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Factors Affecting E-Banking Adoption

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Ethiopian Banks
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International Journal of Marketing and Business Communication

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Factors Affecting E-Banking Adoption and

Its Impact on Customer Satisfaction: A Case
Study of Ethiopian Banks
Philipos Lamore Bambore*, Vikas Singla**
AbstrAct
Purpose: The aim of the present paper was to identify current customers of e-banking by predicting their intention to use and its acceptance
and impacts on customer satisfaction in selected banks of Ethiopia.
Research philosophy and approaches: The philosophy of this research was positivism philosophy and the approach of this research is a
deductive approach, the type of the research was quantitative type/ cross-sectional survey design.
Design/methodology: The design of this study was conclusive/inferential research design. Data was collected from a self-administered survey
from selected banks of Ethiopia. Exploratory Factory Analysis (EFA) by using SPSS 16 and Confirmatory Factor Analysis (CFA) by using
AMOS 21 in order identify the factors those affect e-banking adoption. Finally, SEM analysis was done to check the impact of TAM (technology
acceptance model) on customer satisfaction.
Findings: Perceived ease of use and perceived usefulness were significantly influences the intentions of electronic banking users, intentions of
Electronic Banking were significantly influences the Actual usage of Electronic Banking Services and lastly actual usage of electronic banking
affect customer satisfaction
Research limitations/implications: Sampling issue (researchers select only five banks’ customers (Commercial, Wogagen, Dashen, Zemen
Bank, and Nib International Bank of Ethiopia purposively) but these five banks are not the only banks to provide e-bank services in Ethiopia);
there are other banks as well in Ethiopia. As a result, the analytical results presented here thus may have limited generalisability and care
should be taken when generalising the findings of this study.
Originality/value: This paper was a pioneer study of satisfaction with electronic banking adoption, especially of the relationships between
Technology adoption factors with and its impacts on customer satisfaction
Keywords: Electronic Banking, Perceived Ease of Use, Perceived Usefulness, Intention, Actual Usage, Customer Satisfaction

as success of Internet access, customer’s awareness as

Introduction and Justification of the well as educational status, new online banking features,
Study household growth of Internet usage, legal and regulatory
framework. Electronic banking can offer speedier/efficient
Electronic banking was used mainly as information service, quicker and dependable services to the customers
presentation medium in which banks marketed their for which they may be relatively satisfied than that of
products and services on their websites. Many Internet- manual system of banking. Electronic banking (such as
banking services have been initiated such as e-banking ATM, POS, mobile banking and Internet banking, home
centres, e-ATMS, e-phone banking, e-cash cards, and banking, personal computer banking) provide customers
e-saving account etc. Internet bank has evolved into a with opportunity to establish broad electronic banking
“one stop service and information unit” that promises transactions by a lower administrative cost and more
great benefit to both banks as well as consumers promptly through bank website, without any temporal and
(Margaret & Thompson, 2000). Growth of electronic spatial limitation (Pikkarainen, Pikkarainen, Karjaluoto,
banking in a given country depends on many factors, such & Pahnila, 2004).

