Esprit Rock

CHAPTER ONE

CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
The core banking systems are rapid advancement in information and Communication. Technology has a reflective impact on the bank industry and the wider financial sector over the last two decades. It has now become a tool that facilitates banks’ organizational structures, business strategies, customer services and other related functions. The banking sector was one of the first to embrace rapid globalization and benefit significantly from information technology development within the financial service industry. The technological revolution in banning industry started in the 1950s, with the installation of the first automated book keeping machines at banks. This was well before the other industries become information technology known-how Automation in banking industry will become widespread over the next few decades as bankers quickly realized that much of their labor-intensive information handling processes could be automated with the use of computers (jaymaha, 2008).
Nowadays, the Ethiopian banking sector in general and Commercial Bank of Ethiopia in particular are increasingly going through a major and rapid moderation of their information technology based solution to give better service for their customer. This illustrates that the role of information technology has become so integrated and enveloping with banking industry without an effective information technology.
The Commercial Bank of Ethiopia (CBE) is the biggest and oldest financial institution in the country. Currently it has more than 1251 branches across the country as December 30th 2017 report. Accordingly commercial bank of Ethiopia’s vision is becoming world class commercial bank in year of 2025. Commercial bank of Ethiopia has recently been launching different projects on information technology that has been expected to highly improve its service delivery and helps in achieving its vision. Of these, the newly introduce core banking system (integrated banking solution) is the one correctly implemented in many branches of the bank.
Commercial bank of Ethiopia previously released on a mixture of manual process within limits the bank’s growth and its service delivery system. These systems have limitations to provide end to end services to satisfy the banks comprehensive banning solution requirement. The shortcoming of the present systems have led the bank to need a new banking solution that provides an integrated banking solution that addresses the current problems As a result; it has presently started using core banking system (integrated banking solution) this system is more all-encompassing and technologically advanced than the legacy system (bank master) that has been carried out for many years in commercial Bank of Ethiopia. The newly introduced system has many objectives, of which the main once are:
(A) replacing the existing traditional banking system which has so many limitations to realize the bank’s current business requirement with an integrated that is all in one state of the art solution , (B) Rollout the system in every branch of the bank across the nation where the telecom infrastructure is available,
(C) Establish a central customer data base,
(D) Introduce new technology driven banking products and service such as internet banking, mobile banking ,
(E) Introduce various system which help the bank to adopt international standard and regulatory requirements,
(F) Enhance the security system of the bank’s operation by deploying various authentication software and hardware and enabling the bank to get timely and accurate reports at the fingertips of the respective officials for decision making.
The case for core banking renewal is evidently compelling but its benefits have been known for a long time and yet relatively few banks have undergone core replacement. Replacing legacy banking applications with a modern third party system is the principal means of extracting these cost reductions, while also rendering a bank more flexible and agile to exploit future growth opportunities (Ben;Chris, April 2012).
The core banking services rely heavily on computer and network technology to follow a bank to centralize its record keeping and allow access from any location. Functions of banks reaccepting deposits, advancing loans, mortgages and agency functions were kept and maintained manually; core banking system changed this all by making these services available across multiple channels like an ATM, Internet banking and Mobile banking at any branches and at any location. Customers couldn’t manage their account as necessary required whenever the customer wants to because records were maintained individually by each branch and these branches didn’t have access to customer’s data at another branches (Mani Shankar, 2016).
Core banking system is basically the heart of all systems running in a bank and it forms the core of the bank’s information technology plat form it is banking application on a plat form enabling a phased, strategic approach that is intended to allow banks to improve operations. Reduce costs, and be prepared for growth implementing a modular, component based enterprise solution facilitates integration with a bank existing technologies an overall service oriented architecture h Core Banking Solution stands for Centralized Online Real-Time environment is networking of bank branches, which allows customers to manage their accounts, and use various banking facilities from any part of the world. In simple term, there is no need to visit main branch to do banking transactions. We can do it from any location at any time; Core banking is rapidly expanding its influence, it is imperative for banks to act quickly on core replacement this transformation program is typically one of the largest and most complex programs that a bank can undertake (Gert, André ; Arthur, 2008)
1.2 Statement of the Problem

Satisfying customers is essential for growth of any business organization to be real. It is when customers are satisfied that organizations achieve higher sales, profit and market share. Customer satisfaction also leads organizations to gain loyalty and achieve the desired objectives. Therefore, it is essential for organizations to satisfy their customers promptly so that they can achieve what they plan. Banks as a business organization should provide a great care for its customers to be satisfied which attracts other customers, and retains and gains the loyalty existing customers.
The financial service industry is undergoing significant transformations. Mergers, consolidation, expansion, shifting customer preferences, emerging nontraditional competition and a continuously evolving complex regulatory environment are just some of the issues on the minds of bankers worldwide. With change coming this rapidly, banks must quickly embrace the new world order and accelerate growth to stay a step ahead of the competition. This requires shedding away the complexity which has grown significantly across business functions and operations (Rhoades,1998).
Many studies indicate that there are links between customer satisfaction, service quality ; profitability. In order to meet customer demand, many companies need to better serve their customers. Better quality of service can usually get a higher market share and better returns (slu ; and Mou 2003). Because of high market competition service quality becomes an increasingly important issue in the field of competitive market. Therefore, these issues have made satisfying customers important for the growth of organization (Broderick ; Vachirapornpuc 2002).
Ethiopian Banking Sector is expanding in its number of banks and competition is rising on one hand. On the other hand, the number of transactions and employees demand for banking services is increasing time to time as customers have options to shift from one bank to the other. This necessitates the need to handle the services carefully and efficiently by providing quality service so that customers will be satisfied. Commercial Bank of Ethiopia’s annual surveys from 2009 to 2012 showed that customers are dissatisfied basically due to low speed, limited accessibility, risk and errors on transaction, and security of their information and their assets in the bank. To cope up with the increasing needs and wants of the customers that came with the change in the banking environment, banks are replacing traditional transaction processing systems and applying advanced technology. In this regard, Commercial Bank of Ethiopia, the bank under analysis, has already applied Core-banking technology (advanced transaction processing system that facilitates banking transaction to be efficient) since May 2012. The system is basically used to integrate the services delivered in its all branches and improves the quality of its services.
Tizazu Kassa (2012) has made a survey on service quality in relation to customer satisfaction in Commercial Bank of Ethiopia in that service quality improvement significantly affects customers’ satisfaction. Messay S. (2012) also investigated Bank Service Quality, Customer Satisfaction and Loyalty which depicts that service quality of the bank has great effect on customer satisfaction which results in customers’ loyalty to the bank.
As employee of the bank, I have observed and come across different experiences that customers are dissatisfied even after the implementation of core banking system in the bank for the last five years. Even after the system is applied and improved year after year, especially the last three years, customer satisfaction still existed. Customers complain on the services’ quality, speed, ease of use, accessibility, efficiency and security which deteriorate customer satisfaction. But there is no such prior research that has been done in banking industry in Ethiopia with relation to core banking especially except a study by Endalkachew Abebe (2013) on the effect of core banking and service quality on customer satisfaction. But, since the core banking system is applied in 2012 and study is made on 2013 the research believes that it would be difficult to know the effect of core banking on customer satisfaction within a year and no study has been done in the area after that for the last five years. Thus, this research perhaps appears to be the first academic investigation of customer satisfaction with respect to core banking in Ethiopia banking industry, particularly in CBE. And of course these are what motivated the researcher to conduct a research on the area of core banking and customer satisfaction.
Therefore, keeping the above points in mind, this study tries to examine the impact of core banking on customer satisfaction.

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1.3 Research Question
Based on the statement of the problem and review of related literature, this study seeks answers for the following questions:
• Are customers satisfied with core banking services CBE provided?
• What are the most critical factors of CBE customers’ satisfaction on core banking system of the bank?
• Does core banking information technology system have any impact on customers’ satisfaction in commercial bank Ethiopia?

1.4 Objectives of the Study
The study has the following general and specific objectives.

1.4.1 General Objective
The main purpose of this study is to assess the impact of Core Banking services on Customer Satisfaction in Commercial Bank of Ethiopia.
1.4.2. Specific Objectives
The specific objectives of this study are the following:
• To find out whether or not customers are satisfied with core banking services CBE provided
• To identify the most critical factors of CBE customers’ satisfaction on core banking system of the bank
• To examine the impact of core banking services of CBE on its customers’ satisfaction

1.5 Research Hypothesis

The study proposed the following hypotheses for empirical testing.
Hypothesis 1:
E-banking service quality does influence customer satisfaction
Hypothesis 2:
Access to use of core banking services does impact on customer satisfaction
Hypothesis 3:
Ease of use of core banking services does impact on customer satisfaction
Hypothesis 4:
Reliability of core banking services does impact on customer satisfaction
Hypothesis 5:
Privacy/security of core banking services does impact on customer satisfaction
Hypothesis 6:
Timely delivery of core banking services does impact on customer satisfaction

1.6 Significance of the Study
Since most bank services are easy to duplicate and provides nearly identical services, they can only distinguish themselves on the basis of quality of service (Kebede and Eshetu, 2012). Therefore, this study is greatly important to the bank to assess whether its application of core banking service enhance the level of customer satisfaction and identifies the position of service quality at the bank. Moreover, the study will have the following significances:
• Identifies issues related to the application of core banking and service quality and thus provide feedback to managers.
• Identify the gap between what customer thinks about core banking systems and what are the challenges faced during the service given by staff
• Result of this research project can be used as a base point for further studies in the related issues.
1.7. Scope of the Study
Several factors affect customer satisfaction in banks; kumbhar (2011) has for instance stated 14 factors namely System Availability, E-Fulfillment, Accuracy, Efficiency, Security, Responsiveness, Easiness, Convenience, Cost Effectiveness, Compensation, Problem Handling, Contact, Brand Perception and Perceived Value. However, since the most important factors that affected customers’ satisfaction in the bank as per the banks’ different surveys are ease of use, Speed, Security, Reliability, service quality, Accessibility, and Risk and error freeness, the researcher delimited its variables of the study on these six variables.

Though the bank has more than 1,200 branches (as at December 2017) in almost all parts of the country this study is delimited to Addis Ababa city particularly Addis Ababa branch. This is due to the huge number of transaction with variety of services are provided and hence it is selected as a model branch in the country. Moreover, most business and premium customer with huge volume of deposit who are sensitive with changes in quality of services and customer handling are in this branch.

Since the application of the system is on May 2012 and the effect of the system is believed by the researcher to be known at least after two years, data are collected, especially secondary data, the data collected are employees’ perception starting from 2014.

Methodologically, the research is designed to be of both descriptive and inferential types since the study and its hypothesis has cause and effect relationship of dependent and independent variables; Core banking and customer satisfaction. Particularly regression and correlation were used using questionnaire as the only means for primary data collection as there are secondary data that backs up the response and using interview couldn’t add value for the quality of pertinent data.

1.8. Limitation of the Study
Due to the bulky nature of the document striating from even the core banking system, the student researcher had no sufficient time to see each and every employee and file of the bank which is used as secondary sources of data that are important for the study under analysis. To solve this constraint, therefore, major employees’ group and files which greatly contributed to gain the required level of data had been used.
1.9. Organization of the Study
The proposal consists five chapters. The first chapter deals with the introduction part that consists of background of the study, statements of the problem, objectives of the study, significances of the study, scope of the study and limitation of the study. Chapter 2 contains a review of the related literature. The research design and methodology is presented in chapter 3. In chapter four, the results and findings of the study are discuses. Finally, the last chapter, chapter five, deals with the summary of findings, conclusions and recommendations will forward both by the respondents and by researcher based on the result obtained.

