performance of countries,

industries and firms (Piget and Kossai, 2013). ICT has productivity increasing effect on labor
productivity and total factor productivity of companies. The banking industry is one of the
industries that enjoy the largest productivity growth effect of ICT (Luka and Frank, 2012).
According to Dauda and Akingbade (2011), there is evidence that a significant and positive
relationship between technology innovation and bank employee‟s performance.
ICT investment also facilitates revenue growth through new value propositions, new market and
sales channels, and improves management of life cycle. Higher customer satisfaction leads to
higher loyalty, which ultimately leads to higher revenue growth. ICT can help firms reduce
operational costs, general and administration costs and marketing costs. ICT allows cost
reduction through better information sharing and tighter coordination in the supply chain
relationship (Piget and Kossai, 2013).
Based on the above and many related literature reviews, the conceptual framework of this study
is rooted on the incorporation of ICT facilitated products and services (technology-based services
14
and products) into banking operation and how they impacted on the overall performance of
Ethiopian Private banks in terms of customers‟ satisfaction, staff efficiency/employee
performance. This conceptual relationship of ICT and banks‟ performance refers as a base for the
research question, hypothesis and motivation of the study throughout the paper. ICT signifies the
provision of banking products and services electronically in the form of e-fund transfer
technology, telephone banking technology and Internet banking technology; in other words e-
banking. E-funds transfer technology focused on ATMs, credit and debit cards and e-cheques
while telephone banking technology focused on interactive Voice response and Internet banking
focused on the Internet and its applications such as websites and e-mail (Namirembe, 2007).
Fig 2.2.2.1: Conceptual Framework relating ICT to the performance of Baking Industry
ICT ADOPTION BANKING OPERATION
 Office Automation  Account Opening

(Core Banking, Paperless Environment)  Enquiry on Account
 Internet Banking  Withdrawal and deposit
 Mobile Banking: (SMS, Agent Banking)  Fund Transfer
 Payment Cards (ATM, POS)
BANKS OVERALL PERFORMANCE
 Cost Effectiveness/Profitability
 Competitive Advantage (Customer
satisfaction and attraction)
 Quality Service Delivery
 Staff Efficiency/Productivity
Source: Alalade et. al., (2014).
2.2.3 Types of Technological Facilities/Channels in Banking Industry
Technological innovations have been identified to contribute to the distribution channel of banks.
The electronic delivery channels are collectively known as Electronic Banking. Electronic
Banking is really not one technology, but an attempt to merge several different technologies.
Each of these evolved in different ways, but in recent years groups and industries have
15
recognized the importance of working together (Oppong et. al., 2014). According to Bultum
(2014) E-banking can also be defined as a variety of platforms such as internet banking or online
banking, TV-based baking, mobile phone banking, and PC banking.
Table 2.2.3.1: Delivery Platform available for Electronic Banking
Types of Service Description

PC Banking (Private Proprietary software, distributed by the bank, is installed by the
Dial Up) customer on their PC. Access to bank via a modem linked directly to the
bank.
Internet Banking Access their bank via Internet.
Managed network The bank makes use of an online service provided by another party.
TV Based The use of satellite or cable to deliver account information to the TV
screen of the customer (Also internet based)
Telephone Banking Customers access their bank via telephone (own personal ID and
password required)
Mobile phone banking Account with text message (SMS), Internet connection (WAP), or high
(SMS, WAP, 3rd speed 3rd generation mobile connection (also Intent based)
generation)
Source: Shaikh, (2014).
Some of the products and service of electronic banking/ICT that are often used via the above
platforms are as follows:
Core Banking
In core banking system, banks have a centralized database. There is only one server called HUB.
Easy accessibility of data can be possible because of centralized database, which helps
management information system (MIS) to take quick and accurate decisions (R.K. Uppal, 2008).
Automated Teller Machines (ATMs)
ATM combines a computer terminal, record-keeping system and cash vault in one unit,
permitting customers to enter the bank‟s book keeping system with a plastic card containing a
personal Identification Number (PIN) or by punching a special code number into the computer
16
terminal linked to the bank‟s computerized records 24 hours a day. Once access is gained, it
offers several retail banking services to customers. ATMs are able to provide a wide range of
service, such as making deposits, funds transfer between two or more accounts and bill payments
(Oppong et. al., 2014).
Point-of-Sale Transfer Terminals (POS)
The system allows consumers to pay for retail purchase with a check card, a new name for debit
card. The money for the purchase is transferred immediately from account of debit card
holder/customer to the store‟s/merchant‟s account at purchase point (Bultum, 2014).
Telephone Banking
Telebanking (Telephone Banking) can be considered as a form of remote or virtual banking,

which is essentially the delivery of branch financial services via telecommunication devices
where the bank customers can perform retail banking transactions by dialing a touch-tone
telephone or mobile communication unit, which is connected to an automated system of the bank
by utilizing automated voice response (AVR) technology (Oppong et. al., 2014).
Mobile Banking
Mobile banking is a service that enables customers to conduct some banking services such as
account inquiry and fund transfer, by using of short text message (SMS) (Bultum, 2014).
Personal Computer Banking
PC-Banking is a service which allows the bank‟s customers to access information about their
accounts via a proprietary network, usually with the help of proprietary software installed on
their personal computer. Once access is gained, the customer can perform a lot of retail banking
functions (Oppong et. al., 2014).
Internet banking
The idea of internet banking is to give customers access to their bank accounts via a web site and
to enable them to enact certain transactions on their accounts, given compliance with stringent
17
security checks. It is used to provide traditional banking service over the internet (Oppong et. al.,
2014).
2.2.4 ICT and Ethiopian Private Banking Industry
Telecommunication was introduced in Ethiopia in 1894. Despite the very early introduction,
Ethiopia has one of the most underdeveloped information and communication technology
infrastructures on the continent (GISW, 2008). The sole provider of ICT service of the country,
Ethiopian Telecommunication Corporation, newly called Ethio-telecom, has received a
monopoly license from the regulator, the Ethiopian Telecommunication Agency (ETA) for
efficiency and quality service requirement and infrastructure expansion targets (Adam, 2007).
According to GTP 2004 report, in 2010/2011 fiscal year the number of mobile subscription
reached 17.26 million while the number of fixed line subscription reached 0.805 million.
Similarly internet subscription including mobile internet for the same fiscal year reached 2.661
million.
The rapidly growing information and communication technology is knocking the front door of
every organization in the world, where Ethiopian banks would not be exceptional. In the face of
rapid expansion of electronic payment system throughout the developed and developing world,
Ethiopian‟s financial sector cannot remain an exception in expanding the use of the system
(Worku, 2010). Still, the adoption and implementation stage of ICT is one of the most
distinguishing development criteria of developing and developed countries.
In Ethiopia cash is still the most dominant medium of exchange, and electronic payment systems
are at an embryonic stage (Worku, 2010). Bultum (2014) concurred that the development of E-
Commerce, adoption and diffusion of E-banking system is not well developed in Ethiopia. All
banks in Ethiopia are too late to move with technological advancement and they should clearly
chart out the time schedule for their integration and technological advancement. Even though
currently there are three government and sixteen private banks in the Ethiopian banking industry,
the modern e-banking services like ATMs, Payment cards, Tele banking, Internet banking,
Mobile Banking and other are new to the industry.
According to Bultum (2014) Commercial Bank of Ethiopia (CBE) was the first to introduce
ATMs to deliver the service to local users. In addition to eight ATM located in Addis Ababa,
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CBE has had visa membership since November 14, 2005. However, due to lack of appropriate
infrastructure it failed to reap the fruit of its membership. Worku (2010) Dashen Bank, a
forerunner in introducing E-bank in the Ethiopian private banks industry, has launched ATM
service for its customers in 2006. Harnessing its leadership with advanced banking technology,
Dashen Bank signed an agreement with iVery, a South African E-payment technology company,
for the introduction of mobile banking in April 21, 2009. The agreement signed by three private
banks, Awash International Bank, United Bank and Nib International Bank, to launch ATM and
POS terminal network together in 2009 has also been another pointing event for development of
E-banking in the industry (Bultum, 2014). It also introduced inter-connectivity between banks
for the first time.
According to NBE report as of June 2014 there were 884 ATM machines in the country, among
which only seven private banks have been able to distribute 451 ATM machines in the industry.
Features of E-banking services rendered by Ethiopian banks are presented as follows:
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Table 2.2.4.1: Features of E-Banking services rendered by Ethiopian Banks
Electronic Banking Features of Services Rendered

