ADDIS ABABA

UNIVERSITY
College of Business and Economics

Department of Accounting
and Finance

THE EFFECT OF ELECTRONIC BANKING SERVICE QUALITIES ON CUSTOMER SATISFACTION:

THE CASE OF DASHEN BANK

A Research Proposal Presented to

In Partial Fulfilment of the Requirements for the Course Research

Methods in Accounting and Finance

GROUP MEMBER

1. Dagmawit Tsegaye......................BEE/6448/13

2. Aschalew Urgessa......................BEE/3340/13

3. Dawit Tadesse ............................BEE/7876/13

4. Abel Girma..................................BEE/6752/13

5. Bethelhem kassahun....................BEE/ 9893/13

Course Name: Research Methods in Accounting & Finance

Course Code:AcFn 3111

 Submitted to : Andualem Zenebe (Mr.)

Date of Submission: Feb1, 2024

Content

acknowledgements .......................................................................... II
abstract..............................................................................................VI

list of tables..........................................................................................

list of abbreviations and acronyms......................................................

CHAPTER ONE .................................................................................... 1
1.INTRODUCTION............................................................................... 1
1.1 BACKGROUND OfTHESTUDY..........................................................1
1.4 OBJECTIVES OFTHE STUDY............................................................ 6
1.4.1. GENERAL OBJECTIVE OF THE STUDY........................................ 6
1.4.2. SPECIFIC OBJECTIVES OF THE STUDY

1.4.3 Scope (Delimitations) of the study

1.4.4 Limitations of the study

1.4.5 Definitions and assumptions

Chapter 2: Review of the Literature

Chapter 3: Methodology

Time and Cost Estimates (schedule)

References
 ACKNOWLEDGEMENTS

First of all we would like to thank God, for giving us health and power and the courage, to learn
or improve our knowledge, and complete this thesis.
we also would like to thank to the staff and management of the six branches found under the
four district offices of Dashen Bank in Addis Ababa for their genuine corporation in responding
the thesis questionnaires.
Abstract

This proposal reports the findings of a study conducted to investigate The Effect of Electronic
Banking service qualities on customer satisfaction: The case of Dashen Bank S.C. The study
examined electronic banking service qualities provided by Dashen Bank S.Co by taking a sample
of 370 internal and external customers of electronic banking service users using haphazard, or
convenience sampling technique from 420 branches found under the four district offices in
Addis Ababa.

The data was collected using a 5 point Likert scale questionnaire and it was analyzed and tested
using multiple regression model to show the effects of the explanatory variables; reliability,
system security. ease of use, performance and availability of electronic banking service qualities
on customer satisfaction. Based on the results of the statistical analysis, reliability, performance
and ease of use of E-banking service qualities are found to have a significant effect on customer
satisfaction in Dashen Bank. The study revealed areas of improvement with possible solutions
that can solve the identified major problem areas of electronic banking service qualities in
Dashen Bank, which includes continuous reviewing and up grading of the existing performance
of the service, reliability and ease of use characteristic of electronic banking services of Dashen
Bank., moreover, the management of Dashen Bank has to give due attention to the system
security or speed and accuracy of the system and has to make the electronic banking services
available to remote customers that cannot find the service.

Keywords: Reliability, performance, system security, ease of use, E-banking and customer
satisfaction.

List of Tables
Table 4.1 Demographic Profile of Respondents
Table 4.2 Mean and Standard Deviation
Table 4.3 Mean and Standard Deviation of Overall Customer Satisfaction

List of Abbreviations and Acronyms

ATM ........Automated Teller’s Machine

POS ...........Point on Sale

AMEX ..........American Express

ICT ................Information Communication Technology

SERQUAL ........Service Quality

EFT .................... Electronic Fund Transfer

ANOVA................Analysis of Variance
DB ........................Dashen Bank

Chapter 1
Introduction

1.1 Background of the Study

Information Communication technology is a major component for future growth of banks, as it

