ASSESSING THE EFFECTIVINESS OF DIGITAL BANKING SERVICE

IN CUSTOMER SATISFACTION, IN CASE OF CBE YELA SAWLA

BRANCH

THE RESEARCH PROPOSAL SUBMITTED TO DEPARTMENT OF

MANAGEMENT FOR THE PARTIAL FULFILLMENT OF
REQUIRMENTS OF BACHLEOR ART DEGREE IN
MANAGEMENT

SET BY: ASTER WOLDU

ID; ID; /2014
ADVISER; Mr. SELEMON (MBA)

APRIL, 2024/5
SAWLA , ETHIOP
DECLARATION

assessing the effectiveness of digital

I undersigned declare that this study entitled as
banking service in customer satisfaction, in case of CBE Yela sawla branc h
, is my own work. I have carried out the research work independently with the guidance and
support of the research advisor. Mr. Selemon G

Name of student: Aster Woldu

Signature:

Date:
APPROVAL

This is to certify that the Paper prepared by Aster Woldu an assessing the effectiveness
of digital banking service in customer satisfaction, in case of CBE Yela
sawla branch and submitted in partial fulfillment of the requirement for the ( BA) degree in
Management complies with the regulation of the university and meets the accepted standard with
respect to originality and quality.

________________________ ______________ ____________

Examiner Signature
Table of Contents

Contents
DECLARATION.................................................................................................................................................................ii
APPROVAL.........................................................................................................................................................................ii
CHAPTER ONE....................................................................................................................................................................... 3
INTRODUCTION..................................................................................................................................................................... 3
1.1 Background of the Study.............................................................................................................................................3
1.2 Statement of the Problem...........................................................................................................................................6
1.3 Research Questions.....................................................................................................................................................7
1.4 Objective of the Study.................................................................................................................................................8
1.4.1 General Objective.................................................................................................................................................8
1.4.2 Specific Objectives................................................................................................................................................8
1.5 Significance of the Study.............................................................................................................................................8
1.6 Scope of the Study......................................................................................................................................................9
1.6.1 Conceptual Scope.............................................................................................................................................9
1.6.2 Methodological scope.......................................................................................................................................9
1.6.3 Geographic scope...........................................................................................................................................10
1.7 Limitation of the Study.....................................................................................................................................10
1.8 Organization of the Study.................................................................................................................................10
CHAPER TWO LITERATURE REVIEW.....................................................................................................................11
2.1 Theoretical Literature...................................................................................................................................11
2.2 Customer satisfaction....................................................................................................................................13
2.2.2 The Relationship between Service and Customer Satisfaction...............................................................15
2.3 Empirical Evidences......................................................................................................................................16
CHAPTER THREE...........................................................................................................................................................19
3.1 Research Approach and Design....................................................................................................................19
3.2 Target Population..........................................................................................................................................20
3.3 Sample size.....................................................................................................................................................21
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 3.4 Methods of Data Collection...........................................................................................................................22
3.5 Data Analysis Method...................................................................................................................................22
4. TIME AND COST BREAKDOWN.............................................................................................................................23
4.1 Time schedule........................................................................................................................................................23
4.2 The cost breakdown.............................................................................................................................................24
5. REFERANCE................................................................................................................................................................25

ACCRONOMY

CBE – Commercial Bank of Ethiopia

ICT - Information and Communication Technology

IS – Information System

IT - Information Technology

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 TAM - Technology Acceptance Model

TPB - Theory of Planned Behaviour

TRA - Theory of Reasoned Action

SPSS - Statistical Package for Social Sciences

CHAPTER ONE

INTRODUCTION
1.1 Background of the Study

Technology and the internet are now more prevalent in our daily lives and are taking on greater
significance. A revolution in electrical technology is currently taking place, mainly in the phone,
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information, and communications industries. A number of services for the Internet have been
made possible by the widespread acceptance of digital services across all socioeconomic
segments and age groups (Emad, 2021). Most banks are now accessible through online services,
and internet banking is already well-known and accepted on a global scale. This presents banks
with new business and service opportunities as well as challenges to thrive in the financial
market and survive. Customers can use these E-services to check their bank accounts with only
one click and an internet connection (Serrah and Maideen, 2022).

A multitude of factors, such as advertising, word-of-mouth, brand recognition, location, pricing,

and the needs and values of the target market, influence modern marketing services. Advertising,
direct mail, sales promotion, websites, internet communication, and sales campaigns are all
examples of marketing communication, according to Widayat, Ilyas, and Novita (2020). A direct
conduit for using banking services such as money transfers, electronic alerts, phone banking,
online banking, etc. is known as digital banking. It can be adjusted to the technological
preferences of the consumer. This concept spreads and solidifies throughout the entire global
corporate environment. As a result, consumers may now lower their service costs and run their
enterprises efficiently and autonomously thanks to the expansion of digital banking services and
other service types including mobile banking, online banking, and automated teller machines
(ATMs) (Serrah and Maideen, 2022).