* Bahir Dar University, College of Business and Economics, Department of Marketing management, Bahir Dar, Ethiopia.
Email: [email protected]
** Assistant Professor, School of Management Studies, Punjabi University, Patiala, Punjab, India. Email: [email protected]
 Factors Affecting E-Banking Adoption and Its Impact on Customer Satisfaction: A Case Study of Ethiopian Banks 17
According to Qureshi, Zafar, and Khan (2008), the major revolution in the banking industry. The Ethiopian banks
reasons for moving to the adoption of e-banking services appear to be on fast track for technology based products
are perceived usefulness, perceived ease of use, security and services. That is why bank customers are becoming
and privacy of online banking. Earlier studies identified very demanding and it is the extensive use of technology
that the adoption rate of Internet banking is still low due that enables banks to satisfy adequately the requirement
to a number of factors: customers’ perceptions of risk, of customers as well as the bank must also maintain the
their specific needs, lack of knowledge about Internet existing customers (customer loyalty).
banking, inertia, accessibility of technology, pricing,
and IT fatigue (Gerrard, Cunningham, & Devlin, 2006). Research Methodology
As far as my knowledge is concerned, no research is
conducted by combining TAM model with customer The philosophy of this research was positivism philosophy.
satisfaction in Ethiopian banking industry context. Most According to Bryman and Bell 2003), positivism research
research conducted on technology adoption by using can be defined as a research philosophy where only a
TAM model separately; they do not see the impact of phenomenon that can be understood by the senses shall
TAM model on customer satisfaction. TAM model greatly be seen as real knowledge in the world. The aim of the
contribute customer satisfaction. The main objective of positivism theory is to build hypotheses that should be
this study was to identify current customers of e banking tested and result can be generalised at the end of the final
by predicting their intention to use it and its impacts on research discussion and conclusion (Saunders, Lewis, &
customer satisfaction in some selected bank of Ethiopia. Thornhill, 2003), As a result, the researchers selected the
positivism research philosophy to conduct research on
Research Hypotheses impact of e-banking services on customer satisfaction and
loyalty study of Ethiopian banks.
Based on literature review, the following hypotheses
The approach of this research was deductive, because
emerged based on the TAM model (Davis, 1989) for
of which the hypotheses were developed from existing
technology adoption of customers and its impacts:
theory, often to explain causal relationships, and empirical
Ho1: Perceived ease of use has no effect on attitude of data are gathered to test these hypotheses. Deductive
buyers. research usually concerns with collecting quantitative
data, to later be able to generalise/ conclude the results
Ho2: Perceived usefulness has no effect on attitude of
(Saunders et al., 2003). The researcher used standardised
buyers.
questionnaire to collect the data. As a result the researcher
Ho3: Perceived ease of use has no effect on intention to prepared hypothesis about the technology adoption and
use e banking. customer satisfaction based on studies by Davis (1989),
Ho4: Perceived usefulness has no effect on intention to Parasuraman, Zeithaml, & Malthotra (2005), Zeithaml,
use e banking. Bitner, and Gremler (2002, p. 363), Anderson and
Srinivasan (2003), in addition to this the researcher used
Ho5: Attitude of buyers of has no effect on intention to standardised questionnaire to collect the data based on
use e banking. Parasuraman et al. (2005) e-serv-qual.
Ho6: Intention to use e-banking has no effect on Usage of The type of this research was quantitative. A quantitative
E-banking. approach is one which the investigator primarily uses for
Ho7: Usage of e-banking has no effect on customer developing knowledge, causing and affecting thinking,
satisfaction. reduction to specific variables and hypothesis and
question, use of measurement and observation, and the
test of theories employs strategies of inquiry such as
Need and Significance of the Study experiments and survey and collects data on predetermined
instruments that yield statistical data (Creswell, 2003). Du
The finding of this study may provide marketers/electronic
Plessis and Rousseau (2007) identified that a quantitative
banking sector in Ethiopia with information that could be
research approach is a systematic and structured, aimed at
useful in attracting customers to the banking sector as well
obtaining information from respondents in a direct, open
as retaining existing customers. With the development of
manner. Results obtained from such type of approach
information communication technology, the world has
are easily quantifiable and has a potentially high degree
become a global village and it has brought a dynamic
of accuracy. According to the Herington and Weaven
 18 International Journal of Marketing and Business Communication Volume 6, Issue 1, January 2017