enables the creation of refined services, better market infrastructure and reaching
geographically remote and diversified markets. This has led to the emergence of channels such
as electronic banking. Gupta(2018). Technology has succeeded in making various aspects of life
easier for the societies of today (Rust & Oliver, 1994). More importantly, it has become a
fundamental element in improving the quality of services in general and E-Banking services in
particular (Joseph & Stone, 2013). E-Banking service is said to rely on the exchange of
information between customers and provides services using technological methods devoid of
face-to face interaction (Darwish & Lakhtaria, 2017).Banking sectors in most developed
countries have initially established the area of electronic banking services and have been
actively involved in its continuous improvement. The objective was to try to meet the ever-
changing needs and lifestyles of customers.
Service quality can be defined as a subjective judgment made by a customer on the quality of
service that they hope to get and that which they really get (Gefen, 2002). Service quality is
regarded as a company asset and a crucial determining factor of marketing and business
performance (Yasin et al., 2004). Mohamed & Shirley, (2009) emphasized that banks have to
care about their quality of services since it is considered the essence or core of strategic
competition.
The rapid expansion of Electronic banking Systems throughout the world, forces the banking
industry to implement and improve E-Banking Service qualities.E-banking is one of the most
recent phenomenon in the financial services organizations. This method was established in the
mid-1990s, there after it becomes more important (Allen L &Rai, 1996). It has been widely used
in developed countries. However, in developing countries, the spread is much limited. As
suggested by Classens et al (2002), developing countries in general have an advantage as they
can learn from the experience of advanced countries. Today, almost all banks in Ethiopia are
adopting electronic banking as a means of enhancing service quality. It also increases customer
satisfaction in delivering banking services (Shittu, 2010).

Objectives of the study

1.4.1. General objective of the Study
  The general objective of the study is to examine the effect of Electronic Banking Service
Quality on customer satisfaction of Dashen Bank.

 1.4.2. Specific objectives of the Study

 To examine the effect of reliability of e-banking services qualities on customer

satisfaction of Dashen Bank

 To investigate the effect of availability of e-banking services quality on customer

satisfaction;

 To determine the effect of system security of e-banking services quality on customer

satisfaction;

 To determine the effect of transaction performance quality of e-banking services on

customer satisfaction;

 To examine the effect of ease of use of e-banking services quality on customer

satisfaction

1.5 Significance of the study

The research work provides a feedback to Dashen Bank S.co. to improve the customer
satisfaction with respect to E-Banking services qualities provided by the bank based on the
findings and recommendations of the study.
In addition, it can also be used as a reference to other researchers as an input for conducting
similar researches in the future on the same topic.
1.6. Scope(Delimitation) of the study
This study considers only the customers’ satisfaction perspectives with respect to E-banking
banking services like ATM, including Gold &Green American express cards, POS Mobile banking
and Amole types of E-banking Services provided by Dashen Bank S.C. The study is conducted on
selected e-banking service internal and external customers of Dashen Bank selected from four
district offices found in Addis Ababa.

Limitation of the study

This study is limited to investigating the effect of Electronic banking service qualities on
customers satisfaction at Dashen Bank S.Co in selected Addis Ababa Branches only.It doesn’t
consider other services provided by the bank

Research hypothesis

H1.the quality of E-Banking service reliability has a significant effect on customer satisfaction.

HO. the quality of E-Banking service reliability has no significant effect on customer satisfaction
H2.E-banking Service performance efficiency quality has a significant effect on customer
satisfaction
HO. E-banking Service performance efficiency quality has no significant effect on customer
satisfaction

H3. Availability of e-banking service quality has a significant effect on customer satisfaction
HO. Availability of e-banking service quality has no significant effect on customer satisfaction
H4. Ease of use of E-banking service qualities has a significant effect on customer satisfaction
HO. Ease of use of E-banking service qualities has no significant t on customer satisfaction
H5. E-banking service system security quality has a significant effect on customer satisfaction
HO.E- banking system security quality has no significant effect on customer satisfaction

Chapter 2 REVIEW OF RELATED LITERATURES

Definition of E-Banking
Electronic Banking means the ability to conduct banking and financial transactions electronically
via the Internet or mobile telephone applications. Jamil Hammoud, Rima M. Bizri1, and Ibrahim
El Baba1,( 2018).
E-Banking service is said to rely on the exchange of information between customers and
providers using technological methods devoid of face-to face interaction Darwish & Lakhtaria,
(2011).Daniel, (1999) defines electronic banking as the delivery of banks' information and
services by banks to customers through different delivery channels that can be used with
different electronic devices such as computer and a mobile phone with browser software,
telephone or digital television.