One of the most important services that the banking industry has lately learned to employ to
boost banking user satisfaction by offering more useful and easy services is digital banking,
which can be simply and efficiently achieved (Widayat, et al., 2020). Additionally, its high
quality serves as the foundation for encouraging the secure purchase, sale, and delivery of
products and services on the Website or online generally. It demonstrates that the quality of the

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E-service increases with increased dependability and safety. By improving the quality of the
online platform, digital banking is one of the services that are increasingly needed to deliver
superior customer service and increase customer satisfaction (Perera & Priyanath, 2018).
Customers are demanding more frequently present while the service is being produced and
therefore views and in many cases, is involved in the production process. For the reason that
banking services often are produced and consumed at the same time, mass production is near
impossible from businesses, and businesses must put in more effort to achieve them (Khokhar,
Laghari and Lakhani, 2019).

Although almost all of Ethiopia's financial institutions use digital banking systems, their
operational effects on client services have not yet been fully understood, particularly in the
Ethiopian setting. In the Ethiopian environment, digital banking products and services were
acquainted and operationalized by all banks a few years ago. The pioneer of the digital banking
service started offering these services to its clients in 2008, however. Only 27% of the customers
of the 26 commercial banks in the nation at the time used electronic payment methods to conduct
mobile banking transactions; the remaining 63% did not use electronic payment methods.
Additionally, only 41.3% of all commercial banks' customers used electronic payment
methods in the same year (NBE, 2021).

Ethiopia struggles with low financial revenues and makes an effort to enact rules and legislation
that support and promote the banking industry. This is so that productive work can be
accomplished, which fundamentally calls for recognizing client demands and analyzing the
mobile application aspects influencing their level of satisfaction (Gofe and Tulu, 2019).
Customers' satisfaction is also recognized as a critical differentiator in a market where businesses
fight for their business, and it has quickly developed into a key component of any company's
business strategy. Therefore, addressing the issue of consumer satisfaction with banks is
important and requires research that takes operational aspects of mobile banking into account.

By developing its platform, it was one of the first banks in Ethiopia to offer digital banking, and
customers still heavily rely on it. The investigation was conducted under the aforementioned
conditions in Addis Ababa, Ethiopia. It's important to keep in mind that Commercial Bank of
Ethiopia, the largest bank in the country, is also one of the largest commercial banks in Ethiopia.

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1.2 Statement of the Problem

The Commercial Bank of Ethiopia (CBE) had 1464 branches as of June 30, 2022, 841.2 billion
Birr in total deposits, 775 billion Birr in total outstanding loans, 912 billion Birr in total assets,
and more than 41,000 permanent and 24,000 contract employees. The Commercial Bank of
Ethiopia (CBE) currently offers customers a variety of easy online services. Through electronic
channels, CBE offers a variety of banking services, including CBE Birr, Transfer Money, Cash
Out, Buy Airtime, Buy Goods, Pay Bill, Check Balance, Others, ATM, Forex ATM, Mobile
Banking, Internet Banking, and Point-of-Sale (POS) Terminal. However, the Commercial Bank
of Ethiopia's annual report for 2021 stated that it will experience numerous issues as a result of
these internet services and the increasing number of customers using e-banking. In addition, the
National Intelligence and Security Service (NISS) stated that it had apprehended thieves who
attempted to steal US$110 million from the Commercial Bank of Ethiopia in Addis Ababa .

This illustrates that security is some of the main concerns that users of CBE's online banking
service have. A bank lost millions of dollars due to a single technical problem that caused it to go
down for just one day. Because CBE mainly relies on its online platforms, it has also suffered
huge losses. In contrast, firms must pay particular attention to service quality as the most crucial
aspect of competitiveness if they want to outperform their rivals. This is especially true in the
service sector (Khokhar et al., 2019).

In addition, traditional banking habits, the major barriers to adopting online banking were
customer preference for traditional ATMs and a bank branch, as well as a lack of confidence or
skills. Nevertheless, the number of online banking users has increased by around 54.2 in 2022,
compared to 41.7% in 2016 in CBE, even though, there are a lot of people who haven‘t enough
confidence and knowledge to use online banking and still sticking to the traditional banking
habits (CBE, 2022). It also increased the number of its mobile card users by 2.6 million and that
of mobile banking users by 3.4 million. Similarly, 4.5 million more customers began using the
CBE-Birr service, recruited by the bank‘s agents and branches.