CHAPTER TWO: LITERATURE REVIEW
2. Introduction
2.1 Theoretical Review
This part of the study tried to address relevant theoretical frameworks and conceptual issues that are pertinent to the topic of the study. This chapter also dealt with clear definitions and explanations; types, comparisons, benefits, drawbacks and its history about the core banking system service of CBE and factors of customers’ satisfaction in banking sector.
2.1 History of Banking in Ethiopia
It was in 1905 that the first bank, the “Bank of Abyssinia”, was established based on the agreement signed between the Ethiopian Government and the National Bank of Egypt, which was owned by the British. Its capital was 1 million shillings. According to the agreement, the bank was allowed to engage in commercial banking (selling shares, accepting deposits and effecting payments in cheques) and to issue currency notes. The agreement prevented the establishment of any other bank in Ethiopia, thus giving monopoly right to the Bank of Abyssinia.
The Ethiopian Government, under Emperor Haile Selassie, closed the Bank of Abyssinia, paid compensation to its shareholders and established the Bank of Ethiopia which was fully owned by Ethiopians, with a capital of pound Sterling 750,000. The Bank started operation in 1932. With the Italian occupation (1936-1941), the operation of the Bank of Ethiopia came to a halt, but a number of Italian financial institutions were working in the country. These were Banco Di Roma, Banco Di Napoli and Banco Nazionale del Lavora but with the departure of the Italians and the restoration of Emperor Haile Selassie’s government, the State Bank of Ethiopia was established in 1943 with a capital of 1 million Maria Theresa Dollars by a charter published as General Notice No. 18/1993 (E.C).In 1963, the State Bank of Ethiopia split into the National Bank of Ethiopia and the Commercial Bank of Ethiopia S.C. with the purpose of segregating the functions of central banking from those of commercial banking and CBE was legally established as a share company in 1942. Since then, CBE has been playing significant roles in the developments of the country and also for the banking sector (Fasil & merhatbeb, 2012).
The bank become the leading bank in Ethiopia by introducing modern banking practices, such as branch number, number of employees, its capital and so on as compared to other banks in Ethiopia. It has more than 1160 branches stretched across the country with more than 13.3million account holders and internet banking users also reached more than 1,352,000 as of September 30, 2016 and ATM card holders reached more than 3 million and its committed employees are more than over 30,000. CBE is leading African bank with assets of 384.6 billion birr as own June 30th 2016. Pioneer to introduce ATM, Western union money transfer services and has a swift bilateral arrangement with more than 700 other banks across the world. CBE currently has reliable and long outstanding relationships with many internationally acclaimed banks throughout the world. Most of these changes and characters improvements came after the installation of core banking system (www.combanketh.et).
2.2 History of core banking system in the world
The first core banking solutions appeared in the 1970s in the United States. Most of them ran on mainframe computers and were designed by the banks themselves or by third parties in conjunction with the large US banks. Limitations to exporting these systems outside the US were customized by top tier banks, but these efforts consistently failed. In the 1980s, we saw package solutions coming from other parts of the world, primarily Europe, Asia and Australia. Vendors with a different but comparable background also entered the arena, for example the private banking solutions developed in countries such as Switzerland and Luxembourg. Because -due to the nature of their business – these were more customer focused than the transaction- oriented, transaction crunching engines available before, they had natural fit with the customer centricity that was coming increasingly into focus. Limitations of these systems mainly had to do with the ability to handle large volumes. The 1990s saw new players emerging in India, benefiting from the opening up of the Indian economy, the availability of English language skills, and the huge pool of highly skilled engineers. i-flex solutions (and its legal predecessor CITIL) can be considered as the first successful software product company from India that managed to sell outside the Indian subcontinent few years later by Oracle(through the acquisition of i-flex solutions and Siebel and aligning these to their technology and application strategies(Israa, Sarah&Tebian,2013).
2.3 Core Banking in Ethiopia
The rapid advancement in Information and Communication Technology has had a huge impact on the banking industry. It has now become a tool that facilitates banks’ organizational structures, business strategies, operational efficiency, customer services and other related functions. Traditionally, banking has been product centric but now products have become commoditized. Banking is now more customer-centric and there is a new focus on customer services (Negalign ; Lisanwork, 2016).
In order to expeditious this transformation the commercial bank of Ethiopia signed Swiss vendor TEMENOS Group AG core platform that overhaul its operational infrastructure. The current system (T24) replaced seven previous used systems including Misys Bank master and interfacing technology covering financial messaging and local money transfer, trade services and cad banking which was provided by HP and Sun. The lack of flexibility and homogeneity of the previous systems had an impact on product innovation, service delivery, risk management and cost control. Being able to replace those several standalone applications with T24; it delivers and provides a single view of the business, better understanding of customers, improve services efficiency, monitor and manage risk and lower the total costs. (Source)
The system implementation started operating only by connecting 35 branches a year after the automation were implemented in 219 branches but at the same time the bank was expanded in to more than 1200 branches throughout the country. This makes the commercial bank of Ethiopia the most accessible banks in the county (www.Finextra.com).
2.4 Definition of Core Banking
Core banking system (CBS) is networking of bank branches, which allows customers to manage their accounts and use various banking facilities from any part of the world. Customers can access banking services from any branch of the bank which is on CBS network regardless of branch you have opened your account. For the bank which implements CBS, the customer becomes the bank’s customer instead of customer of particular branch. Execution of Core banking system across all branches helps to speed up most of the banks and customers transactions. In Core banking, all branches access banking applications from centralized server which is hosted in secured data center (Mani Shankar, 2016).
Core banking digitalizes the banking operations and services which include maintaining transactions & accounts, interest calculations on deposits, mortgages& loans, transfers, withdrawals, making various payment and balances inquiry are available across multiple channels like ATMs, Point of sales, Internet banking, Mobile banking and branches. Additionally enables the bank to strengthen and extend its relations with credit card providers such as Visa and MasterCard (Mani Shankar, 2016).
2.5 Benefits of Core Banking
Banks often upgrade their systems step by step, now that a new generation of core banking solutions is available banks of all sizes finds it easier to introduce innovative products and respond quickly to changing customer expectations. This is particularly important as banks were struggling with new online technologies. Core banking system transformation with new solutions offers many major benefits to meet the dynamically changing customer needs, to improve & simplify banking processes so that bank staff can focus on sales & marketing stuff, to speed up the banking transactions, to expand presence in rural & remote areas and in addition the general benefits to the entire country’s economic ;financial development. Core banking solutions are beneficial to both banks as well as customers (Raul Bansode, 2013).
1. Centralized Accounting
All the transactions of the bank directly impact the General Ledger and Profit and Loss Account. This provides a real time total picture about the financial position and situationof the bank. This helps for timely effective decision making for financial management; a very critical and dynamic function in today?s banking (kulkarni, 2012).
2. Centralized Product Control ; Monitoring
Centralization helps in better product analysis, monitoring and rollout. Aspects like interest rate modifications, product modification and interest application can be done centrally from one place for all the branches. Bank can quickly respond to market scenario and customer needs. This gives competitive edge to the bank (Israa.et.al 2013).
3. Introduction of Technology Based Services
Service channels such as ATM, either on-site or off- site, can be started. Cheque Deposit Machines (CDM) can be installed. Such machine in WAN connectivity can allow any customer to deposit the cheque for collection at any branch (Rojo ,2012).
4. Centralized Customer Account Management
Any customer becomes the customer of the bank rather than of a branch. With unique ID / Account Number the accounts of the customers can be viewed centrally by the bank. As such, customer profile, details of the services availed by him and customer behavior about business of the bank can be well understood. Such customer view gives the bank opportunity to decide directions for business development and marketing strategies (kulkarni, 2012).
5. Centralized Reporting
Presence of centralized data constantly live up-dated at any time ensures comprehensive report / statement generation. This tremendously helps in decision making as well as submission to various authorities. Operational efficiency of the bank gets increased due to quick report generation for bank as a whole (kulkarni, 2012).
6. Centralized System Administration
Centralized system / I. T. administration enhances system security and user management. There is reduction in man-power need and cost. Due to single point resource available IT manpower is utilized properly (kulkarni, 2012).
7. Core banking for the Improvement of Clearing House Functions
Banker`s Clearing House is a place where interbank claims arising on account of cheques received for collection by each bank drawn against other banks are settled. Every day, each bank receives hundreds of cheques drawn on different banks. It would be a difficult process to present all these cheques for payment over the counters of each bank. Today, only a very limited numbers of cheques issued are presented for payment to the banks to obtain cash or notes in exchange. A great majority of cheques are paid though the medium of clearing houses (Gomez, 2008).So, core banking supports this facility as all branches directly connected to the clearing house.
2.6 Various Core Banking Services
Core banking became possible with the advent of computer and telecommunication technology that allowed information to be shared between bank branches quickly and efficiently. The following are services of core banking that one gets in banks.
Internet banking: Internet has greatly affected electronic banking. There is no temporal and geographical constraint through the application of internet banking. Internet banking is an electronic payment system which enables customers to conduct financial transactions without referring to the bank, just through their PCs or communications (Mansour ; Mahdi, 2015).
ATM: Automated teller machine is an electronic telecommunications device that enables the customers of a financial institution to perform financial transactions. ATMs are often located inside a specific place which may be accessible 24 hours a day. They are also considered as a branch of the bank, since they provide different services offered in the bank (Mansour ; Mahdi, 2015).
POS: Point of sale is the place where a retail transaction is completed. It is the point at which a customer makes a payment to the merchant in exchange for goods. At the point of sale the retailer would calculate the amount owed by the customer and provide options for the customer to make payment. Telephones or network communications may be utilized to conduct transactions through POS (Mansour ; Mahdi, 2015).
Mobile banking: Multidimensional services such as GPRS which are accessible through mobiles enable customers to conduct financial transactions like getting account balance and financial statement, requesting check, and transferring from one account into other accounts (Mansour ; Mahdi, 2015).
Telephone banking: Conducting small transactions between a customer and its bank can be possible through telephone banking which can be through three different methods: audio transaction, voice recognition, and pre-planned telephones (Mansour ; Mahdi, 2015).
Electronic money: involves the use of internet or other networks to store or transmit money. This type of money can be stored on smart cards or computer’s hardware. Electronic money falls into different types as follows: electronic card, electronic wallet, electronic check, digital money, and virtual card (Mansour & Mahdi, 2015).
2.6 Core Banking Systems Replacement
Core banking systems replacement involves an overhaul of the existing core system and putting in its place a newer and better system to handle the core functions (Boot, 2009). Banks’ core systems can prove to be inadequate for today’s business needs. They are focused on product-oriented back-office processes instead of customer oriented processes; perform batch processing instead of online, real-time. S I P (straight through) processing; and are IT driven and reactive instead of business driven and proactive. Older core systems are fragmented and don’t present an integrated global view (Forgia et al, 2008). System replacement with a modern core banking solution includes such benefits as greater efficiency, easier access to information, and the ability to add new applications without fear of system crashes. Among other benefits, developments in packaged solutions include a move away from dependencies on hardware platforms and operating systems (Boot. 2009).
Banks are feeling the repercussions of past decisions to implement quick fixes to overcome technology challenges that only masked underlying problems that grew worse with time. In addition, several saw their corporate customers grow increasingly frustrated and in some cases, form new banking relationships with competitors better able to provide information on exposures and real-time cash positions which are critical information in the current environment (Boot, 2009).
2.7 Factors Leading To Core Banking System Replacement
The reasons for core system replacement varies from one financial institution to another but according to (Zineldin, 2009) there are seven key drivers for core banking replacement.
• Phased-out vendor technologies: – Vendor mergers often lead to overlaps in technologies or acquisitions of more advanced solutions. Some vendors discontinue upgrades to some products, leaving institutions unsure about the future of their existing solutions. Furthermore, as the number of core system replacements by commercial increases, banks are demonstrating not only an increased need but also a desire to replace antiquated systems (Zineldin, 2009).
• Outdated technologies: – Outdated platforms and integration architectures that don’t permit financial institutions to leverage advances in technology, such as web services. Implementing newer, more efficient technologies with open architectures hastens transaction speeds and speed to market with new products and capabilities (Ritter, 2003).
• Cost reduction: – Besides reducing complexity and speed to market with new products, some institutions are running multiple solutions simultaneously due to mergers and acquisitions and are paying multiple license and maintenance fees (Zineldin, 2009).
• Development of the sector:-Another major reason driving need for core replacement is the industry growth. New solutions enable financial institutions to launch new products quickly without involving vendors for customization or altering sophisticated code (Zineldin, 2009).
• Better risk management and compliance: – Regulators expect to see uniform and integrated management of risk, data, and processes throughout an organization. This is often a daunting task for older, less user-friendly core systems (Blanchard, 2008).
• Competition:-As regulatory demands grow in intensity and financial institutions face a competitive and challenging environment, running a modem and efficient core banking system has become essential to continued success (Chairlonc & Ghosh 2009).
Core replacement involves a series of launches and migrations. The last thing any bank would want is to build a new core that will make the bank look just like the old one (Adamson et al, 2003). The bank should therefore launch the new capability, prove it works and then migrate old to that. This way it will be building the new bank and taking the old one to it.
New core banking systems are helping a growing number of banks achieve a longtime goal which is a comprehensive view of their customers. The credit crisis, new regulatory requirements and increasing demand for higher cross-sale revenue have all renewed banks’ interest in improving their ability not only to see but also to have und use customer information in real time (Abbate, 1999).
2.8 Customer Satisfaction
Although there are numerous articles on customers’ satisfaction, there is no unique or common definition in theoretical literature. According to Jamal, (2004) noted that during the last four decades, satisfaction was considered as one of the most important theoretical and practical subject for most of the marketers in this field.
Generally, there are two different perceptions for customers’ satisfaction: cumulative satisfaction and exchange satisfaction (Olsen ; Johnson 2003). Cumulative satisfaction means that customers’ satisfaction is not only based on recent shopping experiences, but also customer evaluation on all of his/her shopping experiences (Johnson, M. D., & Fornell, C. 1991). Exchange satisfaction refers to customers’ satisfaction of product evaluation based on recent experiences (Oliver 1997). Today, cumulative satisfaction is used in most customers’ satisfaction research (Gupta, S. & Zeithaml, V. (2006).
Cumulative satisfaction has more influence in the banks performances and services and is necessary for predicting the behavior of customer shopping (Parasurman et al., 1998). By considering these two perceptions, there are many definitions for customers’ satisfaction.