 E-banking is a form of banking service where funds are transferred through an exchange
of electronics 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 an
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 Furs t
and Nolle,( 2002),

Types of E-Banking

 Automated Teller Machines (ATM)

 American Express ATM Cards

 Telephone Banking

 Personal computer banking

 Internet banking

 POS /point of Sale/

 Mobile banking

 Branch networking

 Amole
Customer satisfaction

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
customer satisfaction is 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.

Customer satisfaction in banking

Customers satisfaction in bank ) plays a more critical role in the development of the banking
industry by boosting customer satisfaction levels through reliability and tenability . Customer
satisfaction is a crucial factor in all sectors, especially in the service sector .

2. The Relationship between Service Quality and Customer Satisfaction

Customer pleasure is the support of the absolute achievements of the quality revolution.

 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 higher level of service to meet the need 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 vice versa. Customer
satisfaction is the most important criteria that enable organizations 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).

2.1.9. Measuring Customer Satisfaction

Customer satisfaction is measured at the individual level, but it is almost always reported at an
aggregate level. Customer satisfaction is an ambiguous and abstract concept and the actual
manifestation of the state of satisfaction will vary from person to person and product/service to
product/service.

CHAPTER THREE RESEARCH METHODOLOGY

3.1. Research Design
Mouton (2001) defines research design as a plan or blueprint of someone intending to conduct
a research. Research design involves how the researcher has planned to carry out the research.
In this study Explanatory and descriptive research designs is used. Explanatory research design
refers to a research which explores a certain phenomenon with the primary aim of
understanding and explaining a phenomenon or situation using descriptive statistics.

 Explanatory research is used to get clarity and define the problem at hand clearly. As an
explanatory study the researcher aims at establishing the relationship between electronic
banking service qualities and customer satisfaction so as to add to the existing literature
on the subject matter.

 Descriptive designs were used to describe the current state of the effects of e-banking
service qualities on customer satisfaction in Dashen Bank S.Co.
3.2. Research approach

Quantitative research approaches were used. Quantitative research is a structured way of

collecting and analyzing data obtained from different sources. It involves the use of
computational, statistical and mathematical tools to drive results. Since this study was
deductive which intended to test hypothesis formulated based on the literature, quantitative
research approach is used.

3.3 Population and Sampling Techniques of the Study

3.3.1 population of the Study
The population for this research analysis was the customers of Dashen Bank. The target
populations from which the sample was selected are 40,000 E-banking services external &
internal customers selected from six branches found under the four district offices in Addis
Ababa.
3.3.2 Sample Size Determination
Based on a target population of 40,000 E-banking service customers and staffs found under the
four district offices in Addis Ababa, a sample of 380 persons were chosen for the study at
assumed 95% response rate. This sample size was determined using the Table developed by
Krejcie and Morgan (1970) when the population size is known.
3.3.3 Sampling Technique.

The selections of the sample respondents were made using haphazard or convenience sampling
techniques. Out of the 420 branches under the four district offices in Addis Ababa; taking the
relative size, year of operation of the branches, cost and availability of time for the study into
consideration, six branches namely Amoudi ,Beklobet ,Piazza, Megenagna,AfricaAndinet ,and
Tana branches were selected for the study.
In order to make generalizations with confidence about the case under investigation, the
appropriate sample size was considered. The sampling design for this population was
haphazard or convenience sampling technique.
3.3. 5 source of Data and collection procedures
Quantitative and qualitative data were gathered from both primary and secondary data
sources. While the study basically depended on primary sources of data from e-banking service
users of Dashen Bank internal and external customers, it also used secondary sources of data to
fill the gap. The primary data was collected from customers through a five point Likert scale
type of questionnaires. Primary data are described as those items that are original to the
problem under investigation. This primary data was collected from respondents sampled for
the study .

o Primary data are necessary in order to get relevant, original and reliable first-hand
information about the problem under study. Questionnaires are the major tool of
capturing the primary data because of its advantages over the other methods and its
efficiency or ability to capture more information from the source.

o Secondary data were gathered from the available literatures, journals, reports and
documents written about the available services of E-banking in Dashen Bank. Secondary
data’s like reports,journals and written papers are also used in order to get information
that are not possible to find in primary data’s.