Customers' preferences for conventional ATMs and bank branches, in addition to a lack of
confidence or expertise, were the main obstacles to the adoption of online banking. However, the
percentage of people using online banking has climbed by almost 54.2 in 2022, compared to

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 41.7% in 2016 in CBE, even if many people still adhere to traditional banking practices because
they lack the confidence and knowledge to utilize online banking (CBE, 2022). Additionally, it
had a 2.6 million increase in mobile card users and a 3.4 million increase in mobile banking
users. Similar to this, 4.5 million more users of the CBE-Birr service started doing so after being
attracted by the bank's agents and branches.

The majority of prior studies (Emad, 2021) also concentrated on consumers' perceptions of
mobile applications in general and their attitudes, adoption, and intentions toward them. In the
context of Internet banking, Rahi, 2019; Alghizzawi, Rahi, and Khan (2020) concentrated on the
extension of technology with task technology fit (TTF). Previous studies did not focus on
security , and speed of ubiquity of digital to prevent the bank system from fraudsters. They can
now steal money from a person's account covertly and with less physical threat than in the past
by simply using internet banking to search for any personal information. This study uses banking
technology to fill in gaps in online financial transaction activities with only one click, such as
gathering up-to-date information about their financial needs.

1.3 Research Questions

Sub Research Questions

 What is the effect of the security of digital banking on customer satisfaction at the
Commercial Bank of Ethiopia?
 How does the speed of digital banking affect customer satisfaction at the Commercial
Bank of Ethiopia?
 To what extent does the ubiquity of digital banking affect customer satisfaction at the
Commercial Bank of Ethiopia?
 What is the effect of the system availability of digital banking on customer satisfaction at
the Commercial Bank of Ethiopia?
 To what extent does the control of digital banking affect customer satisfaction at the
Commercial Bank of Ethiopia?

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1.4 Objective of the Study
1.4.1 General Objective

The general objective of the study is to examine the effect of digital banking on customer
satisfaction at Commercial Bank of Ethiopian in Yela Sawla branch.

1.4.2 Specific Objectives

 To examine the effect of the security of digital banking on customer satisfaction at the
Commercial Bank of Ethiopia.
 To examine the effect of the speed of digital banking on customer satisfaction at the
Commercial Bank of Ethiopia.
 To examine the effect of the ubiquity of digital banking on customer satisfaction at the
Commercial Bank of Ethiopia.
 To examine the effect of system availability of digital banking on customer satisfaction at
the Commercial Bank of Ethiopia.
 To examine the effect of control of digital banking on customer satisfaction at the
Commercial Bank of Ethiopia.

1.5 Significance of the Study

This study has shown that the effect of digital banking on customer satisfaction at Commercial
Bank of Ethiopian in Sawla. This study will equip managers with the requisite knowledge and
guide them to make an informed decision on adoption of digital banking strategies. Resource
allocation is a critical function of management and firms derive their success from the way they
utilize their scarce resources. The findings from this study will assist CEOs and firm managers to
identify and allocate resources on marketing platforms and strategies with the greatest positive
impact on the performance of the organization. It enables consumers to save money, make and
receive payments under more amiable and accessible conditions, and it aids in the competent
provision of fundamental financial services. It assisted investors, shareholders, and managers in
understanding, anticipating, and responding to significant changes in alternative payment
systems and business requirements.

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 The results of this study project and report can be used to educate those working in the banking or
financial industries as well as the banking industry as a whole and specific member of financial
institutions.

Due to the information it would provide regarding the characteristics of many presentations, the
study will also be helpful to prospective users of digital banking financial transaction applications.

1.6 Scope of the Study

This study strengthens the link between financial transactions and the general populace that is
excluded from financial services. Due to this, there are three main research focuses in this study,
including conceptual and methodological focuses.

1.6.1 Conceptual Scope

The study's major focus was on the operationalization of the Ethiopian digital banking system's
applicability in terms of system availability and related difficulties. It was active in digital banking in
financial transactions that benefited society, employees, and customers. This study is mainly focused
on interactive banking applications for mobile devices that have increased client engagement,
activity, and control. The possibility banks will experience higher profitability and growth increases
with the number of digital banking financial applications that a banking system is accessible to.
Thus, it focused on five independent variables including security of digital banking, speed, ubiquity
of digital banking, system availability and control of digital banking and customer satisfaction as
dependent variable.