(2009), a quantitative research can be taken as the most from the each two banks Yamane (1967) formula was
appropriate for examination of the measurement of employed.
electronic quality by taking the form of distribution of
Yamane (1967:886) provides a simplified formula to
a survey questionnaire. That is why the researcher used
calculate sample sizes. A 95% confidence level and P =
this type for conducting a research on electronic banking
.5 are assumed.
service quality and its impacts.
n = N/1 + N(e)2 = n = 5008/1+5008(0.05)2
Unit of Analysis and Delimitation of n = 370.41
the Study n = 370
Unit of analysis for this study was customers who are using Where n is the sample size, N is the target population
e-banking service in Commercial Bank, Wogagen Bank, size, and e is the level of precision. When this formula is
Dashen Bank, Nib International Bank of Ethiopia, and applied to the above sample/target population, n=370 for
Zemen bank in Addis Ababa, Ethiopia. Only customers commercial bank of Ethiopia from Ethiopia.
with one online bank account and having experience in The other ownership of the bank is private banks. From
using e-banking were considered as potential respondents. the private banks; Dashen bank, Zemen bank, Wogagen
Researcher delimited to the five banks because of the bank and Nib international bank were selected based bank
following reason. Firstly, the Commercial Bank and technology adoption (the year in which the bank adopt
Dashen Bank are the first banks to bring e-banking the bank technology). In over all Ethiopia the number of
service in Ethiopia and later Wogagen, Zaman Bank, and card users in Dashen bank as at January 2016 is 410237,
Nib International Bank too followed e-banking services. Internet banking 5590, mobile banking 6510 and merchant
Based on the bank technology adoption age and to make signing 831. In Ethiopian banking industry Dashen
research manageable and achievable, the researchers bank also is one of the leading bank in bank technology
delimited the scope of the banks in to five banks. adoption next to the commercial bank and the first bank
which introduce worldwide master card in Ethiopia. The
Sample Size and Sampling Methods researcher used simple random sampling method in order
to select the representative banks branches from Dashen
Stratified sampling method was used based on ownership Bank. First, the researcher identified 84 branches of
of banks in from the bank sector. Ownership of the bank was Dashen bank in Addis Ababa. This was because of that
divided in to the public and private ownership. From public e-banking customers must have saving book in order
banks, Commercial Bank of the Ethiopia was selected due to get their visa, mobile banking service and internet
to the case that commercial bank of the Ethiopia is the banking services from one of branch of the Dashen bank.
first bank which adopted ATM/ bank technology in the As a result their list also registered in one of branches of
Ethiopian banking industry/in 2001 Ethiopian calendar/ the Dashen bank in which they get their saving book in
in 2008Gc. In addition to the bank technology adoption Addis Ababa. To take sample of customers who are using
currently the bank lead the other bank by market share e-banking service service in Dashen bank in Addis Ababa,
more than 66%, according to the World bank report 2014, the researcher identified all 84 branches in alphabetical
According to the Agenda of 2016 commercial bank; there order and take 10 % of the 84 branches in Addis Ababa.
are 280 branches in a four districts (East, West, North and
West) of Addis Ababa. From four Districts two districts Based on the lottery system the Dashen bank branch on the
were selected randomly for this research. They are south number 12 get the first chance and used as starting point
Addis and East Addis districts. From each districts one to count 8 branches of Dashen bank (10 % of 84 in Addis
branch were selected to get participants for this research Ababa in Dashen area bank). 8 branches of Dashen bank
purpose. They are Goitera branches from south addis were selected based 11 Dashen bank branches interval. The
Discrticts (1623 e-bank users), Meskel flower from east selected branches are; Ghandi (113 customers), Gojam
Addis (3385). Totally, 5008 participants were selected Berenda branches (99 customers) lamberet branches (130
from commercial bank of Ethiopia as a target population. customers), stadium branches (107), Sosit kutri mazoria
Target population figures were collected from E-payment (172), Tewdros adebabay (128 customers), Meshualekia
department in Legahar Branch of commercial banks of (143) and T/medhanialem (115). The Target population
Ethiopia as of January 2015. figures were collected from E-payment department in
Dashen Bank (Main office Goitara Branch) as of January
More specifically, to get sample/representative participants
 Factors Affecting E-Banking Adoption and Its Impact on Customer Satisfaction: A Case Study of Ethiopian Banks 19
2015. Totally, 1007 customers were selected as target and regular e-bank service users are 1000). Finally the
population for Dashen banks in Addis Ababa. 1000 customers taken as a target population.
Currently 57 branches of wogagen bank installed e-banking Dashen bank 1007, Wogagen bank 573, Nib international
services in its branches in Addis Ababa Ethiopia , From bank 3725, and zemen bank 1000. Totally 6305 were
this researcher took 10% of 57(6) branches by using rule target population from private banks. According to the
of thumb method. Based on lottery system number 2 is sample size determination formula
get the first chance to count six branches. The selected n = N/1+N(e)2
six branches were wogagen bank ayer tena branhes
(171 customers), Wogagen Bank Addis-Hawsi branches Which is calculated as sample size for private banks
(181 customers), Dukem branches (13 customers), Edaga include = 6305/1+6305(0.05)2 = 376
hamuse (22 customers), Meda-agame (169 customers), After calculating the total sample size for all above four
and Yerer Ber branches(17customers), Totally 573 private banks (376), this sample size was proportionally
customers were taken as a target population for Wogagen distributed to the each four banks.
banks representatives Addis Ababa. Target population For Dashen bank 1007/6305*100=60, Nib international
figures were collected from E-payment department in bank bank 3725*376/6305=222, Wogagen bank
Wogagen Bank (Main office in Dabal City Center) as of 573*376/6305=34, and Zemen bank 1000*376/6305=60
January 2015. Totally 746 were participants/target population for
To take sample of customers who are using e-banking this research. Finally, the researcher used convenience
services in Nib International Bank in Addis Ababa, the approaches for each customers from the each selected
researcher identified all 50 branches in alphabetical order branches to distribute the questionnaire in each branches
and take 10% of the 50 branches in Addis Ababa. Target of bank technologies during the bank technology service
population figures were collected from E-payment/e- usage. This was because of that finding of e-bank customer
banking department in Nib International Bank (Main by their name, address is very difficult at a time, in addition
office in Dabal City Center) as of January 2015. Based to this they are also homogeneous customers for each bank
on the lottery system the Nib international branch on the technology services. Gaur A. S. and Gaur S. S. (2009)
number 10 get the first chance and used as starting point an adequate sample size is important for identifying the
to count five branches of Nib International Bank (10% of correct factor analysis. In this research, researcher used
50 in Addis Ababa in Nib International Bank). 5 branches exploratory factor analysis (EFA) and confirmatory factor
of Nib International Bank branches were selected based analysis (CFA) from the factor analysis tools. A sample
10 Nib International Bank branches interval. The selected size of less than 100 is not very suitable for conducting
branches were; Cathedral (731) customers), Ehil Berenda factor analysis. A sample size above 500 is considered
branches (978 customers), M/merkato branches (810), to be excellent sample size. As rule of thumb, a sample
Tigat (722), and wollo seffer (484) customers. Totally size of 200-300 should be considered to be adequate for
3725 customers were selected from the selected five proper analysis. As result the “746” is categorized as an
branches as a target population. excellent sample size.

To take the representative from Zemen bank the researcher

took the main branch which is found in kazachis (In
Data Sources
Addis Abeba) for target population. According to the
The researchers used primary as well as secondary source
annual report of zemen bank report 2015 the visa card
for data.