3.4. Method of data analysis

The collected data were analyzed using quantitative data analysis method. Descriptive analysis
such as frequencies and percentage are used to present quantitative data in the form of tables
and graphs. Data was coded and entered in to the computer using statistical package for social
science (SPSS Version 25) for analysis. It gives means, standard deviations, correlations and
Regression of each independent and dependent variable. Customer satisfaction regressed
against the five independent variables using the regression model. The mean and standard
deviation are the most descriptive statistical methods used in this study to give a clear
description of the data.

3.8. Ethical Considerations

The Researcher had considered and respected some ethical issues of Respondents like the right
to participate or not, the researcher had informed respondents about the purpose of the survey
and the confidentiality of their response were also ensured while conducting the study,
emerging ethical issues were also considered and attention had been given.
For this purpose the introduction part of the questionnaire stated the purpose and importance
of the study and its confidentiality. Respondents were informed that filling the questionnaire is
based on their willingness.
In order to collect primary data, questionnaires were distributed and only general information
was written in the paragraph of the questionnaire to protect their response from
predisposition.
The confidentiality of respondents was protected and respondents’ identities were not
disclosed.
Finally, all research findings has not been covered and is is free from any plagiarism by
acknowledging every reference used. In addition to this, the study was done in an open minded
manner and attitudes were expressed as they are. Nothing was modified and changed. Hence
information collected is presented as they are and all the literatures gathered for the purpose
of this study were appreciated in the reference.

CHAPTER FOUR

4.1 DATA PRESENTAION, ANALYSIS AND DISCUSSION

A total of 380 questionnaires were personally handled to the respondents with clear
orientation and guideline as to how to fill the questionnaire and 370 of the respondents filled
and returned their questionnaire which constitute 97.3% of the total expected respondents the
remaining ten questionnaires were not filled and returned, constituting only 2.7% of total
respondents.
Several questions that measure customers’ satisfaction on the e-banking services qualities
provided by Dashen Bank S.Co are included in the questionnaire. The questionnaires distributed
to staffs and customers of six selected branches that are located under Addis Ababa district
offices.
The basic assumptions are e-banking service selected service quality factors namely reliability,
availability, system security, ease of use and transaction performance influence customer
satisfaction.
A multiple regression approach was used as an effective method for studying the relationships.
The result of this linear regression model is analyzed and discussed.
The statistical analysis of this study was done by SPSS software version 25, the result of study
shown in inference and descriptive section. In descriptive section tables and graphs are used
and in inference section the result of multiple regressions was analyzed.
4.2. Respondents’ profile
The questionnaire include a segment of customer’s profile such as an collection of
demographics and other factors that likely influence the degree of customer satisfaction with
respect to the ebanking services qualities offered by Dashen Bank S.co.It is important to analyze
the background information of the respondents. This is because people’s social background
influences their thinking pattern and to a larger extent what they do. The background
information comprised of age, gender, educational level, occupation and the type of E-banking
service they use.
 Description Frequency Percentage

Gender Female 270 73%

Male 99 26.5%

Age 18-25 115 31.1%

26-35 215 58.1%

36-45 38 10.3%

>45 years old 2 0.5%

Educational High School 54 14.6%

Background
Diploma 115 31.1%

First Degree 100 27%

Masters & Above 101 27.3%

Occupation Student Employee of 60 16.2%

Gov’t & private
210 56.8%
Organization
100 27%
Private co. owners

Types of E-Banking ATM 249 67.3%

services used by
Mobile Banking 51 13.8%
Respondents
Internet Banking 40 10.8%

Amole 30 8.1%

The fact that ATM machines work 24 hours a day and 7 days a week even when the banks are
closed on weekends the use of ATM technology is highly convenient for customers and users.
Bank customers can easily obtain cash from their accounts without having to be physically
present at the bank premises. convenience, the ATM
Table 4.3 mean and Standard Deviation of overall customer satisfaction

N Mean Std.derivation

OVERALL CUSTOMER 370 4.18 .958

SATISFACTION IN E-BANKING
SERVICES QUALITIES OF
DASHEN BANK

Valid N (list wise) 370

Source (SPSS output, 2023)

 A customer satisfaction measuring variables indicate that most of the respondents

strongly agree that E-banking services qualities has a great impact on customer
satisfaction with a mean value of 4.18 and above on a five point likert scale questionnaire
responses. Where 5=Strongly Agree,4= Agree 3= Neutral 2=Disagree and 1=Strongly
Disagree.