1.6.2 Methodological scope

This study tested the effect of digital banking on customer satisfaction financial. Thus, it used
descriptive and explanatory research strategies. The causal effect of digital banking on customer
satisfaction financial was investigated via explanatory research design. This study primarily used
quantitative and qualitative research methods. It used a well-designed five-point Likert scale
questionnaire with closed-ended and/or open-ended questions and an in-depth interview to use a
systematic research strategy for gathering data from a representative sample of people. In the study,
the relevant annual reports of commercial banks and the national bank of Ethiopia were used,
together with primary (questionnaire and interview) and secondary data sources. Last but not least,

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 this study used data from a small sample of bank employees—both male and female— bank
managers, and financial players active in the sector in the study locations.

1.6.3 Geographic scope

The scope of this study will remained geographically within Sawla, the capital city of Gofa Zone.
This study will be concluded in Sawla provided from December 2025 and June 2025.

1.7 Limitation of the Study

This study comprises several limitations, first, this study employed only self-reported questionnaire.
Further study could do more interviews through research utilizing a wider range of customers using
digital application in getting digital banking services. Second, the current study investigated the
influence of 5 independent variables on one dependent variable, i.e., customer‘s satisfactions.
Moderator variables should be simultaneously added into the theoretical framework of future
research to improve the validity of the study. Third, one of the methodological limitations in
this study was the use of self-reported questionnaires. Future studies using qualitative methods
should give a broader understanding of factors influencing internship satisfaction.

1.8 Organization of the Study

The preparation and organization of this study are covered in five chapters. The first chapter's part
on the study's introduction contains information about the background, problem statement, research
questions, objective, significance, scope, definition of terminology, and organizational structure. The
second chapter is then offered, which contains both a theoretical and an empirical literature review.
The third chapter then discusses research procedures, which include data analysis, research
credibility, and data collection methods in addition to study approach, population, sampling, and
sample size estimation. The fourth chapter immediately after present‘s data, analyzes it, interprets it,
and makes comparisons and contrasts with past studies. The fifth chapter finishes with a summary of
the findings and study recommendations.

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 CHAPER TWO
LITERATURE
REVIEW
2.1 Theoretical Literature
2.1.1 Definition of E-banking

E-banking has a variety of definitions all of which explains similar concept. The following
section shows some of these definitions.

E-banking is a form of banking service where funds are transferred through an exchange of
electronic signal between financial institutions, rather than exchange of cash, checks, or other
negotiable instruments (Kamrul, 2009). E-banking also known as electronic funds transfer
(EFT). It is simply the use of electronic means to transfer funds directly from one account to
another rather than by check or cash (Malak, 2007).The term e-banking often refers to
online/internet banking which is the use of the internet as a remote delivery channel for banking
services (Furst&Nolle, 2002, p.5). E-banking is the use of a computer to retrieve and process
banking data (statements, transaction details, etc.) and to initiate transactions (payments,
transfers, requests for services, etc.) directly with a bank or with other financial service provider
remotely via a telecommunications network (Yang, 1997). It should be noted that electronic
banking is a bigger platform than just banking via the internet.

E-banking can be also defined as a variety of platforms such as internet banking or (online
banking), TV-based banking, mobile phone banking, and PC (personal computer) banking
whereby customers access these services using an intelligent electronic device, like PC, personal
digital assistant (PDA), automated teller machine (ATM), point of sale (POS), kiosk, or touch
tone telephone (Alagheband, 2006).

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2.1.2 Forms of E-banking

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There are many electronic banking delivery channels to provide banking service to customers.
Among them ATM, POS, Mobile banking and internet banking are the most widely used and
discussed below.
ATM

ATM is an electronic machine in a public place, connected to a data system and related
equipment and activated by a bank customer to obtain banking services without going in to the
banking hall. It allows customers to access banking services such as withdrawals, transfers,
inquiries about account balances, requests for cheque books, account statements, direct deposits,
foreign currency exchange etc. (Fenuga, 2010). Using an ATM requires an ATM card and a pass
code, often referred to as a PIN (Personal Identification Number).

Internet banking

Internet banking is conducted by completing bank transactions by directly accessing the bank
through the internet. Nowadays, internet banking customers can access many different services
online, which makes physical banks open even after office hours. Internet banking allows
customers of a financial institution to conduct financial transactions on a secure website operated
by the institution. Internet banking can be conducted either by accessing the internet with a
computer or by using a phone that has internet features (Alabar& Timothy, 2012).

POS

Point of Sale (POS) also sometimes referred to as Point of Purchase (POP) checkout is the
location where a transaction occurs. A "checkout" refers to a POS terminal or more generally to
the hardware and software used for checkouts, the equivalent of an electronic cash register. A
POS terminal manages the selling process by a sales person accessible interface. The same
system allows the creation and printing of the receipt (Shittu, 2010).