Perceived
H3
Ease of Use
Esatis
H1 Attitude of Intention to Usage of e-
H5 H6 H7 faction
e-banking use e- banking
H3 users banking
H4
Perceived
H4
usefulness

Fig. 1: Research frame work based on the Technology Acceptance Model (Davis, 1989)
 20 International Journal of Marketing and Business Communication Volume 6, Issue 1, January 2017

Questionnaires were prepared for customers who are Construct Validity

using currently e-banking in Commercial Bank, Wogagen
Bank, Nib International Bank, Dashen bank and Zemen This shows whether the items that compose a determined
scale converge on only one construct (Hair et al., 2010).
Bank. The questionnaires were divided into three sections.
This was tested by checking that the factor loadings of
The first section investigated the respondents’ basic
the confirmatory model were statistically significant
knowledge, their use of Internet banking systems, and their
(level of 0.01) and higher than 0.5 points (Sanzo, Santos,
demographic information. The second section measured Vazquez, & A´lvarez, 2003). For the measurement (TAM)
e-banking service quality. Thirdly, the questionnaire tried model, average factor loading (AVE) of three constructs
to examine the effects of service quality on customer was greater than the minimum acceptance region/.30 for
satisfaction. each of them. With few exceptions (the factor loading
of one dimension of the intention of customers towards
Validity and Reliability Issue e-banking services being .454), rest of all dimensions’
factor loadings in each construct are greater than .50,
Content Validity that means .50 is greater than the minimum acceptable
threshold value (.30).
Content validity can be measured by questionnaire pre- Construct Reliability (CR) = a measure of reliability and
testing (by asking professional in the area to comment internal consistency based on the square of the total of
on the questionnaires) (Hair, Black, Babin, Anderson, & factor loadings for a given construct. Almost all dimensions
Tatham, 2006; Hair, Black, Babin, & Anderson, 2010). (5 dimensions) for objective one (TAM model 1), average
Content validity is the degree to which items correctly Cronbach’s alpha for each of them was .773 , except one
represent the theoretical content of the construct and it is which was usage of e-banking .602. As a result the model/
guaranteed by the in-depth literature review taken under dimensions are sufficiently reliable for this study, which is
Zaichkowsky method (1985). For the purpose of this greater than the minimum threshold value .60.
study, the content of the technology adoption factors was
formulated by consulting academicians/ research scholars. Convergent Validity
Bank professionals and customer representatives were
asked to comment on the standardised questionnaires; the For the measurement (TAM) model, average factor
researchers distributed the questionnaires to marketing loading (AVE) of three constructs is greater than the
professor in Bahir Dar University in Ethiopia as well as at minimum acceptance region/.30 for each of them. With
Punjabi University Patiala and among bank professionals few exceptions (the factor loading of one dimension of
the intention of customers towards e-banking services
in order to gather an important comment on the content
being .454), rest of all dimensions’ factor loadings in each
validity issue. Finally, the content validity was checked
construct are greater than .50, that means .50 is greater than
and corrected based on the collected data.
the minimum acceptable threshold value (.30). As a result,
the model is highly significant (convergent validity).
Face Validity
Discriminate Validity
It is defined as the degree that respondents judge that The internal validity of the measurement model was
the items are appropriate to the targeted construct. Face examined by calculating the composite reliability, average
validity is habitually confused with content validity (Hair variance extracted (AVE), maximum shared variance
et al., 2006; 2010). Face validity was tested through a (Fornell & Larcker, 1981), and maximum reliability (H).
variation of the Zaichkowsky method (1985), whereby Construct reliability was calculated using the formula:
each item is qualified by a panel of experts as ‘‘clearly
representative’’, ‘‘somewhat representative’’, or ‘‘not (square of the summation of the factor loadings)/ {(square
representative’’ of the construct of interest. As a result, of the summation of the factor loadings) + (summation of
the hypothesized model from the pilot test was 82% out error variances)}.
of 100 customers. Comments were incorporated for final The interpretation of the resultant (construct reliability)
questionnaire preparation by using five point Likert Scale coefficient is similar to that of Cronbach’s alpha, except
(strongly disagree, disagree, undecided, agree, strongly that it also takes into account that the actual factor loadings
agree) which was developed based on the Zaichkowsky rather than assuming each item to be equally weighted in
method (1985). the composite load determination. Criteria for ensuring
discriminant validity are MSV<AVE and ASV<AVE
(Hair et al., 2010) as shown in Table 1.
 Factors Affecting E-Banking Adoption and Its Impact on Customer Satisfaction: A Case Study of Ethiopian Banks 21
Table 1: Criteria for Ensuring Discriminant Validity

CR AVE MSV MaxR (H) Usage Peou Pu Intt Esatisfa

Usage .70 .5 0.125 0.614 0.584
Peou 0.804 0.578 0.324 0.852 0.144 0.760
Pu 0.774 0.534 0.324 0.903 0.354 0.569 0.731
Intt .70 .5 0.190 0.920 0.334 0.301 0.436 0.642
Esatisfa 0.818 0.603 0.066 0.943 0.049 0.167 0.257 0.208 0.776