In academic literature, customers’ satisfaction is defined as a function of the difference between past experiences and current perceptions based on shopping (Churchill, G.A. J. & Surprenant, C. 1982). Based on Jamal and Nasser (2003) also defined customers’ satisfaction as a feeling or attitude in the customer related to one service or product after using it. Customers’ satisfaction can be defined as evaluating one product or service based on customer needs and perceptions (Oliver 1980). As such, customer satisfaction is the customer perception of meeting his/her expectations after using the product which influences future behavior (Adamson et al., 2003)
2.9 Measuring Customer Satisfaction
Customer satisfaction can be defined as the company?s ability to fulfill business, emotional, and psychological needs of its customers. In other word it is a summary of psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the consumer’s prior feeling about the consumption experience (Chavan and Ahmad, 2013). However Kumbhar (2011) argued that a customer satisfaction is an ambiguous and abstract concept. He continued that, actual manifestation of the state of satisfaction will vary from person to person, product to product and service to service.
It is well-researched fact that there is a strong linkage between customer satisfaction and operational performance. According to (Qureshi, Adeel, Sehrish, Omar and Zaman, 2013) customer satisfaction has strong influence on the efficiency and financial performance of banks. It has great influence upon performance and profitability of the banks. He also claimed that satisfied customers share their experiences with other people and occupy unambiguous word of mouth (grapevine) advertisement and publication of the banks. This positive word of mouth publication is very helpful in increasing banks relationship and interaction with the whole community. Many literatures found that there is strong relationship between customer satisfaction and organizations efficiencies, operational and financial. The state of satisfaction depends on a number of factors which consolidate as psychological, economic and physical factors. The quality of service is one of the major determinants of the customer satisfaction (Kumbhar, 2011).
Service quality can be defined as the difference between customer expectations for services performance prior to service encounter and their perception of the service received (Wandaogou and Jalulah, 2011). Many past studies develop different dimension and aspects to measure service quality. According to (Wandaogou and Jalulah,2011),( Parasuraman and his colleagues 1985 ; 1988) have developed the dimensions of service quality in their GAP and Extended GAP analysis and based on which they developed that popular SERVQAUL model.
The widely used SERVQUAL model consisted of five dimensions that were measured using a 22-item SERVQUAL scale. The five SERVQUAL dimensions are: Tangibles, Empathy, Assurance, Reliable, and Responsiveness: Tangibles are the physical facilities, equipment, and appearance of personnel. Empathy refers to the caring, individualized attention the firm provides its customers. Assurance means knowledge and courtesy of employees and their ability to inspire trust and confidence. Reliability is the ability to perform the promised service dependably and accurately, and Responsiveness refers to willingness to help customers and provide prompt service. However, due to the differences between traditional service and electronic service, obviously SERVQUAL scale is not suitable for measuring service quality in electronic or internet environment due to the absence of staff, absence of traditional tangible elements, and self-service of customers (Wandaogou and Jalulah, 2011).
Parasuraman, Zeithaml;Malhotra (2005) incorporated e-services and conceptualized and constructed a multiple-item scale (E-S-QUAL and E-RecS-QUAL models) to assess electronic service quality. The final E-S-QUAL Scale, consisting of 22 items on four dimensions, which they labeled and defined as follows:
1. Efficiency: The ease and speed of accessing and using the site.
2. Fulfillment: The extent to which the sites promises about order delivery and item availability are fulfilled.
3. System availability: The correct technical functioning of the site.
4. Privacy: The degree to which the site is safe and protects customer information.
The e-recovery service quality scale (E-RecS-QUAL) consisting of 11 items on three dimensions:
1. Responsiveness: Effective handling of problems and returns through the site.
2. Compensation: The degree to which the site compensates customers for problems.
3. Contact: The availability of assistance through telephone or online representative.
Available literature shows that, the customer satisfaction is measured via service quality and service quality measured by various measurement tools and instruments developed by various researchers and marketing consultancy organizations (Kumbhar, 2011). Based on (Kumbhar, 2011) models and using principal component analysis he identified the following factors that affecting customer?s satisfaction in banking.
Table 1: Factors Affecting Customer Satisfaction
S.No. Construct/Factors Description
1 System Availability Up-to-date equipment and physical facilities- Full Branch computerization, ATM, POS, internet banking, mobile banking, SMS alerts, credit card, EFT, ECS, E-bill pay
2 E-Fulfillment Scope of services offered, availability of global network, digitalization of business information, Variety of services
3 Accuracy Error free e-services through e-banking channels
4 Efficiency Speed of service (clearing, depositing, enquiry, getting information, money transfer, response etc.), immediate and quick transaction and check out with minimal time.
5 Security Trust, privacy, believability, truthfulness, and security, building customer confidence. freedom from danger about money losses, fraud, PIN, password theft; hacking etc.
6 Responsiveness Problem handling, recovery of the problem, prompt service, timeliness service, helping nature, employee curtsey , recovery of PIN, password and money losses
7 Easiness Easy to use ; functioning of ATM, Mobile banking, internet banking, credit card, debit card etc.
8 Convenience Customized services, any ware and any time banking, appropriate language support, time saving
9 Cost Effectiveness Price, fee, charges, – i.e. commission for fund transfer , interest rate, clearing charges, bill collection and payments?, transaction charges, charges on Switching of ATM, processing fees etc. price, charges and commissions should be reduce and charges taken by Telecommunication Company, devise designer company, internet service providers
10 Problem Handling It refers to problem solving process regarding computerized banking services
11 Compensation It refers to recover the losses regarding to problems and inconvenience occurred in using e-banking channels.
12 Contact Communication in bank and customer or customers to bank, Via e-mail, SMS, Phone, interactive website, postal
13 Brand Perception Customers overall perception according to promises given by bank for banking services
14 Perceived Value Consolidated perception from banking service in term of perceived quality and money expended for getting banking services.
Source :kumbhar (2011)