Service
1. Personal Profile Administration
2. Balance Enquiry
3. View daily transaction register
4. Ability to link accounts together so that transfer can be
Internet Banking completed from one account to another
5. Customer service enquiry and resolution within seconds
6. View check issuance status through the register
7. Password change and management features
8. Intrusion detection capability
1. All customers will receive an ATM Card and personal
identification number.
ATM Banking 2. The ATM allows you to receive cash at your convenience. It
also allows you to check your balance, make transfer and deposit
cash.
1. Authentication and verification
2. Check daily, weekly or monthly balance
3. Interactively receive account balance
SMS Banking 4. Produce a mini statement on your mobile
5. Receive alerts and notification on:
 Low balance
 Deposit and withdrawal
 Transfer of funds from your account or into your account
1. Secure delegated 24 hours service
2. Authentication and verification
Call Center Banking 3. Balance enquiry
4. View daily transaction register
5. Customer service enquiry and resolution
6. Request online statement
Source: Shaikh (2014).
2.3 Theoretical Framework
2.3.1 Measuring Customer Satisfaction
Customer satisfaction can be defined as the company‟s ability to fulfill business, emotional, and
psychological needs of its customers. In other word it is a summary of psychological state
20
resulting when the emotion surrounding disconfirmed expectations is coupled with the
consumers‟ prior feeling about the consumption experience (Chavan and Ahmad, 2013).
However Kumbhar (2011) argued that a customer satisfaction is an ambiguous and abstract
concept. He continued that, actual manifestation of the state of satisfaction will vary from person
to person, product to product and service to service.
It is well-researched fact that there is a strong linkage between customer satisfaction and
operational performance. According to Qureshi et. al. (2013) customer satisfaction has strong
influence on the efficiency and financial performance of banks. It has great influence upon
performance and profitability of the banks. He also claimed that satisfied customers share their
experiences with other people and occupy unambiguous word of mouth (grapevine)
advertisement and publication of the banks. This positive word of mouth publication is very
helpful in increasing banks relationship and interaction with the whole community. Many
literatures found that there is strong relationship between customer satisfaction and organizations
efficiencies, operational and financial. The state of satisfaction depends on a number of factors
which consolidate as psychological, economic and physical factors. The quality of service is one
of the major determinants of the customer satisfaction (Kumbhar, 2011).
Service quality can be defined as the difference between customer expectations for services
performance prior to service encounter and their perception of the service received (Wandaogou
and Jalulah, 2011). Many past studies develop different dimension and aspects to measure
service quality. According to Wandaogou and Jalulah (2011), Parasuraman and his colleagues
(1985 & 1988) have developed the dimensions of service quality in their GAP and Extended
GAP analysis and based on which they developed that popular SERVQAUL model.
The widely used SERVQUAL model consisted of five dimensions that were measured using a
22-item SERVQUAL scale. The five SERVQUAL dimensions are: Tangibles, Empathy,
Assurance, Reliable, and Responsiveness: Tangibles are the physical facilities, equipment, and
appearance of personnel. Empathy refers to the caring, individualized attention the firm provides
its customers. Assurance means knowledge and courtesy of employees and their ability to inspire
trust and confidence. Reliability is the ability to perform the promised service dependably and
accurately, and Responsiveness refers to willingness to help customers and provide prompt
21
service. However, due to the differences between traditional service and electronic service,
obviously SERVQUAL scale is not suitable for measuring service quality in electronic or
internet environment due to the absence of staff, absence of traditional tangible elements, and
self-service of customers (Wandaogou and Jalulah, 2011).
Parasuraman et. al. (2005) incorporated e-services and conceptualized and constructed a
multiple-item scale (E-S-QUAL and E-RecS-QUAL models) to assess electronic service quality.
The final E-S-QUAL Scale, consisting of 22 items on four dimensions, which they labeled and
defined as follows:
1. Efficiency: The ease and speed of accessing and using the site.
2. Fulfillment: The extent to which the site‟s promises about order delivery and item
availability are fulfilled.
3. System availability: The correct technical functioning of the site.
4. Privacy: The degree to which the site is safe and protects customer information.
The e-recovery service quality scale (E-RecS-QUAL) consisting of 11 items on three
dimensions:
1. Responsiveness: Effective handling of problems and returns through the site.
2. Compensation: The degree to which the site compensates customers for problems.
3. Contact: The availability of assistance through telephone or online representative.
Available literature shows that, the customer satisfaction is measured via service quality and
service quality measured by various measurement tools and instruments developed by various
researchers and marketing consultancy organizations (Kumbhar, 2011). In his study, Kumbhar
summarized various models constructed by scholars to measure service quality as follows:
22
Table 2.3.1.1: Summary of related studies
S.No. Service/Scale Author/s Attributes/Dimensions used in the study
1 Kano‟s Model Kano (1984) Must-be requirements, One-dimensional requirements,
Attractive requirements, Reverse Quality.
2 Perceived SQ
Technical service quality, Functional service quality,
Gronroos (1984)
Model Corporate image
3 Parasuraman, Reliability, Responsiveness, Assurance, Empathy and
SERVQUAL Zeithaml and
Barry (1985; 1998) Tangibles
4 Cronin & Taylor Reliability, Responsiveness, Assurance, Empathy and

SERVFERF
(1994) Tangibles
5 Schefter & Customer support, on-time delivery, compelling product
E-Commerce presentations, convenient and reasonably priced shipping
Reichheld (2000)
and handling, clear and trustworthy privacy
6 e-SQ and e-
Zeithaml,
efficiency, reliability, fulfillment, privacy, responsiveness,
Parasuraman, and
SERVQUAL compensation, and contact
Malhotra (2000)
7 Szymanski and
Convenience, Merchandising, Easiness, Information,
e-Satisfaction
Hise (2000) Deign, Financial security
8 Gommans,
E-loyalty Krishnan, and Website & Technology, Value Proposition, Customer
Scheffold (2001) Service, Brand Building and Trust & Security
9 Yoo and Donthu Ease of use, aesthetic design, processing speed, and
SITEQUAL
(2001) security
10 Information fit to task, interactivity, trust, responsiveness,
Loiacono, Watson design, intuitiveness, visual appeal, innovativeness,
WebQua and websites flow, integrated communication, business
Goodhue (2002) process and viable substitute, accessibility, speed,
navigability and site content.
11 Anderson and
e-Satisfaction Srinivasan convenience motivation, purchase size, inertia, trust and
(2003) perceived value
12 E-S-QUAL and
Parasuraman,
Zeithaml & Efficiency Fulfillment, System availability, Privacy,
E-RecS-QUAL Responsiveness, Compensation and Contact
Malhotra in (2005)
13 Movie-Related
Cho Yoon, and Ease of use, Usefulness, involvement, information factor,
Joseph Ha Convenience, technology, Community Factor,
Websites
(2008), Entertainment Factors, Brand Name, Price Factor
14 BANKZOT Nadiri, et al (2009 Desired, adequate, predicted and perceived service quality
Source: Kumbhar (2011)
23
Based on the above models and using principal component analysis he identified the following
factors that affecting customer‟s satisfaction in banking.
Table 2.3.1.2: Factors Affecting Customer Satisfaction

S.No. Construct/Factors Description
1 Up-to-date equipment and physical facilities- Full Branch computerization,
System Availability Core banking, ATM, POS, internet banking, mobile banking, SMS alerts,
credit card, EFT, ECS, E-bill pay
2 E-Fulfillment Scope of services offered, availability of global network, digitalization of
business information, Variety of services
3 Accuracy Error free e-services through e-banking channels
4 Speed of service (clearing, depositing, enquiry, getting information, money
Efficiency transfer, response etc.), immediate and quick transaction and check out with
minimal time.
5 Trust, privacy, believability, truthfulness, and security, building customer
Security confidence. freedom from danger about money losses, fraud, PIN, password
theft; hacking etc.
6 Problem handling, recovery of the problem, prompt service, timeliness
Responsiveness service, helping nature, employee curtsey , recovery of PIN, password and
money losses
7 Easiness Easy to use & functioning of ATM, Mobile banking, internet banking, credit
card, debit card etc.
8 Convenience Customized services, any ware and any time banking, appropriate language
support, time saving
9 Price, fee, charges, - i.e. commission for fund transfer , interest rate, clearing
charges, bill collection and payments‟, transaction charges, charges on
Cost Effectiveness Switching of ATM, processing fees etc. price, charges and commissions
should be reduce and charges taken by Telecommunication Company, devise
designer company, internet service providers
10 Problem Handling It refers to problem solving process regarding computerized banking services
11 Compensation It refers to recover the losses regarding to problems and inconvenience
occurred in using e-banking channels.
12 Contact Communication in bank and customer or customers to bank, Via e-mail,
SMS, Phone, interactive website, postal communication, fax
13 Brand Perception Customers overall perception according to promises given by bank for
banking services
14 Perceived Value Consolidated perception from banking service in term of perceived quality and
money expended for getting banking services.
Source: Kumbhar (2011)
2.3.2 Measuring Staff Productivity
With the unpredictable business environment and intense business competition, the companies
are required to reach certain standards by improving their performance to align with such great
demands; otherwise, a lot of problems will surface, including running the risk to close down the
24
business. This performance relates to the firm or individual level which sees the human resource
becoming the most determining factor to achieve the organizations‟ objectives (Muda et. al.,
2014). The concept of performance is something that interests and concerns everybody, whether
it is the performance of a car, or individuals and teams in organizations. An employee who
performs well is seen as one who achieves good results according to some pre-determined goals
(Ojokuku & Sajuyigbe, 2012). Similarly Imran et. al, (2014) concurred that a firm‟s resource are
extremely important for the firm‟s development, and that human capital is a key resource of a
firm.
High employee productivity positively affects a company‟s operational performance. However,
if employees are not given the proper resources to do their job easily and efficiently, their
productivity will suffer. Innovation technology is one way that employer can boost productivity.
According to Dauda & Akingbade (2011) technological innovation rests on the creative ability of
human being. Man has the capacity to use his knowledge to create new machines process and
method that could enhance or improve the quality of goods and services. Technological
advancement is important factor for influencing the improvement of performance. Imran (2014)
concluded in his study that, technological advancement has significant impact on employee
performance it means that as technology tend to be advanced, performance of employee
enhanced.
Technological innovation such as, the use of computer automation and electronic banking
influence speed of bank service delivery, enhanced management decision making and saving
time (Dauda and Akingbade, 2011). He continued, there is evidence that a significant and
positive relationship exit between technology innovation and banks employee‟s performance.
For instance, Electronic bank transfers have facilitated improved service delivery by employees,
promotes customers retention and customers satisfaction. It is easier for employees to perform all
these functions as a result of impact of technological innovation on them. Ojokuku and
Sajuyigbe (2012), conclude that the introduction of electronic banking system in the banking
sector has helped tremendously to improve the productivity of bank personnel, leading to
efficiency and effectiveness in service delivery.
Many studies have identified varies variables or factors that affect employees performance in
work place. Saeed et. al. (2013) concluded that there are five factors which affect the
25
performance of employees; manager‟s attitude, organizational culture, personal problem, job
content and financial rewards. Although, Muda et. al. (2014) found out job stress, motivation and
communication as the three influencing factor of employee performance. He also noted that
organizational performance can be evaluated by; quality, quantity, knowledge or creativity of
individual and accomplished work in specific time.
Najeeb (2013) stated in his literature review that there are four different performance dimensions
on which employee are measured named; quality, quantity, dependability and knowledge.
According to Mathis & Jackson (2009) Performance is associated with quantity of output, quality
of output, timeliness of output, attendance on the job, efficiency of the work, and effectiveness of
work completed. Similarly, Najeeb (2013) categorized the above factors in to three dimensions;
quantity of work, quality of work and speed of work achievement.
For the purpose of this study, based on the above related literatures, the researcher adopted the
following three factors to measure employee performance in banking sector:
Table 2.3.2.1: Measurements of worker performance