Mobile banking

Mobile banking (also known as M-Banking) is a term used for performing balance checks,
account transactions, payments, credit applications and other banking transactions through a

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mobile device such as a mobile phone or Personal Digital Assistant (PDA). The earliest mobile
banking services were offered over SMS, a service known as SMS banking. Mobile banking is
used in many parts of the world with little or no infrastructure, especially remote and rural areas.
This aspect of mobile commerce is also popular in countries where banks can only be found in
big cities, and customers have to travel several miles to the nearest bank. The scope of offered
services may include facilities to conduct bank and stock market transactions, to administer
accounts and to access customized information (Tiwari&Buse, 2007).

2.1.3. Service quality

The present business era is now named as “Quality Era” because perceived quality of the product
is becoming the most important competition factor in business world (Bedi, 2010). It is now the
most powerful competition weapon and organization‟s life giving blood. Perceived service
quality refers to the consumer‟s global attitude or judgment of the overall excellence or
superiority of the service. It is a result from comparisons by consumers of expectations with their
perceptions of service (Caruana& Malta, 2002). That means it can be termed as the extent of
matching or the degree of discrepancy to which the service delivered matches customer
expectations (Parasuraman, Zeithmal, & Berry, 1988). Delivering quality service means
conforming to customer expectations on a consistent basis (Thakur, 2011).
Today one of the most dominant topics of research in services is service quality. It is necessary
for service providers to understand how customers evaluate the quality of service. When
customers consume a product, they compare the quality of experience with their prior
expectations, which leads to their satisfaction or dissatisfaction (Thakur, 2011). Therefore
services marketing researchers based their work on developing a service quality concept focused
on consumer behavior instead of using manufacturing quality concepts (Dhandabani, 2010).
Thus it had been recognized that customers evaluate service quality by comparing the actual
performance with service expectations that they held (Thakur, 2011).
2.2 Customer satisfaction
Customer satisfaction is a measure of how products and services supplied by a company meet or
surpass customer expectation. Customer satisfaction is also defined as the number of customers
whose reported experience with a firm exceeds specified satisfaction goals (Farris, Paul et al.,
2010). Another definition of customer satisfaction refers to the extent to which customers are

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happy with the products and/or services provided by a business. Further definition of customer
satisfaction states that it is a term generally used to measure a customer's perception of a
company's products and/or services (Ahmed, 2005). It's not a straight forward science. Customer
satisfaction will vary from person to person, depending on a whole host of variables which may
be both psychological and physical.

According to Saha& Zhao (2005), customer satisfaction is defined as a collection of outcome of

perception, evaluation and psychological reactions to the consumption experience with a
product/service. In other words, Saha and Zhao further defined customer satisfaction as a result
of a cognitive and affective evaluation where some comparison standard is compared to the
actually perceived performance. If the performance perceived is less than expected, customers
will be dissatisfied. On the other hand, if the perceived performance exceeds expectations,
customer will be satisfied.

In a competitive market place where businesses compete for customers, customer satisfaction is
seen as a key differentiator and increasingly has become a key element of business strategy (Carl
& McDaniel, 2005). It is seen as a key performance indicator within business and is often part of
a Balanced Scorecard. Therefore, it is essential for organizations to effectively manage customer
satisfaction. To be able do this, organizations need reliable and representative measures of
satisfaction.

In researching satisfaction, firms generally ask customers whether their product or service has
met or exceeded expectations. Thus, expectations are a key factor behind satisfaction. When
customers have high expectations and the reality falls short, they will be disappointed and will
likely rate their experience as less than satisfying (John & Joby, 2003).

2.2.1 Customer Satisfaction in Banking

Customer satisfaction is a key determining factor why customers leave or stay with a bank.
Fornell (1992) cited in Thakur (2011) noted that although customer satisfaction and quality
appear to be important for all firms, satisfaction is more important for loyalty in service
industries like bank. Because even if the customers appear to be satisfied, they may look for
other bankers if they believe they might receive better service elsewhere (Reichheld, 1996) cited

15
in Thakur (2011). Thus the banking organizations need to know how to keep their customers.
However, keeping customers is also dependent on a number of other factors. These include a
wider range of service choices, greater convenience, better prices, and enhanced income (Thakur,
2011).

Ioanna (2002) cited in Thakur (2011) further proposed that differentiation is nearly impossible in
a competitive environment like the banking industry. Banks everywhere are delivering nearly
same services. Thus, bank management tends to differentiate their firm from competitors through
service quality. Service quality is a crucial element which impact customers‟ satisfaction level in
the banking industry. Generally in banking, quality is a multivariable concept, which includes
differing types of convenience, reliability, services portfolio, and critically, the staff delivering
the service (Storbacka et al., 1994) cited in Thakur (2011).