Nomo Logical Validity Frequency distribution shows that (74.1%) of total pupation
were male customers and remaining 25.9% were female
The covariance matrix Phi (Ф) of construct correlations is customers. The dominant age group of customers were
useful in this assessment. As a result, there is no problem young customers between 25-35 age groups, this finding
of correlation between the constructs in the measurement confirmed with so many findings in the earlier research
model. That means no correlation among the constructs, of e-banking journal (Poon, 2008; Gupta & Bansal, 2012;
which was above .80. As a result, there is no problem of Herington & Weaven, 2009). Most of the e-bank technology
Nomo logical validity issue. users (49.8%) in the selected banks of Ethiopia were
married couples. Majority (46.4%) of e-bank users were
Data Analysis and Presentation university degree holders (BA). Most of e-bank users were
government workers. This may be due to the fact that most
The data were collected from customers who are using of the customers were from commercial bank of Ethiopia.
electronic banking services (ATM, POS, mobile banking Government bank (Commercial Bank of Ethiopia) has the
and Internet banking) in some selected banks of Ethiopia larger number of electronic services users than private banks
during Feb 1 to Mar 28, 2016. Survey was conducted (Dashen Bank, Wogagen Bank, Zemen Bank, and Nib
through questionnaire using five point Likert scale International Bank of the Ethiopia). 60.2% of them were
ranging from 1=strongly disagree to 5=strongly agree. using ATM services, 10.3% of them were accessing both
100 respondents who were asked to provide comments ATM and POS services, 9.8% of them were using ATM,
on the relevance and wording of the questionnaire items POS, mobile banking, 6.9% of them were using all the type
conducted a pilot test of the measures/ electronic service e-banking services available to them (ATM, POS, mobile
quality dimensions for selected banks of Ethiopia and it banking, and Internet banking). Majority of e-banking
was then adjusted based on their comments. The results of users fall in income category of above 5000 Ethiopian birr.
the pilot test were checked through internal reliability by With regard to the usage time of the customers, 59% of
using ‘Cronbach’s Alpha and Exploratory factor Analysis customers use e-bank technology based on their needs and
(EFA). From 100 questionnaires, 82% were returned for wants (depending on the conditions). Most of the customer
pilot test analysis. Several items were removed from the experiences was found between 1-2 years (28.5%).
instrument based on the feedback from the pretesting
subjects/constructs. After the completion of the pilot Structural equation model for
test validation, a total of 746 survey questionnaires was
distributed for the final survey. At the end, 630 survey Technology Adoption (By using TAM,
questionnaires were collected; among these 40 of them Davis, 1989 with little modification)
were invalid questionnaires and thus were eliminated.
The remaining 590 usable questionnaires were retained There are two types of structural equation modelling,
for further analysis. The response rate is 79.0%, which variance-based structural equation modelling and
was more than reasonable for a survey of this type. The covariance-based structural equation modelling. The
responses from the pilot study were not included in the researchers used covariance-based structural equation
main study. Factor analysis (both exploratory factor modelling which mainly focuses on AMOS (analysis
analysis, EFA and confirmatory factor analysis, CFA) of moment structure). Structural equation modelling is a
and structural equation modelling (SEM) were used to powerful statistical tool that combines a measurement
test the proposed model of relationships. Once the survey model (affirmative factor analysis) and the structural model
questionnaires were completed, all the raw data were (regression of path analysis) in to one statistical synchronic
edited, recorded and coded; errors were filtered and lastly test (Sadeghi & Heidarzadeh, 2010). It is used to verify the
data input into SPSS for processing. goodness of fit of the research framework and to describe
 22 International Journal of Marketing and Business Communication Volume 6, Issue 1, January 2017

the relationships among the construct variables (Chang & Model Fit Summary for SEM model 1
Chen, 2009). Before evaluating the structural models, the
overall model fit (goodness of fit index), local/ comparative The value of CMIN/DF was 2.385, which was very
versus global/ absolute fit indices, were assessed to ensure significant (< 3) according to Carmines and McIver (1981)
that the model adequately represents the entire set of causal and Straub (1989). The value of GFI (.959) and AGFI
relationships (Hair et al., 2006; 2010). The structural (.939) those were >.90. The value of NFI for SEM model
equation modelling (SEM) is a main analytical tool, which 1 is .927, while that of RFI is .904, IFI is .956, and TLI
was used to allocate the cause and effect relation of the is .942. Their minimum acceptable value is >.90 (Hair et
research model variables (Lin & Sun, 2009). The statistical al., 2006, 2010). The value of CFI is .956 which was >.95,
significances of all the structural parameters/ constructs hence the measurement model is highly significant (Hair
estimates were examined to determine the validity of the et al., 2006, 2010). The value of RMSEA for SEM model
hypothesized paths (Lee & Lin, 2005). The structural 1 is .048; the minimum acceptable threshold value for
equation modelling (SEM) technique was used to test the RMSEA should be below 0.08 (Hair et al., 2006, 2010).
research Model (TAM Model), which was supported by
AMOS 21. A structural path representing relationships
between different constructs was examined. It is also used
to verify the goodness of the research framework and to
describe the relationships among the construct variables
(Chang & Chen, 2009). The major objective of this study
was to identify current users of e-banking by predicting
intention to use of customers in some selected banks of
Ethiopia. To achieve this objective, the SEM is employed to
test the interrelationships among all the research constructs
(perceived ease of use, perceived usefulness, intention,
actual usage, and electronic banking satisfaction) and to
compare the modelled relationships with the observed
scores. But the attitude dimension was cancelled after
conducting EFA and CFA, because attitude dimension was
loaded with perceived usefulness of electronic banking
services (ATM, POS, mobile banking, and Internet
banking). During SEM analysis, both unstandardised and
standardised estimates (solution) were identified using Fig. 2: SEM Model for TAM Constructs and its Impact on
AMOS 21. The measurement model was estimated with the Customer Satisfaction
robust maximum likelihood method from the asymptotic
variance (covariance matrix) (Shumacker & Lomack, Table 2: Summary of Hypothesis for TAM Model 1
2010; Hair et al., 2010; Joreskog & Sorbom, 1996). The
fit indices obtained in the measurement model estimation Hypothesis Evidences Conclusion
showed that the variables measured converge towards the after SEM
factors established during the confirmatory factor analysis analysis
(CFA). The proposed research model comprises five latent β-value
constructs for TAM model. A latent construct cannot be and p-value
measured directly but it can be represented or measured by (standardised
one or more variables (indicators). Here in SEM analysis estimates)
each latent construct was measured by three observable/ Ho3: Perceived ease of use has no ef- .15(.000) Not sup-
indicator variables. An observed (measured) variable is a fect on intention to use e-banking. ported
specific item or question, obtained in response to questions Ho4: Perceived ease of use has no .56(.000) Not sup-
in a questionnaire. Measured variables are used as the effect on perceived usefulness of e- ported
banking.
indicators of latent constructs (Hair et al., 2006, 2010).
Ho3: Perceived usefulness of e-bank- .45(.000) Not sup-
ing has no effect on intention to use ported
Standardised Estimates e-banking.
Ho4: Intention to use e-banking has .50(.000) Not sup-
The standardised estimate is the slope coefficient, but no effect on usage of e-banking. ported
normalised to between -/+ 1 (Hair et al., 2006, 2010). Ho5: Usage of e-banking has no ef- .14(.000) Not sup-
fect on e-bank customer satisfaction. ported
 Factors Affecting E-Banking Adoption and Its Impact on Customer Satisfaction: A Case Study of Ethiopian Banks 23