Quality of work
Employees Performance Quantity of Work
Speed required to accomplish a specific task
Source: Najeeb (2013)
2. 4 The Challenges of ICT Application on Commercial Banks
Electronic banking services are believed to be superior to those delivered through the traditional
banking because of its convenience, speed, relatively low cost, high degree of customization
and/or personalization. It is argued that self-service technologies like internet, ATM etc are
characterized by flexibility, convenience of location, greater control over service delivery, higher
perceived level of customization, fun, enjoyment and even spontaneous delight of customers
26
(Oppong et. al., 2014). However, banking sector faces numerous challenges to adopt advanced
technology as well as E-banking applications and seize the opportunities presented by ICT
applications in general.
R.K. Uppal (2008) conceded that with the obvious benefits of E-banking; the following factors
contribute as major impediments in the smooth implementation of E-banking:
 Start-up Cost:- Many banks have expressed their concern about the huge initial start-up cost
for venturing into E-banking.
 Training and Maintenance:-The introduction of E-banking involves 24 hours support
environment, quality service to end user and other partners which would necessitate a well-
qualified and robust group of skilled people to meet external and internal commitments.
 Lack of skilled personnel:- In a fast technological scenario, the obsolescence of technology is
fast and hence there is always shortage of skilled personnel.
 Security:- In paperless banking transactions, many problems of security are involved.
 Legal Issue:- Legal framework for recognizing the validity of banking transaction conducted
through the net is still in the process of being put in place.
 Restricted Business:- Not all transactions can be carried out electronically.
 Destruction of pricing mechanism:- Now players in the field have lower cost than old banks.
Hence, they can undercut the prices and provide stiff competition to the established banks.
According to Oluwatolani et. al. (2011) in developed countries individuals are well connected to
the internet via various communication links while in developing countries individuals might not
get connected due to several reasons. Otukoya (2014) pointed out the following challenges being
faced by Nigerian banks in their attempt to ensure a smooth exchange of electronic data and
information:
 The need to build a better infrastructure that will serve as backbone for communication
within the banks.
 The need to collaborate in sourcing for new technological equipment that will provide
common standard.
 The need to get better in information technology system development and operation by bank
management.
27
 The need to impress by improving the present telecommunications infrastructure.
Similarly Oppong et. al. (2014) identified The following challenges that makes it difficult for the
Ghanaian banks to provide ideal banking services to the customers; security concerns ( alteration
of data, especially by the IT specialist, theft, etc), cost factors(cost of IT infrastructure, training,
maintenance, etc),availability of IT skills, perceived customer readiness, lack of familiarity of the
customers to IT in the bank, reluctance on the part of the bank to network with other banks, low
level of economic development(frequent power failure, low level of education, weak access to
internet, etc)and other challenges include fraud and frequent system failures.
Challenges in Using ICT Facilities in Ethiopia

According to Worku (2010), the Electronic banking in Ethiopia is facing lot of challenges due to
lack of software, awareness, fear of risk and lack of trained persons in the key organizations. In
his finding he pointed out the following challenges that seize the opportunities presented by ICT
facilities in the industry:
 Low level of internet penetration and poorly developed telecommunication infrastructure:
Lack of infrastructure for telecommunications, Internet and online payments impede smooth
development and improvements in e-commerce in Ethiopia. Most rural areas of the country,
where the majority of small and medium businesses are concentrated, have no Internet
facilities and thus are unable to engage in e-commerce activities.
 Lack of suitable legal and regulatory framework for e-commerce and e-payment: Ethiopian
current laws do not accommodate electronic contracts and signatures.
 Inadequate banking system
 Political instabilities in neighboring countries: Political and economic instabilities in
Somalia, Southern Sudan, and Eritrea are threatening traits that do not provide a very
conducive environment for e-banking in Ethiopia. Political instabilities inevitably disturb
smooth operations of business and free flow of goods and services.
 High rates of illiteracy: Low literacy rate is a serious impediment for the adoption of E-
Banking in Ethiopia as it hinders the accessibility of banking services. For citizens to fully
enjoy the benefits of E-Banking, they should not only know how to read and write but also
possess basic ICT literacy.
28
 High cost of Internet: The cost of Internet access relative to per capita income is a critical
factor. Compared to the developed countries, there are higher costs of entry into the e-
commerce market in Ethiopia. These include high start-up investment costs, high costs of
computers and telecommunication and licensing requirements
 Absence of financial networks that links different banks (Banks are not yet automated): Most
of the banking-transactions currently taking place use credit and debit cards supplied by Visa
and MasterCard. For conducting e-banking, the use of credit or debit cards is mandatory thus
requiring the need for specialized systems which are not currently available.
 Frequent power interruption: Lack of reliable power supply is a key challenge for smoothly
running e-banking in Ethiopia.
 Resistance to changes in technology among customers and staff due to:
 Cyber security issues: Cyber security is a global challenge that requires global and multi-
dimensional response with respect to policy, socio-economic, legal and technological
aspects. E-banking applications represent a security challenge as they highly depend on
critical ICT systems that create vulnerabilities in financial institutions, businesses and
potentially harm banking customers. It is imperative for banks to understand and address
security concerns in order to leverage the potentials of ICTs in delivering E-banking
applications. In the deployment of E-banking application, attention should be drawn to the
prevention of cybercrime (i.e. the use of ICTs by individuals to commit fraud and other
crimes against banking transactions).
29
Chapter Three
Methodology
3.1 Introduction
Research method referred as the techniques and procedures used to obtain and analyze research
data, including for example questionnaires, observation, interviews, and statistical and non-
statistical techniques whereas research methodology is the theory of how research should be
undertaken, including the theoretical and philosophical assumptions upon which research is
based and the implications of these for the method or methods adopted (Saunders et. al., 2009).
In order to attain the objective of the study and answer the research questions the study adopted a
case study strategy. The case was conducted on two purposely selected Ethiopian private Banks;
Dashen Bank and United Bank. Currently there are sixteen private banks in Ethiopia. However,
the researcher purposively selected the two banks as they are the pioneer in networking their
whole branches (adopting core banking) which is the platform for most technological innovation
in the industry. Multiple and holistic case study approach adopted to establish whether the
findings of one case occur in other cases and as consequences, the need to generalize from the
findings.
3.2 Operationalization of the Research Topic
Operationalization of the research topic is to identify the variables involved in this project that is
the dependent variables and the independent variables. Therefore the dependent variable,
denoted by “Y”, has been identified in the study as the performance of Ethiopian private banks
which has been measured by customers‟ satisfaction and employees‟ performance. The
independent variables, denoted by “X”, have been identified in the study as the impact of
Information and Communication Technology.
To examine the impact of Information and Communication technology on customers‟