2.8 Core Banking Service Quality
Due to an increasingly competitive, saturated and dynamic business environment, retail banks in many countries have adopted customer-driven philosophies to address the rapid and changing needs of their customers (Burnham, T. A., Feels, and J. And Vijay, M. 2003). Technological advances have changed the world radically, altering the manner in which individuals conduct their personal and business affairs. Over the past two decades in particular, the banking industry has invested substantial resources in bringing ICT to customers. The banking industry is undergoing through the significant technological changes; it has several impacts on customer satisfaction and loyalty. It has revolutionized every industry including banking in the world by rendering faster and cost effective delivery of products and services to the customers (Walker et al., 2008). According to Chakra arty, (2007) core banking solution enables banks to extend the full benefits of ATM, tile-banking, mobile banking, internet banking, card banking and other multiple delivery channels to all customers allowing banks to offer a multitude of customer-centric services on a 24×7 basis from a single location, supporting retail as well as corporate banking activities. Banks in Ethiopia are using Information Technology (IT) not only to improve their own internal processes but also to increase, facilities and to provide quality services to their customers. Particularly, in the banking sector ICT is one of the most important tools, because it provides many suitable alternative banking channels to the customers. It brings connivance, customer centricity, enhance service quality and cost effectiveness in the banking services (Vijay M. Kumara 2012). Even now, customers are evaluating their banks based on availability of high-tech services. Therefore, implementation of ICT in the banking business continues to improve the banking service. In addition to customer satisfactions dimensions the researcher employs some additional factors by evaluating the performances of core banking services on customer satisfaction. Those factors include the followings:
• Reducing Risks and Errors
The security issue is of special concern in the Banking Industry, as banking is highly based on trust from its customers. Hence, the risk of hackers, denial of service attacks, technological failures, breach of privacy of customer information, and opportunities for fraud created by the anonymity of the parties to electronic transactions all have to be managed. Depending upon its nature and scope, a breach in security can seriously damage public confidence in the stability of a financial institution or of a nation’s entire banking system. Hence, by introducing the appropriate security measures and putting security concerns at ease, the Banking Industry might be able to attract the segments among consumers who previously were not inclined to use core banking. Furthermore, it is also in the banks? own interest to improve security, as digital fraud can be costly both in financial losses, and in terms of the damage it does to the brand of the bank in question (Broderick & Vachirapornpuc, 2002)
• Accessibility
Rapid advancement in information and communication technology (ICT) has had a profound effect on the banking industry and the wider financial sector over the last 2 decades. ICT is now a tool that facilitates the banks? organizational structures? business strategies & customer services. It enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risk and helps the financial intermediaries to reach geographically distant and diversified markets. Hence, the uses of core banking in commercial bank of Ethiopia are making its services that can be accessed easily. For instances, VISA card can facilitates you to make a purchase goods and services at an automated teller station that is set up to handle such transactions. Core banking helps to promote customer retention, convenience and satisfaction for customer in which the bank might not be got without the use of the system (Vijay M. Kumara 2012).
• Speed
Transactions are also faster in banks via core banking. Core banking makes transactions faster through dissemination of required information or data at a quicker and faster rate. The Banking Industry is currently being renewed in many areas. One of these areas related to the digitalization of formerly paper-based processes. Electronic mail is increasingly being applied for especially non-legal correspondence like account statements, marketing and sales. On the other hand, the introduction of ICT increases efficiency of the employee in the bank (Kulkarni K, Kalkundrikar S., 2002). Core banking can be used to enhance customer service delivery, which could also pave the way for the reduction of the workload on tellers in banking halls. Such workload reduction could provide the tellers with opportunities for adequate interaction with customer and also help improve their functional efficiencies and effectiveness in customer service delivery. Therefore improving the service quality of the banking with the core banking could improve the overall customer perception of the banks functional suitability for service provision as rendered by tellers in the banking halls (Bijou. entail 2012).
• Service Quality
“Quality research in the goods sector was established long before it was established in the service sector” (Gambeson, 1991). Bandyopadhyay 2003, pp. 187-188) claimed that quality in goods sectors is “commonly defined as the product’s fitness for its intended use, which means how well the product meet the needs and the expectations of its customer”. Garvin (1983) referred to “the product oriented quality approach as „objective quality.” (Climes, Gann, and Kao, 2007). However, “understanding quality in the goods sector is inadequate for understanding service quality because of the fundamental difference between the two terms” (Parasuraman, et al., 1985). (Parasuraman, et al., 1985, pp. 42) “Suggest that service quality is performance based rather than objects, therefore precise manufacturing specifications concerning uniform quality can rarely be set”. Service quality is “more difficult for consumers to evaluate than product quality; this is due to a lack of tangible evidence associated with the service” (Hong and Goo, 2004).
In the past decades, researchers (Carman 1990; Garvin 1983; Parasuraman et al, 1985, 1988) have defined and measured service quality by examining the attributes of service quality, while others (Biter and Hubert 1994; Iacobucci, Grayson, and Nostrum, 1994; Oliver, 1993; Oliver and Desorb, 1988; Parasuraman, Zenithal, and Berry, 1994) focused on the application in services to conceptualize the relationship between service quality and customer satisfaction.
Therefore, a combination of the service quality and customer satisfaction literature has formed the foundation of service quality theory (Climes et al., 2007; Parasuraman et al., 1985). Biter and Hubert (1994) “define service quality as the customers? overall impression of the relative inferiority or superiority of the organization and its services.” Greenrooms (1984) “identified service quality as the evaluation process outcome, in which customers are involved and where a certain experience is always compared to the perceived service received.” “Service quality is not objectively measured according to some technical standards but is subjectively felt by customers and measured relative to customer determined standards” (Kwortnik, 2005). Berry et al., (1990) also “defined service quality as the discrepancy between customers? expectations or desire and their perceptions.” “The previous literature suggests that the evaluation of quality in services is more difficult than goods (Parasuraman et al., 1985) and that delivering quality services is increasingly recognized as the key to success for service providers” (Cronin and Taylor, 1992). But, “perceived service quality has confirmed to be a complex concept to understand” (Brady and Cronin, 2001, pp.34). Therefore, Rust and Oliver (2000) propose that it is essential for companies to develop the awareness of customers’ perceptions of service quality.
• Security
This is an important factor for e-banking users against their account information guarantee that the record showing banking activities and security of account information is not shared (Yang and Fang 2004).
According to Madu (2002) indicated that security is another common interest of customers to decide usage of Internet banking. So, while the privacy of customers is not well kept with the given bank the service offered; the customer will totally cease their usage. Pavlou (2003) study indicated that security concerns kept both bankers and customers away from e-banking. Polatoglu and Ekin (2001) also indicated that risk in terms of financial, physical and social characteristics was the main cause of slow growth of internet banking usage. Clottey and Collier (2008) in their study also found out that most individuals had faint knowledge and understanding of online banking security risks though they know of the risks. A further finding shows that individuals are aware that their bank will protect their privacy hence their strong confidence in their bank but have a weak confidence in technology use for online banking. Oliver (1981) stated in the findings that security issues are the major factor preventing customers from using the Internet for financial transactions .The study further concludes by indicating that customers do not see the benefit of using the internet for commerce and that an educational campaign would be needed to make new internet offering successfully (Oliver, 1981). Finally, Churchill (1982) indicated that one of the most important future challenges facing individuals or customers of a bank is the fear of higher risks associated with using the Web for banking and financial transaction.
2.10 Customer Satisfaction
Early concepts of satisfaction have typically defined satisfaction as a post utility evaluation and judgment concerning a specific purchase decision (Churchill and Sauprenant 1992; Oliver, 1980). Most researchers agree that satisfaction is an attitude or evaluation that is formed by the customer by comparing what they expect to receive to their subjective perceptions of the performance they actually get (Oliver, 1980).
Several authors have defined customer satisfaction in various ways:
According to Kotler (2000), satisfaction is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectation.
Gaither (1994) defines customer satisfaction as the determination of customer requirements and demonstrated success in meeting them.
Kotler (2006) again defined customer satisfaction by giving details on the attributes of a highly satisfied customer. According to him, a highly satisfied customer stays loyal, longer, and buys more as the company introduces new products and upgrades existing products; talks favorably about the company and its products, pays less attention to competing brands and is less sensitive to price, offers service or product ideas to the company and costs less to serve him than new customers because transactions are routine.
Kotler and Armstrong (2001) in their Principles of Marketing, define customer satisfaction as the extent to which a product’s perceived performance matches a buyer’s expectations. They continued that, if the product’s performance falls short of expectations, the buyer would be dissatisfied but if performance matches or exceeds expectation, the customer will be satisfied or highly satisfied. In service quality literature , customer expectations are understood as desires or wants of consumers (Zeithaml, berry & Parasuraman 1993) or “what they feel the service provider should offer rather than would offer” (Parasuraman et al., 1988). Customer perceptions are defined as “the customer’s judgment of the service organization’s performance” (Parasuraman et al., 1988).
Customer satisfaction is a “psychological concept that involves the feeling of wellbeing and pleasure that results from obtaining what one hopes for and expects from
an appealing product and/or service” (WTO, 1985);
CS “as an attitude-like judgment following a purchase act or a series of consumer
product interactions.” ( Lovelock &Wirtz, 2007);
“Satisfaction is merely the result of things not going wrong; satisfying the needs and
desires of consumers.” (Besterfield, 1994);
“Satisfaction is a person’s feeling of pleasure or disappointment resulting from
comparing a product’s performance (outcome) in relation to his or her expectation.” (Kotler& Keller, 2006 p. 144).
Again, CS may be described as a process or an outcome. One area that has received considerable debate in customer satisfaction literature is whether customer satisfaction 40 should be defined as an outcome or a process. Many early definitions conceptualized satisfaction as a process which is currently the dominant view held by most scholars (Oliver, 1980, Parasuraman et al., 1988). The process perspective presupposes that customer satisfaction is a feeling of satisfaction that results from the process of comparing perceived performance and one or more predictive standards, such as expectations or desires (Khalifa& Liu, 2002). This perspective is grounded in the expectancy disconfirmation theory proposed by Richard Oliver (Oliver, 1980). The customer is satisfied if the performance of product/service is equal to his/her expectations and he/she is dissatisfied if the product/service performance is perceived to be below his/her expectation (negative disconfirmation). If expectation exceeds perceived performance, the customer is highly satisfied. By taking satisfaction as a process these definitions do not focus on satisfaction itself but things that cause satisfaction, the antecedents to satisfaction, which occur primarily during the service delivery process (Vavra, 1997). Recent studies have found that satisfaction as an outcome or end result during the process of the consumption of a service; it is viewed as a post-purchase experience (Vavra, 1997). This view has its roots in motivation theories that postulate that people are driven by the desire to satisfy their needs (Maslow, 1954) or that their behavior is directed at the achievement of relevant goals (Vroom, 1964). In this way satisfaction is perceived as a goal to be achieved and can be described as consumer fulfillment response (Rust & Oliver, 1994). In the context of this study, customer satisfaction is defined from process perspective because the researcher believe that in core banking arena, customers’ evaluation of core banking service quality takes place primarily during the service delivery process and continues, but not just an outcome that customers strive to achieve.
2.11 Factors that cause Customer Satisfaction
A customer satisfaction is an ambiguous and abstract concept. Actual manifestation of the state of satisfaction will vary from person to person, product to product and service to service. The state of satisfaction depends on a number of factors which consolidate as psychological, economic and physical factors.
The quality of service is one of the major determinants of the customer satisfaction, which can be enhanced by using ICT available to survive (Vijay M. K. 2012). Several factors affect customer satisfaction. The kinds of products that banks offer to its customers can cause customer satisfaction or dissatisfaction. Consumers do not buy a product or service for its own sake. They buy to acquire benefits that the product offers. They buy to satisfy a need. Products therefore exist for what they fulfill in terms of consumer needs. It is the essential feature or benefit that the buyer expects to receive from using the product that motivates buying behavior (Boateng, 1994).
The service delivery process also plays a key role in customer satisfaction. When the process of service delivery is too long, it lengthens customer waiting time. According to (Sasraku, 2007), the physical evidence also plays a role in customer satisfaction. The physical evidence includes the edifice or buildings and its decorations, an imposing banking hall with comfortable seats, places of conveniences, etc. The office or building and its external and internal decorations can satisfy a customer. The customer can pride him or herself as customer of that bank.
Another service element that causes customer satisfaction or dissatisfaction is the peopleor the employees delivering the product or service (Covey, 2004). The employees occupy the first point of contact with the customer. Employee behaviors are therefore important to customers. If the employee is cold or rude the customer takes it as a measure of the state of the company. Unhappy employees will have difficulty in keeping customers happy (Dei-Tumi, 2005).
Also, easy access to the bank premise would make a customer feel happy in transacting business with a bank, for example, if the bank premise is located on a high street. However, the nice edifice of a banking hall will not be noticeable if customer service is poor and there are unnecessary delays and lack of personal support from staff (Sasraku, 2007).
The technology being used by the bank in service delivery could be a source of satisfaction to customers. When electronic devices like computers are used, they tend to speed up the processing time of transactions. System and processes solely do no create satisfaction. Service system quality, behavioral service quality, service transaction accuracy and machine service quality are necessary to make the technology in use worthwhile (Aldlaigan&Buttle, 2002).
Furthermore, the security of customers and their deposits is an area of concern to customers. When customers are assured of protection from external threats they feel secured and happy. For example, if a bank is situated at a place noted for criminal activities, customers are scared and dissatisfied (Sasraku, 2007). Of course the internal security is equally important to customer who will want to deal with personnel with integrity and good moral values especially, the financial institutions (Lovelock &Wirtzn.d 2007).
2.12 Customer Satisfaction in Banking Services Context
In contrast to products, customers are not really able to evaluate services before the service process takes place. The interaction with the service provider and the customers, the so called service encounter, is the key in the evaluation of service performance (Gil, 2008). During these encounters, the customer is able to get an impression of the way the company provides its services. His/her service experience is defined by the interaction with the organization, the processes and the employees. Accordingly, customer satisfaction is built upon the basis of service encounters. Service providers have significant opportunities to manage the interactions that together form the experience (Wirtz, 1994). They can design and the interactive production process; select, train and manage service employees; design and maintain the service environment; selectively target, socialize and educate customers. In banking services, satisfaction is usually conceptualized as a multidimensional construct (Manrai, L.A., Manrai, A.K., 2007). The list of bank service attributes used for the measurement of satisfaction comprises elements like: appearance of the facility, attitude and behavior of staff, decor and atmosphere, business hours, interest rate, waiting time. Bank customers may regard some of these elements as being not equally important as the others.
2.14 Empirical framework
2.3.1. International experience
Conducted researches in foreign countries indicate that various indexes such as productivity, efficiency have been applied to evaluate the implementation of information technology systems special core banking IT services in the banks’ economic performances. A sum of their findings can be explained in the following manner.
Alipour (2009) studied “The effects of using automation systems on human resource productivity (Case study of Mazda Yadak Comapay)”. The results suggested that there is a strong direct relationship between efficiency and effectiveness. Similarly, Taqi Zadeh (2006) examined the impact of information technology on customer satisfaction in the Organization of Libraries, Museums, and Documents Center of Astan Quds Razavi. The results indicated that the employment of IT systems has increased the effectiveness of the organization and customers’ satisfactions in organizations.
Ombati, magutu & nyaoga (2010) concluded that direct relationship exist between technology and service quality in banking industry. If financial institutions use technology in their working it will result in better service quality as well as enhancing the productivity of employees and satisfaction of customers.
Siam (2006) assessed the role of the electronic banking services on the profits of Jordanian banks, and concluded that electronic banking services negatively affect bank profitability in the short term, while they have a positive influence in the long term, since bank investments are all with regard to infrastructures and staffs’ training.
Geetha & Ramanarayanan (2013) study on the impact of Core Banking Services in SBM bank and clearly indicates that the customers were for the CBS because of its ease of operations, instantaneous, timely response and cost effectiveness. As CBS offers any time any where banking facility, customers are surely benefitted out of it and after the introduction of CBS the operational efficiency of banks has certainly improved which has increased customers’ satisfaction.
Rono (2012) The purpose of his study was to: determine factors leading to replacement of core banking systems in commercial banks in Kenya; establish the challenges that commercial banks in Kenya encounter in the process of core banking systems replacement; and determine the effect of core banking systems replacement on bank performance and the Findings also indicated that replacing core systems has a significant positive effect on financial performance, service quality that greatly increased customer satisfaction.
Hazra et.al. (2011) attempted to examine a contribution of various dimensions of service quality in customers’ satisfaction. A result of the study indicates that, all 14 variables were found significant and were good predictors of overall satisfaction in e-banking. However, A result of principle component analysis indicates that, perceived value, brand perception, cost effectiveness, easy to use, convenience, problem handling, security/assurance and responsiveness are important factors in customers satisfaction in e-banking it explains 48.30 per cent of variance. Contact facilities, system availability, fulfillment, efficiency and compensation are comparatively less important because these dimensions explain 21.70 per cent of variance in customers’ satisfaction. Responsiveness, easy to use, cost effectiveness and compensation are predictors of brand perception in e-banking and fulfillment, efficiency, security/assurance, responsiveness, convenience, cost effectiveness, problem handling and compensation are predictors of perceived value in e-banking. Therefore, banker and e-banking service designers should think over these dimensions and make possible changes in the e-banking services as the changes rule customers’ expectations and need of the time. It will help to enhance service quality of e-banking and increase the level of customers’ satisfaction in e-banking.
According to Shaukat and Zafarullah (2009) local banks in Pakistan are more committed to invest and use new technology than foreign banks. Their employees are able to produce more because new technology enables them to perform multi task. A user who is working on electronic fund transfer can simultaneously work on clearing or on account opening. User is not supposed to stop or close one transaction in order to complete the second one. Similarly, built-in security checks in system are the user to perform their functions without error.
Abdi et al. (2010) investigated the effect of new banking technologies on the organizations? agility. They did their research with the help of academics and banking experts. Findings of this study indicate that the staffs? knowledge and skills in the application of new banking technologies have the most correlation with seven dimensions of flexibility, accountability, speed, integration and low complexity, core competencies, high quality, product improvement, and culture of change. Furthermore, the staffs? knowledge and skills are significantly associated with electronic banking indexes, widespread networks of information exchange between customers and bank, and aforementioned dimensions.
Baradaran et al. (2009) assessed the effect of using bank cards among the customers of Bank Melli in East Azerbaijan, and found that this usage can increase the customers’ satisfaction and feeling of security (Coppin et al.2003) did a research with regard to all banks in Barbados and found that ATMs were not profitable at first, since training personnel and customers how to use them was expensive. But when it was educated, efficiency increased from %3 to %17.
Salman and Kashif (2010) study of electronic banking in Pakistan revealed that reliability, accessibility, security and feedback are very important for the satisfaction of the customers. This study also revealed those customers are not satisfied by the downloading time of website banks in Pakistan. If clients are not happy with the banking products, prices or services offered by a particular bank, they are able to change their banking partner much more easily than in the physical or real bank-client relationship.
Ethiopia’s Experience
Conducted researches in Ethiopia indicate that various indexes such as productivity, efficiency have been applied to evaluate the implementation of information technology systems special core banking IT services in the banks’ performances. A sum of their findings can be explained in the following manner.
Yalew, (2015) studied on the impact of information & communication technology on Ethiopian private banks’ performance. He concluded that adoption of information and Communication Technology has a significant impact on customers’ satisfaction. Furthermore, it can be deduced from the linear regression model that there is a strong positive relationship between adoption of Information and Communication technology and customers satisfaction. It can also be concluded that the impact of Information and Communication Technology on accuracy, problem handling process and complains resolving process of the banks was the least three among the factors affecting customers’ satisfaction. In general, from the hypothesis tested, it can be concluded that adoption of information and Communication Technology has a significant impact on employees’ performance. Furthermore, it can be deduced from the linear regression that there was a strong relationship between adoption of Information and Communication.
Leyouager (2015) studied the impact of e-banking in service quality and bank performance and customer satisfaction and the study concluded that customer satisfaction is highly influenced by electronic banking while ROE is not that much.
Eyob (2010) the study entitled “Capital Investment Decisions On IT And Its Impact On Corporate Value Maximization” has investigated the impact of IT on profitability and cost efficiency in six private commercial banks. He conclude that shown high IT capital did not result in a significantly better profit and cost performance compared to the relatively low IT capital banks. 27
Milion (2013) He study presents what impact electronic banking has on customer satisfaction and Based on the result of the study he concluded that e-banking has impact in improving customer satisfaction, impact in reducing waiting time for customers to get bank service and impact in improving customers to control their account movements.
2.4. Critical review and gap in the literature
Commercial banks assaulted by the pressure of globalization and competition from non-banking new ways to add value to the services. The question of what drives performance is at the top in understanding superior performance and hence striving for it. Substantial research efforts have gone into addressing this question, starting from the strategic level and going down too operational details. A key study bench marking the strategies of leading retail banks was carried out by the bank strategies of leading retail banks (Vander Velde 1992). This study is based on the opinions of heads of retail banks at commercial bank of Ethiopia established the linkage between marketing, operations, organizing excellence. This finding led to the formulation of the service management strategy encapsulated in the trail operational capabilities service quality performance (Foth and Jackson 1995). The capabilities service quality-performance trail is, in turn, a focused view of the service profit chain described by (Heskettet all, 1994) based on their analysis of successful service organizations.
However for the case of Ethiopian in spite of banks trying to enforce the core banking services and still faced with come challenges which need to be addressed in order to promote effective and efficient banking performance and these are: The development of an efficient monetary transfer system in Ethiopian has been hampered by so many factors. Ethiopian is faced with infrastructural deficiency such as erratic power supply and communication link in some areas, inadequate skilled managers and requisite tools on end users and client systems, high charge or cost for the e-payment terminals (ATMs) so the banking legislation should set out standard charges for core banking services. Hence these factors are believed to hampered core banking services performance in the country affecting banks performance and reason behind the investment made by commercial bank of Ethiopia on core banking information technology system was to bring operational effectiveness and efficiency. This intern on effect employee’s performance and customer satisfaction. From this research manly focus on the impact that the core banking brings for the effect on employee performance and customer satisfaction after implementation that has to be measured to get to good track. Even though many studies have been conducted on effect of ICT on banking performance but limited studies are available in Ethiopia that investigate the effect of core banking information technology system on performance of commercial banks in Ethiopian and more studies are still required to understand the relevance of core banking systems in Ethiopian Banks and to give a better insight for decision makers of the industry.
2.14 Conceptual framework
The basic objective of this study is to assess the impact of Core Banking on Customer Satisfaction in Commercial Bank of Ethiopia Addis Ababa Branch. The research model for this research is given in Figure 1 below. The independent variables will be taken into account in the explanation of Customer satisfactions as follows.