Discussion on Analysis Part with and Internet banking). Pikkarainen et al. (2004) identified
that perceived usefulness has the most powerful impact on
Existing Literature intention to use, among various other variables. Gounaris
and Koritos (2008) compared motivating factors of
The five constructs (perceived ease of use, perceived
electronic/online banking adoption and they reached the
usefulness, intention, actual usage, and electronic
same conclusion of Pikkarainen et al. (2004). Successful
banking satisfaction) were confirmed for further
electronic system should be both easy to learn and use
analysis (SEM model) through EFA and CFA (which
(adopt), since the perception about these characteristics is
includes the local and global fit indices). This finding
likely to lead in higher adoption behaviour (actual usage
matched with the previous researchers’ results (Hong,
of electronic banking system) (Jahangir & Begum, 2008).
Thong, Wong, & Tam, 2001). They also suggested that
Gounaris and Koritos (2008) found that perceived ease
the inclusion of attitude is not meaningful. The TAM
of use satisfactory predicts the intention to use electronic
concepts (perceived ease of use (PEOU) and perceived
banking/ online banking, while Pikkarainen et al. (2004)
usefulness (PU)) in predicting customers’ intention of/
and Eriksson, Kerem, and Nilsson (2005) failed to reach
adoption of electronic-banking were supported by recent
the same conclusion with the above one. Perceived ease
studies (Chen & Barnes, 2007; Joseph, McClure, &
of use (usability) is one of the most important factors for
Joseph, 1999; Meuter, Ostrom, Rountree, & Bitner, 2000;
determining the quality of a website/electronic service
Parasuraman & Grewal, 2000; Parasuraman et al., 2005;
quality which also supported with a number of studies
Cheng, Lam, & Yeung, 2006). According to the Adesina
like Casalo, Flavia, and Guinal (2008); Sikdar, Kumar,
and Ayo (2010), bank customers who are active users of
and Makkad (2015). In return it may influence the levels
e-banking system use it because it is available anywhere
of online customer satisfaction. Chong, Ooi, Lin, and Tan
(found at any place and at any time), easy to use, time
(2010) identified that if users feel that online banking is
saving, and appropriate for their transaction needs. This
easy to use and free of hustle, then the chances of them
research’s finding also matched with that of Chirani and
using the system will be greater. Perceived ease of use
Rahmati (2009) who identified that TAM was a simpler,
is an essential element of consumer usage of computer
easier to use, and more powerful model to uncover what
technologies like electronic banking technologies (Davis,
determines user acceptance/ adoption of IT (e-banking).
1989; Morris & Turner, 2001; Freed, 2011; Liao & Cheung,
Individual customers expect that the perceived ease of use
2002; Venkatesh, 2000; Venkatesh and Davis, 2000),
make them free from incurring effort/ make things easy to
and it has particular importance for new users (Gefen &
do (Davis, 1989; Lin & Sun, 2009; Taylor & Todd, 1995).
Straub, 2000). It is also a determinant of service quality
Perceived usefulness has been found to have a significant
(Dabholkar, 1996) and decisive for customer satisfaction,
effect on the intention to use or adopt any new technology
since it enhances the efficiency of using the service (Xue
like ATM, mobile banking, phone/ mobile banking, and
& Harker, 2002). Flavia’n and Guinalı’u (2006); Poon
Internet banking (Tobbin, 2012). Although usefulness
(2008) identified that convenience/ efficiency/perceived
was found to be a significant predictor of attitudes toward
ease of use, easy accessibility, feature availability, bank
ATMs and phone banking, this was not the case for
management and image, fees and charges, privacy and
Internet banking (Curran & Meuter, 2005). PU positively
security, design, content, and speed are pertinent factors
influences mobile Internet and M-services acceptance
that significantly affect the adoption/ usage of e-banking
(Chiu et al., 2005; Nysveen, Pedersen, & Thornbjørnsen,
at p <0.05 in case of Malaysian consumers. Measurement
2005). The measurement model was matched with other
model also confirmed with other studies like McHaney
previous research works like Abdinnour-Helm, Chaparro,
et al. (2002) and Somers, Nelson, and Karimi (2003)
and Farmer (2005) which found that perceived ease of use
which identified that perceived ease of use implies
has a direct and positive effect on customer satisfaction
that the Internet banking system has a user-friendly
with a commercial web site. Liao and Cheung (2008)
interface and the interface is easy to use for electronic
proposed and empirically tested the perceived ease of
banking customers. Information content (fulfilment) and
use as a measurement of consumer satisfaction with
perceived ease of use are the main elements of electronic
online banking/ electronic banking. Perceived ease of
service quality and later they can be the sources of
use is an antecedent of customer satisfaction with online
online customer loyalty (Collier & Bienstock, 2006;
banking (Yoon, 2010). Khanifar, Niya, Jandaghi, Molavi,
Lin & Sun, 2009; Liao & Cheung, 2008; Sikdar et al.,
and Emami (2012) empirically found that perceived
2015; Yen & Lu, 2008; Finn, 2010; Pentji, Marimon, &
electronic service quality and subjective norm have
Casadesus, 2011; Bernardo, Marimon, Alonso-Almeida,
significant direct influence on customer’s intention to use
2012). Perceived ease of use is an antecedent of customer
electronic banking service (ATM, mobile banking, POS,
 24 International Journal of Marketing and Business Communication Volume 6, Issue 1, January 2017