satisfaction, the study used 10 factors of customer satisfaction identified in chapter two,
theoretical framework section. Similarly, to examine the impact of Information and
Communication Technology on employees‟ performance the study used the three employee
performance measurement points identified in chapter two, theoretical framework section.
30
3.3 Research Design
There are three approaches to conduct any research: Qualitative, Quantitative and Mixed
approaches. According to Saunders et. al. (2009) mixed method approach is the general term for
when both qualitative and quantitative data collection techniques and analysis procedures are
used in research design. In this study mixed-method approach was employed to ensure
effectiveness of the research process as the findings of the qualitative data enhance the findings
of quantitative one and the vise versa.
This study used a case study approach. According to Yeboah et. al, (2013) a case study approach
is particularly appropriate for individual researchers because it gives an opportunity for one
aspect of a problem to be studied in some depth within a limited time scale. Studies that establish
causal relationships between variables may be termed explanatory research (Saunders et. al.,
2009). This study tried to examine the relationship between adaptation and application of ICT in
Ethiopian private banks‟ services/ products and their performance improvement in terms of their
customers‟ satisfaction and employees‟ performance.
3.4 Source of Data
There are two types of data which is usually used in researches, primary and secondary data.
Primary data does not actually exist until and unless it is generated through the research process
as part of the consultancy or dissertation or project. It will often be collected through techniques
such as experimentation, interviewing, observation and surveys. On the other hand Secondary
data is information which already exists in some form or other but which was not primarily
collected, at least initially, for the purpose of the consultancy exercise at hand. In fact, secondary
data is often the start point for data collection in as much as it is the first type of data to be
collected (Lancaster, 2005).
This study used primary and secondary source of data. Regarding the primary data the researcher
distributed structured questionnaires to relevant participants. In order to strength the result and
findings of the study the researcher examined different articles, academic journals, useful
academic books and banks‟ reports as secondary data.
31
3.5 Target population
Target populations of the study were customers and senior staff of the purposely selected two
private banks: Dashen Bank and United Bank. The researcher purposely selected customers who
have used at least one technology-based service/product of the banks and employees who have
worked in their current bank at least for three years. These groups are targeted because the
research believes that they are appropriate people to provide appropriate information and answer
of the research questions.
3.6 Sampling Design
A total of 200 customers and 60 employees of Dashen Bank and United Bank were randomly
selected to participate in the study. The participants were selected using convenient sampling
technique, Non-probability sampling method (Saunders et. al., 2009). According to Saunders et.
al. (2009) unlike probability sampling, there are no rules in non-probability sampling techniques.
Rather the logical relationship between your sample selection technique and the purpose and
focus of your research is important; generalizations being made to theory rather than about a
population. Non-probability sampling involves the selection of subject based on assumption
regarding the population of interest, which forms the criteria for selection.
Convenience sampling (or haphazard sampling) involves selecting haphazardly those cases that
are easiest to obtain for your sample (Saunders et. al., 2009). It involves selecting participants
from the part of the population which is close to hand. This strategy was chosen for this study
because sampling participants using list of customers who have used at least one of the
Technology-based services/products and list of employees who have at least three years work
experience was a challenge.
Accordingly, 200 customers and 60 employees were purposefully selected. 100 customers and 30
employees were asked to fill the questionnaires from each bank within five working days.
32
3.7 Data Collection Instrument
The study used two types of structured close ended questionnaires, one for customers and other
for employees. Questionnaire distributed for customers has three parts. The first part aimed at
the collection of demographic information of the participants. The second part used five point
Likert scale which measures the impact of Information and Communication Technology on
customers‟ satisfaction. The customers are requested to express their level of agreement or
disagreement with the statement. The last part used three point Likert scale which measure the
effects of challenges associated with Technology-based services/products on customers. Again
the customers were requested to express whether the challenges are affecting them or not.
Questionnaire distributed for employees has only two parts. The first part aimed to collect
demographic information of the participants. The second part used five point Likert scale to
measure the impact of Information and Communication Technology on employees‟ performance.
3.8 Method of Data Analysis
In order to reach on meaningful facts and conclusions, the research provided explanation on
impact of Information and communication Technology on Ethiopian private banks performance
and answered the basic questions of the research. The data collected via the questionnaires was
analyzed by Statistical Package for Social Sciences (SPSS). In generating the actual results,
frequency tables were generated to determine the number of respondents who expressed their
opinion on a particular item. Based on the frequency tables generated from SPSS, descriptive
statistic was used to analyze and describe the findings. In order to further test the research
hypothesis, the research used One sample test (T-statistic) and linear Regression model. The T-
statistic test applied to examine the relationship between the studies‟ dependent and independent
variable whereas linear regression model was applied to evaluate the level of significance of the
independent variables on the dependent variable.
33
CHAPTER FOUR
Data Presentation, Analysis and Interpretation
4.1 Introduction
This chapter covers the presentation, analysis and interpretation of data collected from primary
sources. A total of 200 questionnaires were distributed to the two purposefully selected private
banks‟ customers, Dashen Bank S.C. and United Bank S.C., in order to collect data about the
impact of ICT on customers‟ satisfaction. In addition, 60 questionnaires were distributed for
these two banks‟ employees in order to collect data about the impact of ICT on employees‟
performance. As shown in table 4.1.1 out of the questionnaires distributed to 200 customers and
60 employees, replies were obtained from197 customers and 55 employees.
The data collected are presented by frequency tables and charts where ever necessary and to
analyze the results Statistical Package for the Social Science (SPSS) is used. The hypothesis test
was conducted using T-test and linear simple regression model, and appropriate interpretations
were made thereon in accordance with the results of the testing.
Table 4.1.1: Rate of Responses by Respondents
Customers Employees
Questionnaires
Respondents Valid Percentage Respondents Valid Percentage
Returned 197 98.5% 55 92%
Not Returned 3 1.5% 5 8%
Total 200 100% 60 100%
Source: Survey result, 2015
4.2 Demographic Data Presentation

4.2.1 Customers’ Responses:
Customers participated in the survey questionnaires have different personal information. Table
4.2.1 presents the demographic data of participants as follows:
34
Table 4.2.1: customers‟ demographic information
S. Classification of Valid
Variables Frequency Percentage
No. Variables Percentage
Male 121 61.4% 62.1%
1 Gender Female 74 37.6% 37.9%
Missing 2 1%
18 or Below 3 1.5% 1.5%
19-28 years 75 38.1% 38.1%
2 Age (Years old) 29-38 years 93 47.2% 47.2%
39 or above 26 13.2% 13.2%
Single 98 49.7% 49.7%
Married 62 31.5% 31.5%
3 Marital Status Divorce 35 17.8% 17.8%
Separated 2 1% 1%
Widowed - - -
High School Diploma or
above
27 13.7% 13.8%
Educational Junior college Diploma 30 15.2% 15.3%
4 BA 112 56.9% 57.1%
Background
Masters or above 27 13.7% 13.8%
Missing 1 .5%
Business Managerial 90 45.7% 47.1%
Gov‟t Officer 14 7.1% 7.3%
Professional 26 13.2% 13.6%
Student 6 3% 3.1%
5 Occupation Self-employee 20 10.2% 10.5%
Unemployed 4 2% 2.1%
Other 31 15.7% 16.2%
Missing 6 3%
Less than 1 year 49 24.9% 25.9%
Length of use of 1-2 years 52 26.4% 27.5%
6 Technology-based
services or products 2 and above years 88 44.7% 46.6%
Missing 8 4.1%
As is shown in the above table, 121 of the respondents were male which represent 62.1% of the
total respondents, while the 74 were females which are 37.9% of the total respondents.
Considering the age groups of the respondents, the higher number of respondents was in the rage
of 29-38 years, which represent 47.2%, followed by age groups of 19-28 years and 39 or above
years, which represent 38.1% and 13.2% respectively. According to table 4.2.1, most of the
respondents were single, representing 49.7% of the total respondents. Married and divorce
participants represent 31.5% and 17.8% of the total respondents respectively. The table also
showed out of the total participants, 112 and 30 of the respondents have bachelor Degree and
35
Diploma respectively, while customers who have Master degree or above, and lower than
diploma were equal, 27 each. In terms of occupation of the participants, the higher number of the
respondents was managerial employees who represented 47.1% of the total response. In addition
form the above, it can be deduced that 88 of the respondents, 46.6% of the total, have been using
technology-based services/products of the bank for more than two years whereas, 27.5% and
25.9% of the respondents have been using the services/products for 1-2 years and less than a year
respectively.
4.2.2 Employees’ Responses
Employees of the two banks who participated in the survey questionnaires have different
personal information. Table 4.2.2 presents the demographic data of participants as follows:
Table 4.2.2: Employees‟ demographic information
S. Classification of Valid
Variables Frequency Percentage
No. Variables Percentage
Male 35 63.6% 64.8%
1 Gender Female 19 34.5% 35.2%
Missing 1 1.8% -
19-28 years 14 25.5% 25.5%
2 Age (Years old) 29-38 years 33 60% 60%
39 or above 8 14.55 14.5%
Single 20 36.4% 36.4%
Married 18 32.7% 32.7%
3 Marital Status Divorce 17 30.9% 30.9%
Separated
Widowed
High School Diploma or
above
Educational Junior college Diploma 2 3.6% 3.6%
4 BA 44 80% 80%
Background
Masters or above 9 16.4% 16.4%
Missing
Non-Managerial 27 49.1% 50%
5 Position Managerial 27 49.1% 50%
Missing 1 1.8% -
Less than 3 year 6 10.9% 10.9%
3-5 years 15 27.3% 27.3%
6 Work Experience
5 and above years 34 61.8% 61.8%
Missing
36
As shown in the above table, 35 of the respondents were male which represents 63.6% of the
total respondents, while 19 were females which are 34.5% of the total respondents. Considering
the age groups of the respondents, the higher number of respondents was in the range of 29-38
years, which represent 60%, followed by age groups of 19-28 years and 39 or above years, which
represent 25.5% and 14.5% respectively. According to table 4.2.2, most of the respondents were
single, representing 36.4% of the total respondents. Married and divorce participants represent
32.7% and 30.9% of the total respondents respectively. The table also showed that out of the
total participants 44 and 9 of the respondents have bachelor Degree and Masters degree
respectively, while employees who have college diploma were only 2. In terms of work position
of the participants, both managerial and non-managerial employees had equal share of responses,
each 27. In addition, it can be deduced from the above table that only 6 of the respondents served
their current bank for less than three years. Out of the respondents 15 employees representing
27.3% served their current bank for three to five years while the remaining 34 employees which
represent 61.8%, served their current bank for more than five years.
4.3 Descriptive Analysis of Data Collected

4.3.1 Impact of ICT on Customers’ Satisfaction
The following section seeks to display and analyze the frequency distribution of the responses on
the questionnaire items regarding the dependent and independent variables of the first research
question; the impact of ICT on customers‟ satisfaction.
Table 4.3.1.1 This Bank Provides most Technology-based services/products and the services are
almost always available:
Frequency Percent Valid Percent

Strongly disagree 4 2.0% 2.0%
Disagree 22 11.2% 11.2%
Neutral 33 16.8% 16.8%
Valid
Agree 102 51.8% 51.8%
Strongly agree 36 18.3% 18.3%
Total 197 100.0% 100.0%
As shown on the above table, 138 representing 70% of the respondents agreed that the two banks
provide most of Technology-based services/products and the services are almost always
37
available. 16.8 % and 13.2% of the respondents were neutral and disagree with this statement
respectively.
Table 4.3.1.2: The Technology-based services/products provided by this bank work accurately
and are error-free:

Disagree 32 16.2% 16.2%
Neutral 59 29.9% 29.9%
Valid
Agree 77 39.1% 39.1%
Total 197 100% 100%
From the Above table, it can be deduced that only 97 of the respondents, representing 49.3% of
the respondents agreed that the technology-based services/products of the banks work accurately,
and are error-free and reliable. 59 of the respondents were neutral representing 29.9% and 41 of
the respondents disagreed which account for 20.8% of the total responses.
Table 4.3.1.3: The Technology-based services/products allow me to complete transactions

quickly and save me a lot of time, especially when I am pressed for time:

Strongly disagree 1 .5% .5%
Disagree 13 6.6% 6.6%
Neutral 39 19.8% 19.8%
Valid
Agree 92 46.7% 46.7%
Total 197 100% 100%
Out of the total respondents, 144 customers representing 73.1% agreed that Technology-based
services/products allow them to complete transactions quickly and save them a lot of time,
especially when they are pressed for time whereas only 14 of the respondents representing 7.1%
of the total responses disagree. 39 of the respondents were neutral which represent 19.8% of the
total.
38
Table 4.3.1.4: I feel Technology-based services/products provided by this bank are safe and the
risk associated with them is low:

Strongly disagree 1 .5% .5%
Disagree 17 8.6% 8.6%
Neutral 35 17.8% 17.8%
Valid
Agree 103 52.3% 52.3%
Total 197 100% 100%
As shown on the above table 144, representing 73.1% of the total respondents, agreed that they
feel the Technology-based services/products provided by these banks are safe and the risk
associated with them is low. 17.8 % and 9.1% of the total respondents were neutral and disagree
with this statement respectively.
Table 4.3.1.5: The Technology-based services/products provided precise and sufficient

information I need (account statement and balance enquiry):

Strongly disagree 2 1% 1%
Disagree 8 4.1% 4.1%
Neutral 35 17.8% 18%
Valid Agree 84 42.6% 43.3%
Strongly agree 65 33% 33.5%
Total 194 98.5% 100%
Missing 3 1.5% -
Out of the total respondents 149 customers representing 76.8% of the total responses agreed that
Technology-based services/products provide precise and sufficient information they need. Only
5.1% of the total respondents or 10 of them disagree with this statement while 35 of the
respondents representing 18% of the total respondents were neutral.
39
Table 4.3.1.6: The Technology-based services/products provide are easy to use and user-
friendly:

Disagree 13 6.6% 6.7%
Neutral 29 14.7% 14.9%
Valid Agree 104 52.8% 53.6%
Total 194 98.5% 100%
Missing 3 1.5% -
As shown in the above table 77.3% of the respondents agreed that technology-based
services/products of the banks are easy to use and user-friendly. 14.9% of the respondents neither
agreed nor disagreed with this statement whereas only 7.7% of the respondents disagreed with
this statement.
Table 4.3.1.7: The Technology-based services/products minimize inconvenience by anywhere

and anytime banking (banking at home/office at 24/7):

Disagree 18 9.1% 9.4%
Neutral 45 22.8% 23.4%
Valid Agree 75 38.1% 39.1%
Total 192 97.5% 100%
Missing 5 2.5%
From the Above table, it can be deduced that 126 respondents, representing 65.7% of the total
agreed that the technology-based services/products of the banks minimize inconvenience by
providing anywhere and anytime banking. 45 of the respondents were neutral representing 23.4%
and only 21 of the respondents disagreed which account for 11% of the total responses.
40
Table 4.3.1.8 The charges associated with Technology-based services/products are reasonably
fair and minimize the transaction cost of banking:

Disagree 14 7.1% 7.2%
Neutral 38 19.3% 19.6%
Valid Agree 82 41.6% 42.3%
Total 194 98.5% 100%
Missing 3 1.5%
As shown on the above table 139, representing 71.7% of the respondents, agreed that the charges
associated with technology-based services/products are reasonably fair and minimize the
transaction cost of banking. 19.6 % and 8.7% of the respondents were neutral and disagreed with
this statement respectively.
Table 4.3.1.9When I contact this bank’s customer service via e-mail, phone, interactive website
and fax, my requests are always anticipated properly and always answered promptly:

Disagree 35 17.8% 18.3%
Neutral 60 30.5% 31.4%
Valid Agree 56 28.4% 29.3%
Total 191 97% 100%
Missing 6 3% -
From the above table it can be deduced that only 88 of the respondents which are 46.1% agreed
that their requests are always anticipated properly and answered promptly when they contact
these banks‟ customer service officers via e-mail, phone, interactive website and fax.
Furthermore, 60 of them which comprise 31.4% of the total respondents neither agreed nor
disagreed with this statement. 43 of the respondents representing 22.5% disagreed with this
statement.
41
Table 4.3.1.10: This bank resolves my complaints quickly and offers a fair compensation for its
mistakes:

Disagree 30 15.2% 15.7%
Neutral 51 25.9% 26.7%
Valid Agree 63 32% 33%
Total 191 97% 100%
Missing 6 3% -
Out of the total respondents 102 customers representing 53.4% of the total responses agreed that
these banks resolve their complaints quickly and offer a fair compensation for their mistakes.
Likewise 19.9% of the total respondents or 38 of them disagreed with this statement while 51 of
the respondents representing 26.7% of the total respondents were neutral.
Table 4.3.1.11: Overall, I am satisfied with the bank Technology-based services:

Disagree 14 7.1% 7.1%
Neutral 24 12.2% 12.2%
Valid Agree 104 52.8% 53.1%
Total 196 99.5% 100%
Missing 1 .5%
Regarding their overall satisfaction on Technology-based services/products, 158 customers, who

represent 79.6% of the total agreed whereas only 16 of them representing 8.1% of the total
responses disagreed. Furthermore, 24 of them which represent 12.2% of the total respondents
neither agreed nor disagreed with the statement.
42
Table 4.3.1.12: I say positive things about the bank to other people:

Neutral 23 11.7% 11.9%
Valid Agree 88 44.7% 45.4%
Total 194 98.5% 100%
Missing 3 1.5% -
As shown in the above table the majority of the respondents, 84.1% of the total, agreed that they
say positive things about the bank to other people. 23 out of the total respondents representing
11.9% of the total were neutral while only 8 respondents, which represent 4.1% of the total,
disagree with the statement.
Table 4.3.1.13: I will encourage friends and relatives to use services offered by the bank:

Neutral 19 9.6% 9.9%
Valid Agree 79 40.1% 41.1%
Total 192 97.5% 100%
Missing 5 2.5% -
Out of the total respondents 163 customers representing 84.9 were willing to encourage friends
and relatives to use the services offered by the banks. 19 of the respondents which represent
9.9% of the total were neutral while only 10 of the respondents representing 5.2% of the total
respondents were disagreed with the statement.
43
Table 4.3.1.14 Summary of Descriptive statistics of impact of ICT on Customers’ satisfaction
Std.
N Min Max Mean Deviation
This bank provides most of Technology-based services/products and the

197 1 5 3.73 .955
services are almost always available.
The Technology-based services/products provided by this bank work

197 1 5 3.34 1.016
accurately and are error-free and reliable.
The Technology-based services/products allow me to complete

transactions quickly and save me a lot of time, especially when I am 197 1 5 3.92 .877
pressed for time.
I feel the Technology-based services/products provided by this bank are

197 1 5 3.84 .869
safe and the risk associated with them is low.
The Technology-based services/products provide precise and sufficient

194 1 5 4.04 .881
information I need (account statement and balance enquiry).
The Technology-based services/products provided by this bank are easy

194 1 5 3.92 .863
to use and user-friendly.
The Technology-based services/products minimize inconvenience by

providing anywhere and anytime banking (banking at home/office at 192 1 5 3.80 .990
24/7).
The charges associated with Technology-based services/products are

194 1 5 3.91 .956
reasonably fair and minimize the transaction cost of banking.
When I contact this bank's customer service via e-mail, phone,

interactive website and fax, my requests are always anticipated 191 1 5 3.36 1.091
properly and always answered promptly.
This bank resolves my complaints quickly and offers a fair compensation

191 1 5 3.50 1.109
for its mistakes.
Overall, I am satisfied with the bank Technology-based services. 196 1 5 3.97 .877
I say positive things about the bank to other people. 194 1 5 4.17 .850
I will encourage friends and relatives to use the service offered by the
192 1 5 4.22 .883
bank.
44
Based on the above table it can be interpreted that, the mean score calculated from the
customers‟ responses on statements related with Efficiency, responsiveness and easiness of
Technology-based services/products provided by the banks are higher than other mean scores of
factors of customers‟ satisfaction. However according to mean scores calculated from the
customers‟ responses on statements related with accuracy of Technology-based services/products
provided by the banks, problem handling process and complains resolving process of the banks
are the least three of factors of customers‟ satisfactions.
4.3.2 Impact of ICT on Employee Performance/Productivity
The following section seeks to display and analyze the frequency distribution of the responses on
the questionnaire items regarding the dependent and independent variables of the second
research question; the impact of ICT on employees performance.
Table 4.3.2.1 Information and Communication Technology helps employees to achieve a larger
number of tasks:

Neutral 1 1.8% 1.8%
Valid Agree 17 30.9% 30.9%
Total 55 100% 100%
As shown on the above table, out of the total 55 responses 53 employees agree that Information
and Communication Technology helps employees to achieve a larger number of tasks. Only two
employees were neutral or disagreed.
Table 4.3.2.2: Information and Communication Information helps to lessen workload of

employees:

Neutral 1 1.8% 1.8%
Agree 22 40% 40%
Valid
Total 55 100% 100%
45
Out of the total responses almost all of the employees, 98.2% of the total agreed that Information
and Communication Technology helps to lessen workload form employees. None of the
respondents disagreed with the statement while only one employee neither agreed nor disagree.
Table 4.3.2.3: Information and communication Technology helps employees to deliver output
timely