Source (Yang et.al. 2004)
Figure 1: Structured Model
From the above conceptual model one can estimate one multiple regression. The model that is presented accordingly:
Satisfaction = ?o+?1access+?2reliability+?3ease of use+?4privacy or security+?5service quality+?6time of delivery

CHAPTER THREE: RESEARCH METHODOLOGY
3. Introduction
This chapter presents detail of the research design and methodology. This included the research design, sample size and sampling technique, data source and data collection methods, procedure of data collection, questionnaire and reliability test. At the end the method of data analysis is presented.
3.1 Research Design
There are three approaches to conduct any research: Qualitative, Quantitative and Mixed approaches. According to Saunders et. al. (2009) mixed method approach is the general term for when both qualitative and quantitative data collection techniques and analysis procedures are used in research design. In this study mixed-method approach was employed to ensure effectiveness of the research process as the findings of the qualitative data enhance the findings of quantitative one and the vice versa.
This study used a case study approach. According to (Yeboah, Djan and Kwarteng, 2013) a case study approach is particularly appropriate for individual researchers because it gives an opportunity for one aspect of a problem to be studied in some depth within a limited time scale.
Studies that establish causal relationships between variables may be termed explanatory research (Saunders, Lewis and Thornhill, 2009). This study tried to examine the relationship between adaptations Core Banking System in commercial bank of Ethiopia on customer’s satisfaction, employees’ performance.

3.2 Types of Data
Two types of data are used to use for this study.
• Primary Data
The Primary data of the study was gathered from customers and bank managers. A questionnaire was distributed to customers in that both open-ended and close ended questions were used. In addition, in-depth or (Semi-structured) interview was used for interviewing the Addis Ababa branch managers because it helped the researcher to address some sensitive topics and allow understanding of interviewees’ personal feelings and opinions.

• Secondary Data
The secondary data was collected from different sources such as, websites, books, and journals, periodicals, bank’s annual surveys and reports in addition to articles, national and international newspapers and magazines.
3.3 Target Population of the Study
It is because of the fact that financial institutions are quite many in Ethiopia and thus, the researcher should not have studied all customers in the institution. For this reasons customers in CBE five selected branches formed the study or target population. The reason why the researcher choice these branches are that their capacity of serving a large number of customers and their performance grade is higher than other branches there in Addis Ababa. This implied that the study concentrated on the customers of commercial bank of Ethiopia in the selected branches as well as in the country as a whole.

3.4 Sampling Techniques
For the purpose of this study, the sampling technique that has been used was convenience sampling technique. This sample is used because it enabled the researcher to base its selection on their experience and knowledge on subject matter. Moreover, since it was difficult to access each customer at their address it was found important to reach them when they came to the branch for their service need.
3.5 Sampling size
The target samples for the study were premium and business customers totaled 2,057; these are 1057 premium and 1000 business customers in Addis Ababa branch and the total population is 170287. As per the formula given by (Gay, 1981), and rick (2006) who state 10% of the target population can be used as a sample for non probability sampling technique, the study had selected 206 target customers as a sample to take the acceptance.
3.6 Method of data collection
Data collection method that was used in this research is self-administered questionnaire to customers using both open ended and close ended questions. Detail of which is given below.