Minimum price with maximum usage and profit always breeds higher level of satisfaction (Jamal
& Kamal, 2004) cited in Afsar (2010). When pricing is not suited to the needs of the customers,
dissatisfaction usually occurs. In banking industry also, the interest rates on loans and charges on
the usage of online services such as ATM machines and the processing fee is a major source of
conflict between the bank and its customers. If customers think that the charges are more than it
should become paring to their needs, they switch. Competition is now fierce in banking industry
as it has become too easy to open an account in any other bank that results switching cost to be
very minimal. But if a customer is satisfied, the loyalty injects automatically and the customer
remains with the current banker for a longer and longer period of time (Fox &Poje, 2002) cited
in Afsar (2010).
2.2.2 The Relationship between Service and Customer Satisfaction
The status or prestige of an organization is determined by the quality of the provided services.
Organization of high quality level of its services has a high competitive position. Achieving a
high level of services meet the needs of customers. Studies confirmed that service quality and
customer satisfaction have strong relationship (Alagheband, 2006; Bedi, 2010; Keiningham,
2005). when the customer receives high quality service his behavior and attitude towards the
organization will be positive and that would strengthen the relationship with the organization and

16
vice versa. Customer satisfaction is the most important criteria that enable organizatio ns to
ensure the quality of their goods or services (Parasuraman et al., 1985).
In case of the banking sector, recognized standard scales to measure the perceived quality of a
bank service is not available. Thus providing high quality service is being taken as an important
weapon to survive and to gain and maintain competitive advantage (Bateson, 1985) cited in
Thakur (2011).

For commodity like products, quality can be measured easily by its features. But quality of
service depends heavily on the quality of the personnel of service provider or the provider
himself. Studies on customers‟ switching from banks have found that they do so because they
considered to be poorly serviced. Quality service improved customer satisfaction and reduced
customer erosion (Thakur, 2011).service quality is the key to measure e-banking user
satisfaction. Researchers have paid much attention to the close relationship between service
quality and customer satisfaction (Parasuraman et al., 1985).
2.3 Empirical Evidences
2.3.1 Empirical Study-Worldwide

A study conducted by Masukujjaman, (2010) on quality of Categorized Service and Customer

Satisfaction in Banking Industry. The main objectives of the study were to evaluate the customer
satisfaction of the service quality and to assess whether bank services provided by the institutions
are satisfactory to Bangladeshi customers especially in term of service categories like general
banking, credit banking and foreign exchange banking services. The study also examined
empirically the determinants of service quality in Bangladesh. A questionnaire for such purpose

17
was designed and different statistical methods were applied to analyze the collected data. From
the study it was found that the overall service quality in private commercial bank in Bangladesh
is moderate, where service quality in general banking services was better than the credit banking
services and foreign exchange services though its quality was not too bad. However, the study
was done in Bangladeshi. This study will be done in Ethiopia, specifically to assess e-banking
practice and customer‟s satisfaction the case of united bank.

Construct in Retail Banking in India. This study investigates customer satisfaction as the most
important factor behind loyalty in retail banking. Various study showed that satisfaction plays an
important role to establish loyal customer base. Their study points out that satisfaction and
loyalty relationship was critical for retail banks. Understanding the factors behind loyalty as well
as the antecedents of customer satisfaction was an important issue for academic research as well
as for marketing in financial services. The major aim of this study was to identify satisfaction as
the major factor behind customer loyalty in retail banking. The research has been carried out
through secondary research and primary research. Survey method were used for primary
research. Personal contact approach through questionnaire had been introduced to conduct the
survey. The findings reveal that satisfaction and loyalty were related to each other. Moreover,
satisfaction has a positive and direct impact on loyalty in banking. The study was loyalty based.
The study was good, but failed to study the effects of e-banking on customer‟s satisfaction. This
study wants to fill a gap. Jaspal and Gagandeep (2011) conducted a study on determinants of
Customer Satisfaction. The study examines customer satisfaction had been a common practice
among banking and finance researchers over the years. The main reason for continued interest in
this area of research was the ever changing banking business environment across the world. The
objective of the present paper was to investigate the determinants of customer satisfaction of
Indian (Universal) banks. Data was collected from a sample of 180 respondents using
convenience sampling technique. Factor analysis results revealed that responsiveness, tangibles,
services innovation, reliability and accessibility, assurance, pricing and other facilities, problem
solving capability and convenient working hours are the main determinants of customer
satisfaction. With all the potential of the study, the study failed to incorporate the concept of e-
banking and customers satisfaction.