satisfaction with Electronic banking services (Yoon, 2010, Smadi, 2012). This was because the concept of electronic
Liao & Cheung, 2008, Abdinnour-Helm et al., 2005, Lai banking technology (ATM, POS, mobile banking, and
& Li, 2005), on the other hand perceived usefulness of Internet banking) services was new and emerging in
bank technology is an antecedent of customer satisfaction Ethiopia. As a result, most of the consumers were ATM
with electronic banking services (ATM, POS, Internet users. The second major category of dominant electronic
banking, and mobile banking) (Zhou & Lu, 2011; type was POS (Point of Sales). ATM and POS users were
Wu, 2013). Measurement model also linked with other larger due to the fact that consumer use POS when they
previous researchers finding accessibility, ease of use, face difficulty in ATM services. The third and fourth
trust, and usefulness on satisfaction with electronic Internet/electronic banking service in Ethiopia were
banking services (Liebana-Cabanillas, Munoz-Leiva, & mobile banking and Internet banking respectively.
Rejon-Guardia, 2013). Pikkarainen et al. (2004) applied
After conducting the necessary tests (EFA, CFA,
the traditional Technology Acceptance Model (TAM)
SEM), perceived ease of use and perceived usefulness
in Finland and they found that perceived usefulness
significantly influence the intentions of electronic
and information on Electronic banking were the main
banking users. Intentions of electronic banking customers
factors influencing customer acceptance, According to
in Ethiopia significantly influence the actual usage of
the Anderson, Fornell, and Lehmann (1994), consumer
electronic banking services and lastly, actual usage of
satisfaction is valuable for explaining why consumers
electronic banking affects customer satisfaction which
purchase or repurchase products/services, and exposes
was supported by the number of pervious research results
the motivations that underlie consumer behaviour and
(Taylor & Todd, 1995; Venkatesh & Davis, 2000).
psychology. In an electronic banking transactions/e-
tailing context, perceived ease of use can be described
as accurate functionality, accessibility/convenience of Recommendations/Managerial
relevant information for targeted customers, ease of Implications
ordering and navigation (Reibstein, 2002). A number
of research findings support the above measurement Perceived ease of use/convenience/efficiency all time
model. One of the main reasons why online consumers usage is an antecedent of customer satisfaction with online
use electronic banking services/Internet banking is that banking/electronic banking which is also supported by
it is very convenient to them and they are very easy to the measurement model/ hypothesized model. As a result,
accomplish it in short period of time (Zeithaml, Bitner, bank sector in Ethiopia must ensure consumer education
& Gremler, 2009; Santos, 2003; Ombati, Mangatu, towards the usage of electronic banking technology. To
Nyamwange, & Nyaoa, 2010; Hamadi, 2010; Yoon, 2010). increase the perceived ease of use, banks should hold
As a result perceived ease of use needs to be considered by training courses/manuals about how to use e-banking
bankers so that customers are able to use online banking/ systems, because customer education/ customer awareness
electronic banking service effectively, efficiently and to is the base/key to increase product and service usage
their satisfaction. The findings of this research output as from service providers (Yoon, 2010; Gefen & Straub,
well as other research results show that perceived ease 2000; Joseph et al., 1999; Reibstein, 2002; Meuter et al.,
of use is a major factor in determining the adoption and 2000; Parasuraman & Grewal, 2000; Parasuraman et al.,
use of various corporate information technologies such 2005; Moutinho and Smith, 2000; Zhu et al., 2002; Liao
as electronic banking (Gounaris & Koritos, 2008; Liao & & Cheung, 2008). The most commonly cited reason for
Cheung, 2008). online shopping/online transaction is perceived ease of use/
convenience (Chang & Chen, 2009). Forcing technology
Conclusion enabled bank services on customers, particularly complex
technologies that do not enhance/increase the exchange
From general descriptive statistics, it can be said that age, process, may create hostile and frustrated consumers.
gender, income, experience, type of bank technology, Online customers/electronic banking customers perceive
nature of banks (private versus government), timing of that the technology channel should be easy to use and
the bank technology, marital status, and education status reliable. Their consumption experience will be positive
have a significant impact on adoption (usage) of electronic and they will be satisfied with the use of technology
banking services in Ethiopia. based-banking, thus giving a boost to their confidence/
trust in the long run consumption pattern.
ATM was dominant electronic banking type used by
most of the Ethiopian electronic banking consumers (Al-
 Factors Affecting E-Banking Adoption and Its Impact on Customer Satisfaction: A Case Study of Ethiopian Banks 25