Neutral 1 1.8 1.9
Agree 18 32.7 33.3
Valid Strongly agree 35 63.6 64.8
Missing 1 1.8 -
Total 55 98.2 100
From the above table it can be deduced that almost all of the respondents, 53 of employees out of
55 responses, agreed that Information and Communication Technology helps employees to
deliver output timely. Only one employee was neutral while none of the respondents disagreed
with the statement.
Table 4.3.2.4: Information and Communication Technology helps employees to reduce errors:

Neutral 12 21.8% 21.8%
Valid Agree 23 41.8% 41.8%
Total 55 100% 100%
From the above table it can be deduced that 40 employees representing 72.7% of the total
respondents agreed that Information and Communication Technology helps employees to reduce
errors. Only 3 employees representing 5.5% of the total disagreed while the remaining 21.8% of
the total employees neither agreed nor disagreed that Information and Communication
Technology helps employees to reduce errors.
46
Table 4.3.2.5: Information and Communication Technology helps employees to perform their
work within the required specification:

Neutral 6 10.9% 10.9%
Valid Agree 31 56.4% 56.4%
Total 55 100% 100%
As shown on the above table 48 employees which represent 87.3% of the total respondents
agreed that Information and Communication Technology helps employees to perform their work
within the required specifications. Out of the total respondents 6 employees were neutral while
only one employee disagreed with the statement.
Table 4.3.2.6: Information and Communication Technology helps employees to improve work
continuously:

Neutral 2 3.6% 3.8%
Agree 26 47.3% 49.1%
Valid
Total 53 96.4% 100%
Missing 2 3.6% -
Out of the total respondents 50 employees representing 94.4% of the total responses agreed that
Information and Communication Technology helps employees to improve work continuously
whereas, only one employee disagreed with the statement and two of the respondents
representing 3.8% of the total responses were neutral.
47
Table 4.3.2.7: Information and Communication Technology helps employees to deliver
consistent output even in high work pressure:

Neutral 9 16.4% 17%
Valid Agree 25 45.5% 47.2%
Total 53 96.4% 100%
Missing 2 3.6%
From the above table it can be deduced that 40 employees who represent 75.5% of the total
respondents agreed that Information and Communication Technology helps employees to deliver
consistent output even in high work pressure. 9 employees, representing 17% of the total neither
agreed nor disagreed with the statement while 4 of the respondents disagreed.
Table 4.3.2.8: Information and Communication Technology helps employees to improve their
effort to learn more and apply new knowledge:

Neutral 5 9.1% 9.3%
Valid Agree 20 36.4% 37%
Total 54 98.2% 100%
Missing 1 1.8% -
As shown in the above table the majority of the respondents, 85.1% of the total, agreed that
Information and Communication Information helps employees to improve their effort to learn
more and apply new knowledge. Out of the total respondents, 5 of them representing 9.3% of the
total were neutral Only 3 respondents which represent 5.6% of the total disagreed with the
statement.
48
Table 4.3.2.9: Information and Communication Technology helps employees to achieve greater
flexibility in work:

Neutral 11 20% 20.4%
Valid Agree 19 34.5% 35.2%
Total 54 98.2% 100%
Missing 1 1.8%
From the Above table, it can be deduced that only 37 of the respondents, representing 68.5% of
the respondents agreed that Information and communication Technology helps employees to
achieve greater flexibility in work. Eleven of the respondents were neutral representing 20.4%
and only 6 of the respondents disagreed which account for 11.1% of the total responses.
Table 4.3.2.10: Overall, Information and communication Technology enhances performance of

bank employees.

Neutral 4 7.3% 7.4%
Agree 25 45.5% 46.3%
Valid Strongly agree 25 45.5% 46.3%
Total 54 98.2% 100%
Missing 1 1.8% -
From the above table it can be deduced that most of the respondents, 50 employees out of 55,
agreed that overall Information and Communication Technology enhances their performance.
Only four employees were neutral while none of the respondents disagreed with the statement.
Table 4.3.2.11: Information and Communication Technology has made work easier and
interesting:

Neutral 2 3.6% 3.7%
Agree 25 45.5% 46.3%
Valid
Total 54 98.2% 100%
Missing 1 1.8% -
49
Out of the total respondents 51 employees representing 94.4% of the total responses agreed that
Information and Communication Technology has made work easier and interesting whereas,
only one employee disagreed with the statement two of the respondents representing 3.7% of the
total responses were neutral.
Table 4.3.2.12: Information and Communication Technology improves effectiveness of

communication flow (via internet and intranet) and decision making process:

Neutral 7 12.7% 12.7%
Valid Agree 24 43.6% 43.6%
Total 55 100% 100%
From the above table, it can be deduced that 47 employees representing 85.4% of the total
population agreed that Information and Communication Technology improves effectiveness of
communication flow and decision making process. However, only one employee disagreed with
the statement while 7 employees representing 12.7% were neutral.
50
Table 4.3.2.13 Summary of Descriptive statistics of impact of ICT on Employees’ performance.
Std.
N Min Max Mean Deviation
Information and Communication Technology helps employees to

55 2 5 4.60 .627
achieve a larger number of tasks.
Information and Communication Technology helps to lesson

55 3 5 4.56 .536
workload of employees.
Information and Communication Technology helps

54 3 5 4.63 .525
employees to deliver output timely.
55 2 5 3.98 .871
employees to reduce errors.
55 2 5 4.16 .688
perform their work within the required specifications.

53 2 5 4.38 .657
improve work continuously.

employees to deliver consistent output even in high work 53 1 5 3.94 .929
pressure.
employees to improve their effort to learn more and apply 54 1 5 4.24 .970
new knowledge.
Information and Communication Technology helps to achieve
54 1 5 3.87 1.082
greater flexibility in work.
From the above table it can be interpreted that, based on the average mean score calculated from
the employees‟ responses on respective statements, the impact of ICT on handling of large
amount of work is higher than its impact on improving quality of work and speed required to
accomplish a specific task within specific time. In other word it can be interpreted that, based on
average mean score calculated on employees responses, the impact of ICT on speed required to
accomplish a specific task is less than average mean score of its impact on other dimension of
employee performance measurements.
51
4.3.3 Challenges
Table 4.3.3.1: Summary of Descriptive Statistic of Challenges
Std. Rank based

Challenges
N Min Max Mean Deviation on Mean
Lack of confidence with the security on 8

194 1 3 1.97 .733
Technology-based services/products.
Customers do not trust the Technology-
based services/products provided by the 195 1 3 1.91 .740 9
bank
Using the Technology-based
197 1 3 1.65 .738 10
services/products of the bank is expensive.
Customers are not familiar with the
Technology-based services/products of the 197 1 3 2.27 .697 3
bank.
Lack of sufficient technical and managerial
195 1 3 2.02 .736 7
support of the bank.
The bank is not fast to respond/rectify when
transactional errors occur (like: when ATM jammed
196 1 3 2.09 .722 5
payment cards or customers' accounts deducted
without being paid the full or part of the amount).
Lack of available Information and Communication

technology infrastructure (access to internet, mobile 191 1 3 2.29 .744 2
phone and computers).
Mobile and Internet are not connected well every

192 1 3 2.33 .733 1
time due to network problem.
The system doesn't work efficiently every time we

194 1 3 2.16 .691 4
need it, as the bank promised.
Customers may prefer branch service to Technology-

194 1 3 2.05 .711 6
based services/products.
As shown in the above table (table 4.3.3.1), most of the respondents agreed that the major
challenge they faced is that mobile and internet connection is low due to network problem. The
second major challenge is lack of available infrastructure followed by lack of familiarity with the
52
technology-based services/products by the customers themselves. „the system does not work
efficiently all the time‟ and „the bank is not fast to respond when transactional errors occur are
placed at 4th and 5th rank as per the customers responses.
The least reason that customers ranked as a challenge is the charges associated with Technology-
based services/products. Most of respondents feel that the charges associated with the
services/products are not expensive enough to prohibit the customers to use the
services/products. The 8th and 9th ranked challenges, security and trust, are also considered by the
customers as the least reasons that discourage them to use Technology-based services/products
provided by the banks.
4.4 Hypothesis Testing

4.4.1 Hypothesis One: Impact of ICT on Customer Satisfaction
Hypothesis: The adaptation of Information and Communication Technology has a significant

impact on customers‟ satisfaction in Ethiopian Private Banking Industry.
I. One-Sample Test (T-Statistics)
To test the first hypothesis of the study, impact of ICT on customers‟ satisfaction, the One-
Sample T test compares the mean score of a sample to a known value.
Table: 4.4.1.1 One Sample T-Statistics
One-Sample Statistics
Std. Error
N Mean Std. Deviation Mean
Adoption of ICT have significant

191 4.1291 .74588 .05397
impact on customers’ satisfaction
Table: 4.4.1.2 One Sample Test
One-Sample Test
53
Test Value = 0
95% Confidence Interval

of the Difference
Mean
t df Sig. (2-tailed) Difference Lower Upper
Adaption of ICT have significant

76.508 190 .000 4.12914 4.0227 4.2356
impact on customers’ satisfaction
Interpretation
It can be deduced that, the calculated value (t-value) and the p-value for the above statement is
76.508 and .000 at 5% level of significance and 190 degree of freedom.
Decision (Rejection Rule: Reject Ho if the p-value ≤ α i.e. 0.05)
From the above table the p-value is .000 which is less than the tabulated value α (.05). Therefore
the null hypothesis (Ho) should be rejected in favor of accepting alternative hypothesis (H 1).
Hence, we can conclude that the adaptation of Information and Communication Technology has
a significant impact on customers‟ satisfaction in Ethiopian private banking industry.
II. Simple Linear Regression Model
Using simple linear regression model we can explain the extent to which Information and
Communication Technology significantly affect customers‟ satisfaction in Ethiopian private
banking industry.
54
Table: 4.4.1.3 linear Regression Model Summary
a
Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 1.115 .293 3.811 .000
Adaptation of ICT (Factors affecting