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Amaoko (2012) in his research on the impact of ICT on banking operations in Ghana, ICT has
contributed positively to the provision of banking services and growth of the Ghananian banking
services and growth of the Ghananian banking industry. Internet banking and e-banking is not
yet developed in Ghana. The study recommended that banks should develop user friendly
systems and applications for general population Government and banks should play a key in
enhancing ICT infrastructure, put in place incentives like tax reduction, make PC available and
affordable for every Ghanian. Financial institutions should offer programs to reassure customer‟s
safety with regards to ICT through sensitization, workshops and support the skills be a central
monitoring unit permanently mannered by personnel to the operations of all the bank‟s ATM‟s
so that shortage of funds, occasional shut downs, seizure of electronic cards etc are handled with
dispatch. Lastly the banking institutions should also come out with more electronic products and
services to reduce the turnaround time of customers, such products will give them the
opportunity to sit at the comfort of their homes, workplaces and transact business with the banks.
2.3.2 Empirical Studies in Ethiopia

(Gardachew, 2010) conducted a research on the opportunities and challenges of e- banking in

Ethiopia. The study was focused on analyzing the status of electronic banking in Ethiopia and
investigates the main challenges and opportunities of implementing e-banking system. The
author conducted a survey on the existing operating style of banks and identifies some challenges
of using e-banking system, such as, lack of suitable legal and regulatory frame works for e-
commerce and e- payments, political instability in neighboring countries, high rates of illiteracy
and absence of financial networks that links different banks.

Wondossen & Tsegai (2005) also studied the challenges and opportunities of e-payments in
Ethiopia; their objective was studying of e-payment practices in developing countries. The
authors employed interview and on site observation to investigate challenges to e-payment in
Ethiopia and found that, the main obstacles to the development of e-payments are, lack of
customers trust in the initiatives, unavailability of payment laws and regulations particularly for
e- payment, lack of skilled manpower and frequent power disruption. According to
(Wondwossen & Tsegai, 2005), an adequate legal structure and security framework could foster
the use of e- payments, which is contradicting with the finding of the previous study.

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Furthermore (Assefa, 2013) conducted a study on the impact of e-banking on customer
satisfaction in two privet banks in Gondar city. The researcher employed descriptive and
inferential statistics in analyzing this study and it was limited to customers of two privet banks
only. The results of the study implied that majority of users of e-banking are the young, the
educated, salaried and students, business men and women are not actively using the service of e-
banking, e-banking currently provided for saving and current accounts holders only, e- banking
reduced frequency of bank hall for banking service, reduced waiting time for customers, there
are customers who don‟t know the fee charged for being e-banking users , the bank customers
satisfaction increased after being e-banking users, enabled customers to control their account
movements and there is high opportunity to expand e-banking service in the city.

CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY

This chapter covers the following sections namely: the research design, the study area, sample
size and sampling procedure, source of data, data collection procedures, analysis and
presentation and the ethical consideration for the study.

3.1 Research Approach and Design

Survey design was used for this study in order to collect data from several sources through
questionnaire and interview to study their opinion and perspective toward customer satisfaction
on united banks e-banking activities. According to Kerlinger (1973) survey is the best research
design for obtaining facts, beliefs and attitudes. Survey uses questionnaire as a tool for data
collection. Exactly, this will be used to elicit information about the customer‟s satisfaction on
united banks‟ electronic banking practices. Ajala (1996) proposed that descriptive survey is the
best method where there is the need to capture people‟s opinion, experience, values and
impressions about an issue.

The researcher preferred to use both qualitative and quantitative study approach. Qualitative
analysis is the analysis of qualitative data such as text data from interview transcripts. In the

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qualitative research approach knowledge is constructed inductively. Quantitative data, on the
other hand, helps in removing personal biases that are created during interviews and
interpretations and further, generalizes findings to a larger group. By combining both of the
approaches, the student researcher offset the weaknesses of either approach used individually.

3.2 Target Population

The total population of study is composed of managers, front line officers, E-banking
department staff and active users of the E banking service under Addis Ababa city specifically
big branches only, grade „‟A’’ branches. The Total population of the study is 392.