3.8 Questionnaire
The questionnaire has three parts. These are: – Service Quality Questionnaire (SQQ), core banking questionnaire (CBQ)e and Customer Satisfaction Questionnaire (CSQ)
A. Service Quality Questionnaire (SQQ)
The first part of the questionnaire measures the banks service quality by using a five – point Likert response scale which includes strongly dissatisfied (1), dissatisfied (2), neither satisfied nor dissatisfied (3), satisfied (4) and strongly satisfied (5). After a review of the literature, service quality factor were developed in the questionnaire based on Cronin and Taylor 1992. SERVPERF instrument served as a foundation for development of questionnaire
B. Core banking questionnaire
(CBQ) The second part of the of the questionnaire measures the core banking customer satisfaction by using a five –point Liker response scale which includes strongly disagree (1), disagree(2), neither agree nor disagree (3), agree (4) and strongly agree (5).
C. Customer Satisfaction Questionnaire
(CSQ) The third part of the questionnaire measures customer satisfaction level by using a five – point Liker response scale which includes strongly disagree (1), disagree(2), neither agree nor disagree (3), agree (4) and strongly agree (5). 7 customer satisfaction items were developed in the questionnaire.
3.9 Reliability and Validity
In order to ensure validity and reliability, the questionnaire were carefully constructed avoiding ambiguity. The questionnaires of the study were reviewed and commented and discussion by two randomly selected bank managers, worked on core banking team members and suggestion of my thesis advisor too. In order to assess the reliability and consistency of the instrument the Cronbach?s Alpha was used. A pilot test was conducted using some sort of the questionnaires during the development stage to ensure the internal consistency of the instrument.
3.9.1. Customer satisfaction reliability test
To measure the consistency of the Questionnaires in related with customer satisfaction, the reliability analysis was done using Cronbach’s Alpha (?), the most common measure of scale reliability test. As indicated below in Table 8 below the value for Cronbach’s Alpha (?) was 0.804 for all variables which exceed 0.70 the accepted value for Cronbach’s Alpha (Field, 2009; Cohen and Sayag, 2010). In short nut, the responses generated for all of the variables used in this research was reliable enough for data analysis.
Table 3 : Reliability Statistics for customer satisfaction Cronbach’s Alpha Cronbach’s Alpha Based on Standardized Items N of Items
0.804 0.838 13
3.7 Method of data analysis
In order to reach on meaningful facts and conclusions, the research provided explanation and analysis on impact of core banking information technology system on commercial bank of Ethiopian in Addis Ababa branch. The data collected through the questionnaires was analyzed by Statistical Package for Social Sciences (SPSS) version 21. In generating the actual results, frequency tables were generated to determine the number of respondents who expressed their opinion on a particular item. Based on the frequency tables generated from SPSS, descriptive statistic was used to analyze and describe the findings.
In order to further test the research hypothesis, the researcher used One sample test (T-statistic) and linear Regression model. The T-statistic test applied to examine the relationship between the studies’ dependent and independent variables whereas linear regression model was applied to evaluate the level of significance of the independent variables on the dependent variable.

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION
Introduction
In this chapter, the data collected from the sampled bank branches customers in which commercial bank of Ethiopia is presented, and analyzed by using different statistical tools based on data analysis method. The findings of the study should be discussed in the later section of this chapter.
106 questionnaires distributed to 100 sampled respondents in Addis Ababa branch were collected successfully and analyzed the general question using SPSS without any missing.
This chapter has three sections the general information analysis, reliability test and the specialized information analysis (Regression analysis) based on the information collected. So the general analysis was analyzed using descriptive analysis via frequency and percentage and the specialized questions was analyzed using SPSS version 21 via multiple regression models and the hypothesis tested using t-test.
4.1. Descriptive Analysis for Demographic Data
This descriptive analysis is used to look at the data collected and to describe that information. It is used to describe the demographic factors for more clarification. It is mainly important to make some general observations about the data gathered for general or demographics questions. The demographics factors used in this research are gender, age, education qualification, monthly income, and types of service they used the banks services.
4.1.1 The Demographic Data Analysis
The demographic analysis that means age, gender, marital status, educational level, income level of customers of e-banking used could be analyzed as follows.

Table 2. Age of Respondents
Years N %

18-29 61 61

30-49 29 29
Valid
50-69 8 8

Above 69 year 2 2

Total 100 100
Source: own survey, 2017
As the above table 2 shows that the age statistics indicated that the least age groups were those above 69 which were represented 2% of the respondents sampled for the study. Additionally, the highest age groups from the study were those between 18-29 years. These age groups were made up of 61 respondents which represented 61% of the respondents. The highest age group was followed by those between 30-49 years and 50-69 years old. This age group represents 29% and 8% of the respondents respectively. This implies that the more corporate customers who are using e-banking are youngsters.
When we connect it with the objective of the study we could identify the types of customers based on the age group. In this case, the bank should have to go the elderly and other age groups in order to duplicate its service. Here, the researcher would have understood one thing; that was youngsters are egger or keen to change or to use technology immediately without any incentives.
Table 3. Gender of the Respondents
Gender N %
Male 76 76
Female 24 24
Total 100 100
Source: own survey, 2017
As the above table 3 age categorization of the 100 respondents showed that, 76 representing 76 % were males and 24 representing 24% were females. This means that the highest users of e-banking in corporate customers of CBE Addis Ababa branch are males. Based on the objective of this study, the types of customers were male and female in the category of gender.
But among these male and female customers of e-banking service in the surveyed bank most of them were males. According to the researcher males were near to usage of e-banking technology than females. For instance, when we see the previous researcher on the same topic or title most of their findings were males were took e-banking service than females the researchers like, Parasuraman et al (1985), Bambore PL (2013), Kwashie W. (2012) of Ghana etc.
Table .4. Marital Status
Marital status N %

Single 59 59

Married 37 37
Valid
Separated 2 2

Widowed 2 2

Total 100 100
Source: own survey, 2017
Furthermore, the marital status of respondents shows that 79 have never been married, 14 were not married, 2 were separated and 2 were widowed. Percentages of 79 % were married, 14% were not married, 2% were separated and 2% were widowed.
Table 5. Education Level
Qualification N %

No formal education 1 1

Basic education 6 6

TVET 2 2
Valid
Diploma 14 14

Degree 60 60

Masters and above 17 17

Total 100 100
Source: own survey, 2017
In terms of education, as the above table 5 noted from the total respondents of sampled e-banking users 1 of the respondent was without any formal education. The most represented educational levels were those with a Bachelor degree which was made up of 60 respondents or 60% of the respondents. This was followed by 17 respondents representing 17% who were with a master’s degree and above, and 14 respondents representing 14% who were with a diploma. 6 respondents of the study which accounts for 6% were holders of basic education. The least represented educational level were those with TVET who were 2 in number or 2% of the respondents.
Based on the objective of the study, the customers using e-banking in the sampled bank were mostly first degree and second degree holders.
Table 6. Income Level of customers
Level of income Frequency Percent

Br.50,000-100,000 8 8

Valid Br.100,001-200,000 60 60

Above Br.200,000 32 32

Total 100 100
Source: own survey, 2017
As indicated in table 6 above, 8 of the respondents or 8% of the respondents earned between br. 50,000 and 100,000; 60 or 60% earned between br.100,001-200,000; and 32 respondents or 32% earned above br.200,000. A large number of respondents or customers have been with the monthly income of between Birr 100,001-200,000. This implies that most corporate customers of the bank earn a monthly income of Birr 100,000 to Birr 200,000.
Table 7. Types of e-banking Service Customers Used
Service type N %

ATM 39 39

Point of Sales(POS) 3 3

Internet banking(IB) 8 8

Valid Mobile Banking(MB) 1 1

ATM, POS & MB 19 19

ATM & MB 18 18

All 12 12

Total 100 100
Source: own survey, 2017
As represented in the above table 7, 39 or 39% of the respondents were the users of ATM, 3 or 3% were uses POS, 8 or 8% of the respondents were using IB, 1 or 1% of the respondents was using mobile banking, and 19 or 19% were the users of ATM, POS & MB as well as 18 or 18% were uses ATM and MB, and finally 12 or 12% were the users of all types of e- banking in CBE.
This implies that the large numbers of the respondents were the users of ATM, the second large numbers of customers were used ATM, POS and MB; the third, the fourth and the fifth were ATM and MB, all e-banking services and IB respectively. Large numbers of customers have been using ATM e-banking service rather than other e-banking services. The reason for this was that ATM service was simply accessible for any types of customers easily.
4.2. Regression Result and Implications
In this section, the reliability test, the model assumption test, the descriptive statistics of mean and standard deviation, result of variance, and hypothesis testing has been analyzed in good manner in accordance with the previous studies.
4.2.1. Cronbach’s Alpha Test of Reliability
According to, Anderson, (2008) reliability is essentially the dependability of an instrument to test what it was designed to test. Reliability refers to the consistency and dependability of a measuring instrument; using it repeatedly should give us the same or similar results every time (Anderson, I., Gaile-Sarkane, E., 2008).
Table 9 Cronbach’s Alpha Score

Cronbach’s Cronbach’s Alpha Based N of Items
Alpha on Standardized Items

.968 .968 45
Source: survey, 2017
According to, Nunnally and Bernstein, (1994) the closer the Cronbach’s alpha is to 1, the higher the internal consistency reliability of the research instrument. The Cronbach’s Alpha score ranges from 0 to 1. The Cronbach’s Alpha score greater than 0.70; show that high internal reliability of the scaled item (Nunnally and Bernstein, 1994).
In spite of this argument Garson (2002) indicated that the cut off point for the Cronbach’s Alpha should be between 0.8 and 0.6 (Garson, 2002). Additionally, the Cronbach’s Alpha increases when the number of items in the scale is increased which means that the Cronbach’s Alpha score decreased (Garson, 2002). From table 8 above the cumulative Cronbach’s alpha scores were above 0.70 or it approaches to 1, meaning that they are highly reliable.
This means that it fulfills the argument mentioned by Nunnally and Bernstein. The above reliability result shows that, the instrument in which the researcher was used essentially very much measured the dependent variable. When we see the reliability result that means 0.968 this means that it was close to 1 according to Nunnally and Bernstein it strongly fit to the variable conducted.
4.2.2. Descriptive Statistics Analysis
This type of analysis helps to know the overall mean and standard deviation of each variable used in the study.
Table 10 Descriptive Statistics

Variables Mean Std. Deviation N

Customer satisfaction 3.5400 .79671 100

Accessibility 3.4900 .75872 100

Reliability 3.5300 .80973 100

Ease of use 3.6500 .71598 100

Time of delivery 3.7200 .71181 100

Security 3.6500 .90314 100

Accuracy 3.6500 .80873 100
Source: own survey, 2017
As we see from the above descriptive statistics, table 10 contains the means and standard deviations value. According to Best (1997) the mean score that ranges from 1-1.80 is considered to be lowest, from 1.81-2.61 is lower, from 2.62-3.41 is deemed to be average/moderate, from 3.42-4.21 is good/high and from 4.22-5 is going to be considered as very good/excellent.
Besides this, the decision rules used in any analysis fall in the average mean less than 3 was considered as low, average mean equal to 3 has to be considered as medium and the average mean greater than 3 was deemed as high throughout the study (Best and Khan, 1995). As we understand from the above table 10, based on the mean measurement of the mentioned authors, the mean score of all independent and dependent variables were greater than 3. This implies that the dependent variable is highly described by the independent variables. Means that the independent variables have influenced the e-banking customers positively. This leads to customer delight. The reason for this may be the customers have got high service quality, the bank might have good account information privacy, the employees of the bank have been good service providing and treatment given to employees, and also the bank management system has been better. This leads to the improvement of banking profitability while the customers are being delighted.
4.2.3. Multiple Regression Analysis
On the basis of four dimensions as given in the objective, the four alternative hypotheses have been formed. It has been investigated that whether these dimensions have a significant impact on the customer satisfaction of the core banking users or not.
The alternative hypotheses were:
•Ha1: Access does impact on customer satisfaction
•Ha2: Reliability does impact on customer satisfaction
•Ha3: Privacy/security does impact on customer satisfaction
•Ha4: Time of delivery does impact on customer satisfaction
The hypotheses formulated above have been tested empirically by employing regression model. The regression model is as follows: Y=?+?1+ ?2+ ?3+ ?4 + ?. Where the dependent variable is satisfaction of the customers denoted by Y and the independent variables are: Access (?1), Reliability (?2), time of delivery (?3), privacy/security (?4). The error term (?) contains the extraneous variables aside from independent variables that determine the value of the dependent variable (Y) for a specific observation. Enter regression method has been used to evaluate the data. Regression technique has been employed using weighted average scores. Regression results have been shown in below Tables.
Table 11 Model Summary
R R Square Adjusted R Std. Error of the Durbin Watson

.783a 0.613 0.588 0.51138 1.985

Source: own, survey, 2018
Table 11, shows that R2 = 61.3 percent and Adjusted R2(adjusted for d.f.) = 58.8 percent which means existing model has explained 61.3 percent variance in dependent variable which has been caused by independent variables. R2 = 0.613 which indicates that about 61.3% of the variation in customer satisfaction of core banking service quality explained by the variation in the independent variables other variables remain constant and the variations are unexplained by the model. So, the regression equation has a very high explanatory power and that the regression line is a “good fit”
Table 12 ANOVA
Model Sum of Squares Df Mean Square F Sig.
Regression 38.520 6 6.420 24.550 .000b
Residual 24.320 93 .262
Total 62.840 99

Source: own survey, 2018
a. Dependent Variable: Customer satisfaction
b. Predictors: (Constant), Speed, Reliability, Access, Security
Privacy, Time of delivery
F-value of the model has been found to be significant at 5% level of significance showing that model is best fit to use and model is significant in explaining variation in the dependent variable (refer Table 12).
4.2.4. Model Assumption Testing
According to, the model assumption was described in chapter two that was multiple regressions has an assumption of linearity, normality, equal variance and multi coliniality. Due to that, here the researcher would try to test it based on assumption.
We have to this below the normality and linearity of the dependent and independent variable in below with normal p-plot of regression.
Figure 2. Normality of the Model

Source, own survey, 2018
This implies that the normality of independent variable with respect to dependent variable.