Research Limitations and Future ing in Saudi Arabia. PhD dissertation, The School
of Engineering and Applied Science, The George
Research Area/ Directions Washington University, Washington, DC.
Sampling issue: Researchers selected only five banks’ Adesina, A. A., & Ayo, C. K. (2010). An empirical inves-
customers (Commercial Bank, Wogagen Bank, Dashen tigation of the level of users’ acceptance of e-banking
Bank, Zemen Bank, and Nib International Bank of Ethiopia in Nigeria. Journal of Internet Banking and Commerce,
purposively), but these five bank were not the only banks 15(1).
which provide e-bank services in Ethiopia. There are other Al-Somali, S. A., Gholami, R., & Clegg, B. (2009). An
banks too in Ethiopia. As a result the analytical results investigation into the acceptance of online banking in
presented here may have limited generalisability and Saudi Arabia. Technovation, 29, 130-141.
care should be taken when generalising the findings of Anderson, E. W., Fornell, C., & Lehmann, D. R. (1994).
this study. Replication in other settings/ in other country/ Customer satisfaction, market share, and profitability:
by selecting the other remaining banks in Ethiopia is also findings from Sweden. Journal of Marketing, 58(3),
recommended for future researchers. 53-66.
In order to achieve objective of this study (consumer Anderson, R., & Srinivasan, S. (2003). e-Satisfaction and
intentions towards the electronic banking technology), the e-Loyalty: A contingency framework. Psychology &
authors used TAM model. Even though the TAM model is Marketing, 20(2), 123-138.
one of the most common and powerful models to capture Bauer, H. H., Hammerschmidt, M., & Falk, T.
technology acceptance, it is better to be supported by TPB (2005). Measuring the quality of e-banking por-
(Ajzen, 1991), TRA (Ajzen & Fishbein, 1980), technology- tals. International Journal of Bank Marketing, 23(2),
organisational-environmental model (TOE) developed 153-175.
by Tornatzky and Fleischer (1990). This study is cross- Bernardo, M., Marimon, F., & Alonso-Almeida, M. M.
sectional in design and only a standardised questionnaire (2012). Functional quality and hedonic quality: A study
was involved to collect the data. The e-banking market in of the dimensions of e-service quality in online travel
Ethiopia, as well as knowledge about customer behaviour agencies. Information & Management, 49(7), 342-347.
in relation to e-banking is found at the infant stage (it is
also infant stage for other world markets) (Parasuraman Bryman, A., & Bell, E. (2003). Business research meth-
and Zinkhan, 2002; Parasuraman et al., 2005; Gounaris ods. Oxford University
& Koritos, 2008; Bauer et al., 2005; Zhang & Prybutok, Carmines, E. G., & McIver, J. P. (1981). Analyzing mod-
2005). At a time (during the data collection period) when els with unobserved variables: Analysis of covariance
rapid changes in new technologies come to market daily, structures. Social Measurement, 19, 65-110.
weekly, monthly, yearly, the results of a cross-sectional Casalo, L., Flavia, N. C., & Guinalı, U. M. (2008). The
study may not be perfectly generalised to the whole role of satisfaction and website usability in develop-
population in Ethiopia. Future research could undertake a ing customer loyalty and positive word-of-mouth in
more longitudinal study by including the qualitative data the e-banking services. International Journal of Bank
collection methods like in-depth interview, focus groups Marketing, 26(6), 399-417.
and observation techniques by fully investigating the pre- Chang, H. H., & Chen, S. W. (2009). Consumer percep-
launch stage, the promotion stage and the post-launch tion of interface quality, security, and loyalty in elec-
stage of electronic banking services. This would certainly tronic commerce. Information & Management, 46(7),
be a significant contribution to the e-banking literature in 411-7.
the future by customising the research based on Ethiopian
Chen, P. Y., & Hitt, L. M. (2002). Measuring switching
customers’ point of view.
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Internet-enabled businesses: a study of the online bro-
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