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3.3 Sample size
The study was conducted on 387 active E-banking customers.Also 5 E-banking department staffs
were selected to interview.Special considerations were given to the knowledge and skills of the
respondents in relation to the topic under study. Only customers will be selected randomly using
statistical formulas.
Table.1 Sample size
NO. TYPE OF POPULATION POPULATION SAMPLE SIZE

1 Active E-banking customers 12,500.00 387

Total 387
Source: UB‟s quarter E-payment report

3.3.1 Sampling Procedure

Purposive sampling and convenience sampling method were used for this study. The purposive
sampling allowed the picking of interview objects that fit the focus of the study (Osuala, 2001).
Also, according to Kumekpor (1989) cited in Mensah (1997), with the purposive sampling, the
sample units was selected not base on random procedure but intentionally selected for the study.
This is based on the fact that they have certain characteristics that suit the study or because of
certain qualities they possess, which are not randomly distributed in the universe but necessary
for the study.

Therefore, purposive sampling method was used for branch selection and those who are directly
related with electronic banking services. The active users of the e-banking service were also
selected using convenience sampling by clustering only grade A branches as a target using a
statistical formula a questionnaire wasalso distributed for 387 active users of e-banking.

3.3.2 Source of Data Collection

The researcher obtains data from primary and secondary data sources in order to obtain a reliable
data and achieve the stated objectives of this study.

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 3.3.2.1 Primary Sources of Data

These primary sources of data were collected from the respondents through
the use of questionnaires and Interview.

3.3.2.2 Secondary Sources of Data

Secondary data was obtained from documentary sources such as books,

journals, newspapers, reports, articles and other research related to this study.
These sources were very useful in the literature review. The literature
reviewed serves as both theoretical and empirical base for the analysis of the
data collected.

3.4 Methods of Data Collection

The main research instrument used for this study is the questionnaire
and Interview . The sections contain a five point Likert Scale where
respondents were asked to indicate the extent to which they agree/disagree
with various statements. The Five-Point Likert‟sscale was used. Also some
higher official of the bank who are directly related with the job were also
interviewed through an arranged meeting.

3.5 Data Analysis Method

The collected data were edited, sorted and coded in readiness for analysis. The
collected and organized data were also classified and analyzed using the
frequency tables with the help of the Statistical Package for Social Sciences
(SPSS) to establish the relationship between customer satisfaction and e-
banking practice of united bank. The analyzed data were presented in tables
with frequencies and percentages in order to come up with systematic and well
organized information for decision makers.

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CHAPTER FOUR

4. TIME AND COST BREAKDOWN

4.1 Time schedule

Time is one of the most important and useful thing in our world. A time schedule is a kind of
schedule that sets out times at which specific events are intended to occur and the time or way of
something which is planned to be done. Most of us we are hire in case of time and also they can
be several things which we lose because of our witness or because of we didn’t use our time
properly. In addition to this many people says that,” if time is gone ones we can’t gate it again.”
so, the researcher has time schedule which he/she done the research proposal and the final study.
So the time schedule which planned to this study is as follows:

Table 1.1 chart of the work plan of the research proposal is presented as follow.

N0 Activity OCT NO DES JAN FEB MAR APR MAY JUN

V
1 Problem  
identification
2 Title selection 

3 Literature 
review
4 Proposal writing 

5 Proposal 
submission
6 Data collection 
and process
7 Data analysis 
and
interpretation
8 Conclusion and 

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 recommendation

9 Final report 
writing
10 Paper 
submission and
presentation
11 Communication       
with adviser

4.2 The cost breakdown

Budget is one of the necessities of researcher, to do effective and appreciated research on
problems in different governmental or non-governmental organizations, social service
organizations and other. Cost breakdown is the system process of identify the individual
elements that comprise the total cost of good, service or package. Budget for allocation for the
study planned as follows.

Table 1.2 cost schedule for the research.

NUMBER ITEMS QUANTITY UNIT COST UNIT TOTAL

COST(BIRR)
1 Pen 10 10 100

2 Printing price 50 3 150

3 Internet - - 100

4 Telephone card - - 150

5 Binding proposal 2 25 50

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 and research
paper
6 Binder 2 25 50

7 Paper 1 200 200

8 Transport 10 10 100

9 Flash 1 400 400

10 Un expected cost - - 1000

TOTAL - - 2300

5. REFERANCE

Christopher. G, Jones, technology and customer service, 3rd ed,2005.

Dashen’s Brochure, 2012

Darymple, marketing management strategy and cases, 7thed, 1976.

Donnelly, international business, 9thed, 2004.

Dale and Oakland, financial accounting, 3rded (2000)

Fortune, volume 12 No. 618, Sunday, March 4, 2012.

James, Managerial accounting, 5thed, 1978.

King, Technology and innovation management, 5th ed, 1999.

Kotler and Armstrong, principle of marketing, 8thed 1996.

Kotler, marketing an introduction, 5th ed,1999.

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