Figure 3 Linearity of the Model

Source, own survey,2018
The above scatter plot also described that the linearity model test of the study. As we seen from the above scatter plot the model was fit to the assumption of linearity. This implies that, there were the positive relationship between dependent and independent variables.
When we come to the multi co linearity assumption, it shows that multi Co linearity is under the tolerance limit or there is no multi Co linearity has been observed in the model. Generally, according to Kutner, (2004) 10 have been proposed as a cut point value for checking the VIF for the research result.

4.2.5. Hypothesis Testing
Model Unstandardized Coefficients Standardized T Sig Collinearity Statistics

B Std. Error Beta Tolerance VIF

(Constant) 0.256 0.316 0.811 0.42
Access 0.041 0.092 0.039 0.443 0.659 0.546 1.832
Reliability 0.115 0.095 0.117 1.214 0.228 0.446 2.24
Ease of use 0.074 0.101 0.067 0.738 0.463 0.509 1.966
Time of delivery 0.1 0.108 0.09 0.929 0.355 0.447 2.239
Privacy 0.189 0.085 0.214 2.236 .028* 0.453 2.208
Service quality 0.384 0.108 0.39 3.554 .001** 0.346 2.887

Table 13 Coefficients and Collinearity Statistics
Source: own survey, 2018
The regression results have indicated the impact of four dimensions of core banking on customer satisfaction in the banks in Ethiopia with the survey of CBE Addis Ababa branch. In the present study, it has been represented that out of the four dimensions; two dimensions have significantly influenced customer satisfaction of core-banking service. Speed (? = .384, p = .001) and Security/ Privacy (? = .189, p = .028); and have been found to be significant at 5 percent level of significance. From the customers’ point of view, Speed, and Security/Privacy are the most important dimensions in the context of using core banking services (ATM, POS, Mobile banking, Internet banking and branch networks).
Furthermore, as shown in table 12 based on the standardized Beta estimate, Accessibility (? = .390) has occurred as the most important dimension which has highest impact on the customer satisfaction, followed by Security/Privacy (? = .214). Today, more and more services are being delivered through technology, particularly with the advent of mobile and internet applications. According to this study in the e-banking services encounters, customers always seek about the security/privacy in transactions, and service quality. In addition, based on this study the other two dimensions (speed and free of error) did not have significant influence on e-banking and hence customer satisfaction depend up on the view point of the respondents.
Dimensions like Access, ease of use, time of delivery, and reliability doesn’t have an influence on customer satisfaction based on the t-test coefficients. VIF (Variance Inflation Factor) has been used to check the condition of multi Collinearity. It shows that multi Collinearity is under the tolerance limit or there is no multi Collinearity high gap has been observed. Generally, according to Kutner, (2004) 10 have been proposed as a cut point value for checking the VIF for the research result. (Kutner et al, 2004).
Finally, the Model Equation:
Customer satisfaction = 0.256 + 0.041(Access) + 0.074(Ease of use) + 0.100(Time of delivery) + 0.189(Privacy) + 0.384(Service quality) + 0.51138
In this section the researcher tried to split the alternatives hypothesis in to for each dimension of core banking banking service quality in order to clear the acceptance or rejection of the alternatives hypothesis using table form.
Table 14 Decision of Hypothesis
Alternative Hypothesis Decision

Ha1 Service quality of core banking does impact on
customer satisfaction Accepted

Ha2 Access does Impact on customer
Satisfaction Rejected

Ha3 Ease of use does impact on customer
Satisfaction Rejected

Ha4 Time of delivery does impact on customer
Satisfaction Rejected

Ha5 Privacy/security does impact on customer
Satisfaction Accepted

Source: own survey, 2018
The regression results in table 14 have indicated that out of the six dimensions; two dimensions have been found to be significant in influencing customer satisfaction of core banking in Ethiopia. Based on view point of customers, Service quality and Security/Privacy were the major factors that strongly lead to customer satisfaction of the core banking customers in CBE. It has been further found that Access, Ease of use, and time of delivery were the three dimensions which have insignificant impact on the customer satisfaction.
As the above table 14 shows, from the alternatives hypothesis service quality (includes reliability) and privacy were accepted because they have a strong significant effect on customer satisfaction; the reverse of this the researcher reject the Null hypothesis. And also the Null hypothesis in which access, ease of use and time of delivery were accepted because they didn’t have a significant impact on the customer satisfaction based on the regression result. Therefore, it may be interpreted from the above analysis that banks provide the facilities to its customers more comfort through prompt services delivery via the internet usage and customers visit on websites. Customers can get services without any interpretation and delay at their access through internet banking, mobile banking, ATM and POS banking. As concerning the insignificant influence of the factors Access, Ease of use and Time of delivery; since, so such dimensions may not be that significantly unpleasant dimensions for customer satisfaction. However, Banks must secure the information regarding customers’ internet banking activities and should not share customers’ personal information with others users to be reliable in core banking services.
4.3. Interpretations and findings
The objective of this study was to examine the impact of core banking service quality on customer satisfaction with in CBE. Demographic factors such as gender, age, occupation, education qualification, monthly income have been used to know the general characteristics of the respondents.
According to this study the research used 76% male and 37% of female were users of core banking services. This implies that the majority of core banking users in CBE are males. As presented in the age analysis shows that the age statistics indicated that the least age groups were those above 69 which were represented 2% of the respondents sampled for the study. Additionally, the highest age groups from the study were those between 30-49 years. These age groups were made up of 61 respondents which represented 61% of the respondents. The highest age group was followed by those between 20-29 years and 50-69 years old. This age group represents 29% and 8% of the respondents respectively. In terms of age, the majority of respondents are in between 18-29 years old which was accounted 61% and followed by 39- 49 which constituted 29%. This result indicated that the user of e-banking service in CBE more of youngsters.
Furthermore, the marital status of respondents shows that 59 have never been married, 37 were married, 2 were separated and 2 were widow. Percentages of 59 % were never married, 37% were married, 2% were separated and 2% were widow. This result shows that the highest users of e-banking were single or youngsters and the next largest customers were married. In terms of education, noted that from the total respondents of sampled e-bankingusers 1 of the respondent was without any formal education. The most represented educational levels were those with a Bachelor degree which was made up of 60 respondents or 60% of the respondents. This was followed by 17 respondents representing 17% who were with a master’s degree and above, and 14 respondents representing 14% who were with a diploma. 6 respondents of the study which accounts for 6% were a holder of basic education. The least represented educational level were those with TVET who were 2 in number or 2% of the respondents.
With regard to the education qualification of respondents, the majority were first degree holder with 60% which is followed by Master’s Degree holder which accounted 17%. This implies that the reason large number of customers were BA degree and Master’s degree that e-banking service needs to more understanding especially internet banking.
When we see the occupation of the respondents, most of them were working in government sector which accounted 45% and followed by 27% working in private sector. This means that most of the customers that CBE have government employees. The reason why this result was recorded based on the view point of the researcher most of the peoples using banking service in CBE because of it is the leading bank in introduction of banking technologies and it has public image. In terms of the monthly income of the respondents, the majority had income of between Birr 2,001-10,000 which accounted 60% and followed by 32% having income in above birr 10,000. In regarding to the types of e-banking that most of customer’s are using ATM accounted 39% followed by ATM, POS and MB accounted 19% and, ATM and MB accounted 18%. As we understand from this result most of the customers of CBE are using ATM, POS and MB respectively. This implies that it is ease to using ATM and Mobile banking rather than internet banking due to different reasons like using ATM may not need online internet network, it may not requires further understanding and much cost.
This study have been also found that two main outcomes by using inferential statistic. That means the first finding was there is a strong impact of service quality on customer satisfaction and customers need a high privacy/security from the given bank e-banking service. The second outcome of this study, there was no significant effect of Access, Ease of use, Reliability and time of delivery on customer satisfaction. According to the finding for the sampled banks in Ghana empirical work of Parasuraman et al (1985) these dimensions have been a strong significant effect on customer satisfaction. So, this study doesn’t conform to the result of Parasuraman (1985). The similarity between this study researcher and Parasuraman et al (1985) were that the same result they found on the variable of service quality effect on customer satisfaction. The issue of time as discussed in the literature by Churchill (1982) shows that time savings were essential to individuals who used electronic banking and shopping. But in this study even if time of delivery is very important the bank didn’t gave time saving services according to the result. Additionally, the finding of this study goes in line with that of by Parasuraman, Zeithaml and Berry (1988) regarding to service quality. In their empirical work they argue that “if the expected quality of service and actual perceived performance is equal or near equal the customers can be satisfied, while a negative discrepancy between perceptions and expectations or ‘performance-gap’ lead to customer dissatisfaction, and positive discrepancy leads to consumer delight”. This study found that customer of the various branches sampled bank viewed service quality to be equal to performance hence they were very satisfied with the services offered. This led to the results recorded in the study confined with Parasuraman, Zeithaml and Berry (1988). Furthering the discussion, the regression result of this study showed a positive relationship between all the service quality variables and privacy. This confirms the model used for the study. The model indicates that there is a positive or linear relationship between satisfaction and service quality.
Regarding to, access using in the bank according to the respondents point of view it was insignificant impact on their satisfaction or with the variable of ‘Access’ in core banking has not been well provided by the bank. For instance, there was no 24 hours ATM, POS and MB service; in this regard while the customer wants to withdraw money at night or at weekend the machine was not well functioning for the time being due to network breakdown and it may not have enough balance etc. in this case the customers are dissatisfied. According to the previous study conducted in Ghana by Kwashie W. (2012) access was the prominent factor for customer satisfaction and it was significant factor. But, this study was to the contrary of Kwashie result. The same is true it was contrary to the result of Olanipekun, W.D, Brimah, A.N and Ajagbe, S.T (2013), Olsen LL, Johnson MD. (2003) and Parasuraman A, Zeithaml VA, Malhotra A. (2005).
In terms of Ease of use, according to the respondents displayed to this study ‘ease of use’ was not significant factor for customer’s satisfaction. That means for customers core banking services were not easily used or it needs understanding of text message received via Mobile, the instructions used in the internet banking is vague and the PIN of all e-banking services were not that much ease to save in mind especially mobile banking and internet banking.
The degree of significance varied from variable to variable. The results show that without the exception of service quality and privacy, all the other variables were insignificant at 5% significance level. The reason for this result was because customers of core banking indicated that they did not have enough services over core banking activities. In this case findings of this study runs contrarily to that of Bateson (1985) and Bowen (1986) who indicated that Access, ease of use, and time of delivery are significant on customer satisfaction. A further investigation into this findings shows that customers were not interested in the fun aspect of internet banking but rather were interested in the utility that comes with internet banking hence the recorded results. This finding contradicts to the findings by Davis et al. (1992) who stated that individuals assess more positively the fun generated by internet banking.
Analysis of open ended question
Majority of the respondent states their opinion regarding core banking service. From their suggestion it can be inferred that network problem is the big issues. The network problem is the major obstacle in the check clearing operations, quick transfer of fund, cash withdrawal and etc. In addition, the temporary failures in core banking services are not corrected immediately.