.803 .077 .618 10.417 .000
Customers Satisfaction)
a. Dependent Variable: Overall Customer Satisfaction
Interpretation
The above Coefficient table shows the simple linear regression model that expresses the
relationship between Adaptation of Information and Communication Technology and
Customers‟ satisfaction. The model is shown mathematically as follows; Y=a+bX, where y is the
overall satisfaction of customers, X is usage of Technology-based services/products, a is a
constant factor and b is the value of coefficient. From the above table, the model can be read as
Y=1.115+0.803X. This can be interpreted as; the share of using Technology-based
services/products by the customer on his/her overall satisfaction is about 80.3%. Based on this
we can conclude that the impact of Information and communication Technology on customers‟
satisfaction is very strong.
4.4.2 Hypothesis Two: Impact of ICT on Employees’ performance/productivity
Hypothesis: Application of Information and Communication Technology has affected

employees‟ performance in Ethiopian Private Banking industry.
55
I. One-Sample Test (T-Statistics)
To test the second hypothesis of the study, impact of ICT on employees‟ performance, the One-
Sample T test compares the mean score of a sample to a known value.
Table: 4.4.2.1 One Sample T-Statistics
One-Sample Statistics
Std. Error
N Mean Std. Deviation Mean
Application of ICT has affected Employees’

53 4.3711 .48331 .06639
Performance.
Table 4.4.2.2 One-Sample Test
One-Sample Test
Test Value = 0
95% Confidence Interval of the

Difference
Mean
t df Sig. (2-tailed) Difference Lower Upper
Application of ICT has affected Employees’

65.841 52 .000 4.37107 4.2379 4.5043
Performance.
Interpretation
It can be deduced that, the calculated value (t-value) and the p-value for the above statement is
65.841 and .000 at 5% level of significance and 52 degree of freedom respectively.
Decision (Rejection Rule: Reject Ho if the p-value ≤α)
56
From the above table the p-value is .000 which is less than the tabulated value α (.05). Therefore
the null hypothesis (Ho) should be rejected in favor of accepting the alternative hypothesis (H1).
Hence, we can conclude that the adaptation of Information and Communication Technology has
positively affected employees‟ performance in Ethiopian private banking industry.
II. Simple Linear Regression Model
Using simple linear regression model we can explain the extent to which Information and
Communication Technology has affected employees‟ performance in Ethiopian private banking
industry.
Table: 4.4.2.3 linear Regression Model Summary
a
Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 1.260 .562 2.243 .029
Application of ICT (Quality of

Work, Quantity of work and speed
.725 .131 .620 5.530 .000
required to accomplish a specific
work)
a. Dependent Variable: Employees‟ performance
Interpretation
The above Coefficient table shows the simple linear regression model that expresses the
relationship between application of Information and Communication Technology and bank
employees‟ performance. The model is shown mathematically as follows; Y=a+bX, where y is
the employees‟ performance, X is application of ICT in day-to-day operation of the banks, a is a
57
constant factor and b is the value of coefficient. From the above table, the model can be read as
Y=1.26+0.725X. This can be interpreted as; the share of applying Information and
Communication Technology in the banks‟ day-to-day operation on improvement of employees‟
performance is about 72.5%. Based on this we can conclude that the impact of Information and
communication Technology on employees‟ performance in Ethiopian private banking industry is
very strong.
58
Chapter Five
Conclusions and Recommendations
Today, the banking industry across the globe is embracing Information and Communication
Technology as part of business strategy for enhancing its performance towards customer
satisfaction, staff productivity, profitability and creating competitive advantage among banking
institutions. Especially the role of Information and Communication Technology towards
improving service quality which in turn satisfying customer need and expectation, and
augmenting the performance of their employees is inevitable. The purpose of this study was to
examine the impact of Information and Communication Technology on banks‟ performance: a
case of two purposefully selected Ethiopian private banks, namely Dashen Bank S.C. and United
Bank S.C. The study particularly examined the impact of Information and Communication
technology on customers‟ satisfaction and employees‟ performance as measures of non-financial
performance of the banks. In addition the study tried to assess the major challenges that
discourage customers to use Technology-based services/products provided by the banks.
5.1 Conclusion
5.1.1 Impact of Information and communication Technology on Customers’ Satisfaction
The results of the study were obtained through close ended questionnaires distributed to 200
customers of the two banks. The researcher tried to examine the level of the customers‟
satisfaction due to the impact of Information and Communication Technology. The following
conclusions are drawn based on the findings of the study:
 In general, from the hypothesis tested, it can be concluded that adoption of

information and Communication Technology has a significant impact on customers‟
satisfaction. Furthermore, it can be deduced from the linear regression model that
there is a strong positive relationship between adoption of Information and
Communication technology and customers‟ satisfaction.
 From the descriptive statistics (table 4.3.1.14), it can be concluded that customers
agreed that the impact of Information and Communication Technology on Efficiency,
59
responsiveness and easiness has been greater among the factors affecting customers‟
satisfaction.
 From the descriptive statistics (table 4.3.1.14), it can also be concluded that the
impact of Information and Communication Technology on accuracy, problem
handling process and complains resolving process of the banks was the least three
among the factors affecting customers‟ satisfaction.
5.1.2 Impact of ICT on Employees’ performance/productivity
The results of the study were obtained through close ended questionnaires distributed for 60
employees of the two banks. The researcher tried to examine the impact of Information and
Communication Technology on employees‟ performance measurement criteria; quantity of work,
quality of work and speed to accomplish specific tasks. The following conclusions are drawn
based on the findings of the study:
 In general, from the hypothesis tested, it can be concluded that adoption of information
and Communication Technology has a significant impact on employees‟ performance.
Furthermore, it can be deduced from the linear regression that there was a strong
relationship between adoption of Information and Communication technology and
performance of the two banks‟ employees.
 However, considering the bulky nature of the banks‟ transactions, the impact of
Information and Communication Technology on handling of large amount of work was
shown in the descriptive statistics (table 4.3.2.13) noticeably higher.
5.1.3 Challenges
The results of the study were obtained through close ended questionnaires distributed for 200
customers of the two banks. The researcher tried to assess the challenges that discourage
customers to use Technology-based services/products of the banks frequently or at all. The
following conclusions are drawn based on the findings of the study:
 From the descriptive statistics (table 4.3.3.1) the finding of the study is consistent with
Gemechu‟s (2012) findings. The major challenges from the customers perspectives are
60
the mobile and internet network connection problem and lack of available Information
and communication technology infrastructure in the country. Lack of infrastructure
includes insufficient access for internet computer and mobile phone.
 In contrast to Gemechu‟s (2012) findings, this study found that the security issues and
trust of customers on Technology-based services/products are the least challenges that
discourage customers to use the services/products provided by the banks.
5.2 Recommendation
This study raised a number of research questions and developed hypotheses related to the study
variables. The purpose of the study was to examine the impact of Information and
communication Technology on banks‟ performance in terms of customers‟ satisfaction and
employees‟ performance. The study applied survey study on two selected private banks and tried
to infer the findings to Ethiopian private banks in general through testing the hypotheses. Based
on the conclusions drawn above the following recommendations are forwarded for the concerned
bodies:
 Based on the findings of the study and above conclusions the impact of Information
and communication Technology on the performance of the two banks in terms of
customers‟ satisfaction and employees‟ performance is significant. Therefore,
Ethiopian private banks in general and Dashen Bank S.C. and United Bank S.C. in
particular should adequately grasp the role of Information and communication
Technology in their operational performance and keep synthesizing technological
innovations in their strategies and day-to-day operation.
 The role of Information and communication Technology on efficiency,
responsiveness and easiness of the banks‟ services and products is satisfactory.
However the accuracy of Technology-based services/products, problem handling
process and compliant resolving process of the banks are not sufficient enough to
satisfy their customers which in turn would diminish their financial and non-financial
performance. Therefore, senior managers of the banks should give a good deal of
attention for these factors of customer satisfactions.
61
 Daily transaction of banking industry is enormous compared with other industries. In
boosting the capacity of the employees to handle large number of tasks, the role of
Information and communication Technology is undeniable. However, bad internet
and mobile network connection, and lack of awareness or familiarity of the
employees and customers have hindered the impact of Information and
Communication Technology on speed of employees to accomplish specific tasks.
Therefore the concerned bodies of the banks should intensively invest on capacity
building of their employees in terms of modernization and awareness programs for
customers.
62
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Appendix
QUESTIONNAIRE
Dear Respondents,
This questionnaire is designed to gather information about the impact of Information and
Communication Technology on customers‟ satisfaction and the challenges thereon in Ethiopian
private banks. All responses will be used to conduct a study for the partial fulfillment of
Executive Masters Thesis in Business Administration. I would like to assure you that you will be
guaranteed anonymity as I do not ask your name here and your responses will not be used for
any other purposes other than the intended purpose. Besides, this survey should only take about
10 minutes of your time. I am grateful for your cooperation in advance!
N.B Please put a “√” mark to all your responses in the circle provided beside each statement.
If you do not use, at least, any one of Technology-based services/products of the bank, please
do not fill out the questionnaire.
I. Demographic information
1. Gender
□ Male □ Female
2. Age (years old)
□ 18 or below □ 19~28 □ 29~38 □ 39 or above

3. Marital Status
□ Single □ Married □ Divorce □ Separated □ Widowed
4. Education background
□ High school diploma or below □ Junior college diploma □ Undergraduate degree
(Bachelor‟s degree) □ Graduate degree (Master‟s degree) or above