Summary

 The primary objective of this study was to examine the effect of e-banking service
qualities on customer satisfaction in the case of Dashen Bank S.Co.five determinants of
Electronic banking service quality dimensions were used. These are reliability,
transaction performance, service security, ease of use and availability. Hence, this study
has attempted to identify which dimension has the highest influence on customer
satisfaction of e banking service qualities of Dashen Bank S.co..

 The study has also tried to test the hypothesis stated on the empirical literature review
part. The demographic analysis of respondents revealed that the majority of the
customers of e banking service of Dashen Bank are male and most of the respondents fall
under the age bracket of 26-35 years which means that e-banking service customers of
Dashen Bank are dominated by the young groupers far as the educational background and
occupation of respondents are concerned ,most of the respondents are diploma holders
and above which indicates that educated persons highly use electronic banking services
than illiterates. Government and private organization employees constitute the highest
number of respondents and among the various types of E-banking services
  ATM takes the largest share to be used by respondents.The researcher used the
descriptive statistical methods such as mean, standard deviation and also correlation and
regression methods to understand the relationship between dependent variable, customer
satisfaction and independent variables performance, reliability ,ease of use, system

security and availability to analyze the data collected from respondents using a
questionnaire.

 According to the results of the study, all of the explanatory variables have an effect on
customer satisfaction but reliability ,ease of use and transaction performance are found to
have the highest impact on customer satisfaction.
5.1.2. Conclusion
Customer satisfaction is the major factor contributing to the success of the service sector.
Ebanking has become a major facility required by the existing and potential customers.
All the service sectors depend on customer and their satisfaction and the banks are no
exception.

 One of the ways for achieving high customer satisfaction and gaining the loyalty of
customers for banks is to offer high quality services. In this research the level of
satisfaction of customers with the different quality dimensions pertaining to the
theoretical model was evaluated. Accordingly, the major findings are presented as
follows:

 Descriptive analysis revealed that the majority of current e-banking users are youth
between the age of 18-35, occupationally employee at government and private
organization. Educationally, the respondents were predominantly degree holders.
Customer satisfaction on e-banking is above satisfactory level with mean value of 3.30 on
a 5 Likert scale out of the e-banking service quality dimensions reliability (mean of 3.76),
service security (mean of 3.64), ease of use (mean of 3.67) and performance (mean of
3.5) are the majors to improve e banking services and customer satisfaction.

 As it was described in the report findings adjusted R-square values for the regression
model was 0.587. This indicates the explanatory variables; reliability, transaction
efficiency, service security, performance and ease of use in this study explain
approximately about 59 percent of the variation in the level of customer satisfaction. The
remaining 41 percent of the variation in the level of customer satisfaction of are
explained by other variables which are not included in the model.

Recommendation for Future Research

 Electronic banking services have become one of the typical banking strategies globally.
In spite of it numerous advantages there have been some challenges which hinders its
optimum usage both to the public and the bank themselves. The complexities associated
 with e-banking investment are so large that a single study could not discover all. Again,
due to limited resources and time this study considers only a sample of six branches of
Dashen bank S.Co even though the study could have covered a broad setting.

 This study also investigates the dimensions of e-banking service quality that has major
effects on customer satisfaction of Dashen Bank S.co. But, the variables included in the
study were not exhaustive. Future researchers could include other variables which are not
included under this study.

 The researcher also recommends that funds be made available for the study to be
replicated in the other banks since the effect of electronic banking services have a great
effect on customer satisfaction. Recommendations from such a study would lead to a
much better administration and investment to increase the level of electronic banking
services qualities for economic growth and development of the society at large.

Time and Cost Estimates

The research take about one month .since the group members take classified part and do the
research in cordination the research turn out to be organized .

The cost estimates are not precise since we did the research at local branch of dashen bank.
The transport cost,paper cost, time cost and human resource costs are elaborated.
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