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
Chapter five which is the final chapter is the summary, conclusion and recommendation of this study. The chapter provides a summary and implication of the main findings of this study as presented in chapter four. The chapter ends with the recommendation for the various institutions of concerns and finally area of future research.
5.1. Summary and Implications of the Main Findings of the Study
The main findings of this study can be summarized into three main subjects. These themes are the testing of the hypothesis, the analysis of the demographic data and the reliability test. The demographic analysis shows that more males use the e-banking services than their female counterparts.
Additionally, when it comes to age group, the modal age of users of e-banking users of the banks in Ethiopia was 18-29 year or in their youthful age. The marital status of most of the users of e-banking activities in Ethiopia were married whilst educationally, majority hold a Bachelor degree from various fields of studies. In addition to the above, the most earned income of users of e-banking activities was between Birr 2001-10,000. In Cronbach’s Alpha test for the reliability of the data shows that in good way met the Nunnally and Bernstein’s criteria of 0.7. That means it was 0.968. The major finding of the first hypothesis shows that the entire-banking service quality determinant positively impacted the customers’ satisfaction and was significant at 0.05 significant levels.
The second hypothesis shows that speed of delivery, ease of use, and access were positively related, but insignificant at 5% and doesn’t led to customer satisfaction. The third and final hypothesis shows that among the independent variable privacy/security was positively related to customer satisfaction and was significant at 5% significance level. Finally, the result shows that, there was the linear relationship between service quality and customer satisfaction.
Several factors influences customer satisfactions with core banking in worldwide, but the case of Ethiopia is quite different. The finding of the study shows that demographic variables influenced customer satisfaction with the various e-banking services of the banks visited. The age of the respondents influences their satisfaction with the e-banking services provided by the various banks especially the surveyed branches visited. Age was significance because; the young or the youth were more interested than adult and elderly in using technology for their banking services. This is because the youth by their nature are usually breast with modern technology, egger to change and especially in terms of the using internet in the banking industry. Additionally, the age range of the respondents to the study shows that majority of the respondents administered with the questionnaire were youthful and preferred the use of the e-banking for banking purposes rather than the elderly who were mostly not abreast with technology most especial the internet facilities provided by the various banks concerned.
In addition to the above, the educational level of respondents influence their choice of product offered by the banks involved in the study. That was the findings of the study as education of the respondents influenced their adoption of e-banking banking especially in internet banking. Literacy was a major factor, since for an individual to use the e-banking facilities provided by their banks there was a need for patrons to understand what written. Since all respondents or patrons of this study are, literate e-banking played a major role in their usage of e-banking services. The services offered by the banks, which use internet banking, have reliable banking services than those that do not have these services. But, still the use of internet banking is not that much enough with compared to ATM, POS and MB. Respondents can use it anywhere and at any time since they do not have to walk into the banking hall. Banking services can be done anywhere. The only challenge is that most of the users of internet banking services in Ethiopia are literate who are well-informed with technology and the usage of the internet. This implies that those who are illiterate cannot use internet-banking services for their daily activities. The illiterate could not easily use internet- banking services hence they were satisfied with the services provided by their bank. The key concern was the privacy and service quality.
5.2. Conclusion of the Study
Based on the result of the study the researcher concludes that males were more users of e- banking than females. Youngsters were the highest users of e-banking than elderly. In addition it could conclude that the middle income level group and government employees were the highest users of e-banking in CBE selected branch (Addis Ababa branch). Among, the types of e-banking services the large number of customers was using ATM, POS and MB banking respectively. It was conclude that the independent variables were highly described the dependent variable.
It has been concluded that service quality and security/ privacy are the major factors that strongly lead to customer satisfaction of the e-banking customers. It has been further concluded that Ease of use, time of deliver and Access were the three dimensions which had insignificant impact on the customer satisfaction. It can, therefore, be concluded that e-banking service quality enhances the efficiency of the bank. The researcher concludes that, as a manager, it is relevant that all the facilities in core banking service quality programs should be strictly followed and applied successfully in the organization. With the existence of globalized business, banks are providing internet services in the economy in effective manner. Hence, in order to reap benefits, the bank (CBE) should provide the best possible facilities to core banking users.
The results of the study have proven that internet banking service quality scale is the effective indicator to measure customer satisfaction in the banks in Ethiopia and the existing scale has been validated as a determinant of customer satisfaction scale.

5.4. Recommendation of the Study
This study has important implication for both academics and Managers of the CBE and other commercial banks in Ethiopia in general. Banking managers should not only lay emphasis on the bank’ objectives and goals but must also focus on the needs of the customers and enhance customers productivity.
E-banking conveniences enable both customers and employees of the organization to be more effective and productive in receiving, providing and delivering services. It is essentially recommended that banks take a critical look at the significant variables that affect customers satisfaction; security of the core banking system and quality of the system in that the bank should make the service to be efficient and effective that considers the needs and wants of customers. It is also important from the study that given the insignificant valued obtained on the time of delivery, Access, Ease of use and reliability of the use of e-banking services of the various banks it is essentially recommended that banks take a critical look at those variables since they can affect the profitability and the switching intent of the customers.
It is also recommended that banks invest in understanding the needs of customers of e- banking and try as much as possible to meet their various needs associated with the services provided by e-banking especially about POS and Internet banking. There is the need to create awareness and educate majority of the banking population or users on e-banking especially in mobile and internet banking. This was because most of the customers administered with the questionnaires rejected or refused to answer the questionnaire because they did not know about the services nor had minimal education of internet banking services.
Web-site of the bank should contain relevant information explained in an easy to understand language and should be visually attractive and regularly updated because service quality is main determinant for measuring the customer satisfaction efficiently. In case of any problem, the bank employees may speak themselves with the customer through telephone or any other mode of communication.

5.5 Area for Future Research
Although this study has been as expansive as possible there is the need to see the other dimensions of services quality associated with internet banking and assess its impact on customer satisfaction. This will enable to strength the generalization of the findings to customer management in particular and growth of company, an industry and the country. This study was limited to customer satisfaction and service quality, but there is a need for further researchers to examine the effect of customer satisfaction or dissatisfaction on the switching cost of banks offering e-banking or the switching intent of customers of these banks. Finally, further studies should research into the relationship between the heterogeneity of the various customers of e-banking and issues of electronic payment such as funds transfer, security and bills payment.

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APPENDIX
APPENDIX A
ST.MARY`S UNIVERSITY
SCHOOL OF GRADUATE STUDIES
Department Of Project Management
Research Questionnaire
Dear: Respondents
I am studying Public Financial Management in Civil Service University. As part of my studies, I am carrying out a research on the effect of electronic banking service quality on customer satisfaction in the banking sector of Ethiopia (CBE). This questionnaire consists of two main parts and it should only take approximately five minutes to complete it.
The purpose of this study is to examine your opinions about e-banking service quality that is the most important factors of satisfaction. The success of this survey depends on your participation and truthful responses. I would therefore greatly appreciate your assistance in answering the questionnaire. Please be assured that your response will be kept strictly confidential and only be used for academic purpose. Individual participants will not be identified in the analysis as only aggregated results will be analyzed and interpreted.
This survey will be conducted from Oct.2017 to June, 2018. If you have any queries, please do not hesitate to contact me by email at [email protected]
Thank you for your participation
Best regards, Siyoum Mezgebu

Section A: Demographic Data
Please encircle your appropriate answer
1. Age: 1. 18-29 2. 30-49 3. 50-69 4. Above 69 years
2. Gender: 1. Male 2. Female
3. Marital Status: 1. single 2. Married c. Separated d. Widowed
4.Education Level: 1. No formal education 2. Basic Education 3. TVET 4. Diploma 5. degree and above
5.Income Level: 1. less than Br 2000 2. Br 2001-10000 3. Br above 10000
6.Which e-banking types do you use? 1. ATM 2. Point of Sale 3. Internet Banking 4. Mobile Banking 5. ATM;MB 6. ATM ; IB 7.All
7. Types of customers: 1. Self-employee 2. Business men 3. Private employees 5. Gov’t employees
Section B: specialized questions
The purposes of these questions are to know your opinion about the e-banking service quality of CBE. So, please put ? mark in the box which reflects your concern 1= strongly disagree 2= disagree 3= neutral 4= agree 5= strongly agree
Access Strongly Disagree Neutral Agree Strongly
disagree Agree

1. CBE e-banking service is working 24
hours.

2. The use of ATM service is accessed
usually.

3. It is easy to contact my bank whenever
necessary.

4. mobile banking is nice to use

5. I can log in my account anywhere in
the world using internet banking

Reliability 1 2 3 4 5

6. the use of point of sale is reliable

7. the use of all e-banking service in CBE
is reliable

8. CBE employees provide information
that exactly fit my need.
9. I can trust mobile banking service
function of CBE

10. ATM service completes a task
Accurately

Ease of use 1 2 3 4 5

11. Mobile banking information contents
and texts are easy to understand

12. The instructions on ATM services are
Clear

13. E-banking service is easy to use

14. Internet banking is funny to use

15. Mobile banking doesn’t demands a lot
of effort

Time of delivery 1 2 3 4 5

16. The use of mobile banking is very fast

17. The use of ATM is time saving

18. The use of point of sale is stop cash
Holding

19. Using E-Banking service enables me to
accomplish my banking activities more
Quickly

20. My bank offers all the e-banking
services I need.

Privacy or security 1 2 3 4 5

21. The use of POS gives me safety.

22. Pin of all e-banking service is secure

23. E-banking service provides security
over my transaction.

24. I am confident of the security of
overall e-banking service.

25. I feel safe when I using ATM service

Service quality 1 2 3 4 5

26. I find E-Banking a convenient service

27. The service I receive by ATM is
Excellent

28. The level of service quality I got via
mobile banking is high

29. E-banking has impacted positively on
service quality of the bank

30. CBE is providing e-banking service
more than I expect.

1 2 3 4 5
Customer satisfaction

31. My expectations before the use of
Internet banking have been met with this
current experience

32. I find the ATM banking instruction
quite pleasant.

33. I am completely satisfied with the
usage of POS banking.

34. Am satisfied the service delivery of E-
banking via Mobile banking.

35. Overall, I really satisfied the service
quality of E-banking service provided by
CBE.

APPENDIX B: Time and Budget schedule
Time schedule
This section will be guiding the researcher to perform the details of the research within the time frame of the university. So, the researcher is presenting below the time schedule as soon as possible.
Duration in months (M) Remark
No. Activities s
Oct. Nov Dec Jan Feb Mar. Apr. May Jun.

. . . .

1. Proposal x x X x X
Writing

2. Review of x x X x X x
Related
Literature

3. Distributing x
questionnaires

4. Collecting X X
Data

5. Data analysis X x
And
Interpretation

6. Research X X

report writing

7. Submission of X x
draft reporting

8. Editing the x
Report

9. Submission of x
final research
Report

10. Presentation x
of result
(Defense)

Budget schedule
In this section also presented the amount of money or budget that the researcher spent on the entire study.
No. Material used Quantity Unit cost in Total cost in
Birr Birr

1. Stationary materials

1.1. Pen 10 5 50

1.2. Marker or highlighter 1 20 20

1.3. Rubber 1 5 5

1.4. Laptop 1 11580 11580

1.5. Rough paper 1 400 400
packet

2. Transportation cost of data 12 10 120
Collection days

3. Internet expense 200

4. Secretarial service charge 120 5 600
pages

5. Binding 30

6. Reserve 500

Total 13505

x

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