5. Occupation
□ Business (enterprise) managerial and technical personnel
□ Government officer □ Professional (science and education, cultural, health)
70
□ Student □ Self-employed □ Unemployed □ Others
6. Which of the Technology-based services/products of the bank do you use?
□ ATM □ Mobile Banking □ Internet Banking □ SMS Alert □

Phone Banking □ Electronic Fund Transfer
7. Length of Technology-based services/products use:
□ Less than 1 year □ 1-2 years □ 2 years and above
II. This part of questionnaire covers about customer satisfaction in relation with Technology-
based services/products provided by this bank. Technology-based banking services/products
include: connectivity of branches over the internet, ATM, POS, Mobile banking, Internet
Banking, SMS banking and electronic fund transfer. Please indicate how much you agree or
disagree with each of the following statements by circling the number that best represents your
opinion. 1 indicates strongly disagree (SDA), 2 indicates disagree (DA), 3 indicates neutral (N), 4
indicates agree (A) and 5 indicates strongly agree (SA).
71
S.No. Research Question SDA DA N A SA
A. Factors Affecting Customer satisfaction

1. This bank provides most of Technology-based services/products 1 2 3 4 5
and the services are almost always available.
2. The Technology-based services/products provided by this bank 1 2 3 4 5

work accurately and are error-free and reliable.
3. The Technology-based services/products allow me to complete

transactions quickly and save me a lot of time, especially when I am 1 2 3 4 5
pressed for time.
4. I feel the Technology-based services/products provided by this 1 2 3 4 5

bank are safe and the risk associated with them is low.
5. The Technology-based services/products provide precise and

sufficient information I need (account statement and balance 1 2 3 4 5
enquiry).
6. The Technology-based services/products provided by this bank 1 2 3 4 5

are easy to use and user-friendly.
7. The Technology-based services/products minimize 1 2 3 4 5

inconvenience by providing anywhere and anytime banking
(banking at home/office at 24/7).
8. The charges associated with Technology-based services/products 1 2 3 4 5

are reasonably fair and minimize the transaction cost of banking.
9. When I contact this bank’s customer service via e-mail, phone, 1 2 3 4 5

interactive website and fax, my requests are always anticipated
properly and always answered promptly.
10. This bank resolves my complaints quickly and offers a fair 1 2 3 4 5

compensation for its mistakes.
72
B. Overall Customer satisfaction
1. Overall, I am satisfied with the bank Technology-based services. 1 2 3 4 5
2. I say positive things about the bank to other people. 1 2 3 4 5
3. I will encourage friends and relatives to use the service offered

1 2 3 4 5
by the bank.
III. This part of the questionnaire covers about challenges which discourage customers to use
Technology-based services/products of the bank frequently or at all. Please indicate how much the
following challenges affect the customers’ decision to use Technology-based services/products
by circling the number that best represents your opinion. 1 indicates Not at all affecting (NA), 2
indicates somewhat affecting (A), 3 indicates Strongly Affecting (SA).
S.No. Challenges NA A SA
1. Lack of confidence with the security on Technology-based

1 2 3
services/products.
2. Customers do not trust the Technology-based 1 2 3

services/products provided by the bank
3. Using the Technology-based services/products of the bank is 1 2 3

expensive.
4. Customers are not familiar with the Technology-based 1 2 3

services/products of the bank.
5. Lack of sufficient technical and managerial support of the 1 2 3

bank.
73
6. The bank is not fast to respond/rectify when transactional
errors occur (like: when ATM jammed payment cards or 1 2 3
customers’ accounts deducted without being paid the full or part
of the amount).
7. Lack of available Information and Communication technology 1 2 3

infrastructure (access to internet, mobile phone and computers).
8. Mobile and Internet are not connected well every time due to 1 2 3
network problem.
9. The system doesn’t work efficiently every time we need it, as

1 2 3
the bank promised.
10. Customers may prefer branch service to Technology-based 1 2 3

services/products.
Thank you.
74
QUESTIONNAIRE
Dear Respondents,
This questionnaire is designed to gather information about the impact of Information and
Communication Technology on employees‟ performance. All responses will be used to conduct
a study for the partial fulfillment of Executive Masters Thesis in Business Administration. I
would like to assure you that you will be guaranteed anonymity as I do not ask your name here
and your responses will not be used for any other purposes other than the intended purpose.
Besides, this survey should only take about 10 minutes of your time. I am grateful for your
cooperation in advance!
N.B Please put a “√” mark to all your responses in the circle provided beside each statement .
I. Demographic information
1. Gender
□ Male □ Female
2. Age (years old)
□ 18 or below □ 19~28 □ 29~38 □ 39 or above
3. Marital Status
□ Single □ Married □ Divorce □ Separated □ Widowed
4. Education background
□ High school diploma or below □ Junior college diploma □ Undergraduate degree
(Bachelor‟s degree) □ Graduate degree (Master‟s degree) or above

5. Position
□ Non-Managerial Post □ Managerial Post

6. Work Experience
□ Less than 3 year □ 3-5 years □ 5 years and above
II. This part of questionnaire covers about employees’ performance/staff productivity in

relation to adoption of Information and Communication Technology in bank’s day-to-day
75
operation. Please indicate how much you agree or disagree with each of the following
statements by circling the number that best represents your opinion. 1 indicates strongly
disagree (SDA), 2 indicates disagree (DA), 3 indicates neutral (N), 4 indicates agree (A) and 5
indicates strongly agree (SA).
S.No. Research Question SDA DA N A SA
1. Information and Communication Technology helps employees 1 2 3 4 5

to achieve a larger number of tasks.
2. Information and Communication Technology helps to lesson 1 2 3 4 5
workload of employees.
to deliver output timely.
4 Information and Communication Technology helps employees 1 2 3 4 5
to reduce errors.

to perform their work within the required specifications.

to improve work continuously.
to deliver consistent output even in high work pressure.
to improve their effort to learn more and apply new knowledge.
9. Information and Communication Technology helps to achieve 1 2 3 4 5
greater flexibility in work.
Overall Employees Performance
1. Overall, Information and Communication Technology enhance

1 2 3 4 5
performance of bank employees.
2. Information and Communication Technology has made work
1 2 3 4 5
easier and interesting.
3. Information and Communication Technology improve
effectiveness of communication flow (via internet or intranet) 1 2 3 4 5
and decision making process.
Thank you
76

Yalew Nigussie

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ADDIS ABABA UNIVERSITY

COLLEGE OF BUSINESS & ECONOMICS

THE IMPACT OF INFORMATION & COMMUNICATION

A Thesis Submitted to the Department of Management of Addis

By: Yalew Nigussie

Advisor: Dr. Asmare Emerie

THE IMPACT OF INFORMATION & COMMUNICATION

Name and Signature of members of the Examining board

Asmare Emerie (PhD) _________________ _____________

Advisor Signature Date

______________ _________________ _____________

Internal Examiner Signature Date

______________ ________________ _____________

External Examiner Signature Date

Name of Advisor: Dr. Asmare Emerie

I am extremely indebted to my beloved wife, Biruktawit Belete, for her

My thanks also belong to my friend, Haregewion Kebede, for her unreserved

1. Chapter One: Introduction………………………..…………………………………1

2. Chapter Two: Literature Review……………………………………………………..9

2.1 Brief History of Banking in Ethiopia ……………….…………………….9

2.2 Importance of ICT in Financial Service Delivery………………………..11

2.2.1 Benefit of ICT in Banking Industry………………………………..11

2.2.2 Relationship between ICT and Organizational

2.2.3 Types of Technological Facilities/Channels

2.2.4 ICT and Ethiopian Private Banking Industry…………………..18

2.3 Theoretical Framework……………………………………………………….20

2.3.1 Measuring Customer Satisfaction………………………………...20

2.4 The Challenges of ICT Application on Commercial Banks………….26

3. Chapter Three: Methodology of the Study……………………………………….30

3.1 Introduction …………………………………………………………………30

3.2 Operationalization of the Research Topic……………………………..30

3.3 Research Design……………………………………………………… ……31

3.4 Source of Data…………………………………………………………..…..31

3.5 Target Population……………………………………………………… .…32

3.6 Sampling Design………………………………………………………… ..32

3.7 Data Collection Instrument…………………………………………… ..33

3.8 Method of Data Analysis………………………………………………… 33

4. Chapter Four: Data Presentation, Analysis and Interpretation………… …34

4.2 Demographic Data Presentation…………………………………… …34

4.2.1 Customers’ Responses………………………………………… …34

4.2.2 Employees’ Responses ………………………………………….…36

4.3 Descriptive Analysis of Data Collected ….………………………..…..37

4.3.1 Impact of ICT on Customers’ Satisfaction………………….…37

4.3.2 Impact of ICT on Employees’ Performance/Productivity ….45

4.3.3 Challenges …………………………………………………….……..52

4.4 Hypothesis Testing …………………………………………………….…53

4.4.1 Hypothesis One: Impact of ICT on

4.4.2 Hypothesis Two: Impact of ICT on Employees’

5.1.1 Impact of ICT on Customers’ Satisfaction………………….…59

5.1.2 Impact of ICT on Employees’ Performance/Productivity…..60

Table 2.2.3.1: Delivery Platform available for Electronic Banking

Table 2.2.4.1: Feature of banking services rendered by Ethiopian banks

Table 2.3.1.1: Summary of Related Studies

Table 2.3.1.2: Factors Affecting Customer Satisfaction

Table 2.3.2.1: Measurements of Worker performance

Table 4.1.1.1: Rate of Respondents

Table 4.2.1.1: Customers’ demographic information

Table 4.2.2.1: Employees’ demographic information

Table 4.3.1.1: This Bank provides most of Technology-based services/products and

Asmare Emerie (PhD) _____ _

______ _ _____

__ _