Full-Text (PDF)
Total Page：16
File Type：pdf, Size：1020Kb
Vol. 12(4), pp. 174-186, October-December 2020 DOI: 10.5897/JEIF2020.1081 Article Number: A5A5CD864926 ISSN 2006-9812 Copyright©2020 Author(s) retain the copyright of this article Journal of Economics and International Finance http://www.academicjournals.org/JEIF Full Length Research Assessment on the roles of information technology in improving the customer satisfaction and employee performance of commercial banks: The case of Dashen and United Bank Branches in Mizan-Aman, Southwestern Ethiopia Tesfaye Woldu1 and Demelash Belay2* 1United Bank S.C. Mizan-Aman Branch, SNNPR, Ethiopia. 2Department of Sociology, College of Social Science and Humanities, Mizan-Tepi University, Ethiopia. Received 18 August, 2020; Accepted 9 September, 2020 The study was conducted with the major objective of assessing the impact of IT on the performance of commercial banks in Ethiopia. In order to accomplish its general objective, the study attempted to evaluate the effects of IT on customer satisfaction, employee performance as well as bank revenue. The three dimensions were used as crucial indicators of the impact of IT on overall bank performance. Two cross-sectional surveys were conducted to gather the necessary data from the 372 customers and 24 employees of the Mizan-Aman branches of Dashen and United Banks in Southwestern Ethiopia. In addition, the annual performance reports of both banks, particularly the ones for 2015 and 2016 fiscal years, were reanalyzed as data sets for assessing the impact of IT on bank revenue. The findings of the study clearly indicated that IT indeed has an impact on the performance of commercial banks. It was found that the IT based services provided by the two bank branches were found to be convenient and user-friendly to customers. The study has also indicated that customers have found both banks to be efficient not only in terms of service delivery but also in terms of their ability to maintain their IT products. IT also positively affected the job performance of bank employees by reducing their workload and improving their accuracy. Meanwhile, broadband and electric power fluctuations were found to have a significant negative impact on both customer satisfaction and employee performance. Finally, an exploratory overview of the financial performance of the two banks has indicated that IT based services constituted a significant percent of the banks’ gross profit for both 2015 and 2016 fiscal years. Key words: Customer satisfaction, commercial banking, Dashen Bank, employee performance, information technology, United Bank. INTRODUCTION The establishment of Bank of Abyssinia on February 16, agreement between Emperor Minilik II and Mr. Ma 1906 marked the beginning of modern banking in Gillivray, representative of the British owned National Ethiopia. The bank was opened as a result of a 1905 Bank of Egypt. A year after its inauguration the bank Woldu and Belay 175 started selling its shares at Addis Ababa, New York, impact of information technology on the performance of London, Paris and Vienna, and opened branches in commercial banks in Ethiopia. The research was Harar, Dembidolo, Gore, Dire Dawa as well as an agency conducted by taking the Mizan-Aman branches of office at Gambella and a transit office in Djibouti (NBE, Dashen and United Banks as particular cases of 2010). reference. In 1932, Emperor Hailesilassie, in agreement with National Bank of Egypt, liquidated the Bank of Abyssinia by paying compensation to shareholders and established Statement of the problem Bank of Ethiopia with Ethiopian shareholders with a capital of 750,000 pound sterling. At the time, the major Financial industries, especially commercial banks, are shareholders were the Emperor and the then political currently becoming highly competitive and the elites. The bank was functional until the Italian invasion in computation is becoming so tough through service 1935 which latter follows with the entrance of Italian differentiation, easiness of service availability, culture and Banks. The National Bank of Ethiopia was established in religion based product services and information 1963 by proclamation 206/1963 and began operation in technology application. Growing profitability by adopting January 1964 (NBE, 2007). innovative technology that would enhance customers‟ After the 1974 revolution, all private banks and satisfaction is becoming the core of any banks‟ insurance companies merged and nationalized under strategies. The challenges related to IT in Ethiopian supervision and control of National Bank of Ethiopia commercial banking industry shall be classified in four starting from January 1, 1975 (NBE, 2010). Later, when major categories. EPRDF controlled the country in 1991, it decreed a new Security concerns associated with IT such as, Malware, banking law in January 1994 titled Proclamation No. Viruses, Trojans, Worms, Phishing spam and Spoofing, 84/1994 which allowed the establishment of private etc. including acts of intruders and hackers are becoming commercial banks in the country. And sixteen private major challenge in the world. Security will always remain commercial banks have been established since then. high on the IT agenda simply because cyber criminals When it comes to Information Technology (IT), it refers know that a successful attack can be very profitable. This to the application of computers and internet to store, means they will always strive to find new ways to retrieve, transmit and manipulate data, or information, circumvent IT security, and users will consequently need often in the context of a business or other enterprises. to be continually vigilant. Banks like other enterprises use IT as their computing Currently, banks are becoming more and more tool to excel the service they render. Most researchers dependent on the use of IT for their day to day banking conclude that IT has two positive effects on bank‟s operations. Cyber-attacks on information system are performance. First, IT can assist banks in reducing the often aggressive, well organized and very sophisticated operational and human resource costs. Like for instance, (United Bank, 2012). IT can minimize the paper works which can be utilized to Since these technologies for the industry are at the transact money transfers, and can be easily applied by infant stage, the problem remains at its high risk internet banking or mobile banking with no paper. IT can currently. For instance, Chris (2016) reported some pretty increase the efficient of the banks by reducing landline strong attack on banks‟ cyber-defenses in the past year, telephone costs by using online transactions. Also, an 2015. Three major incidents in the swift network, 50 at individual can perform various transactions through IT the Federal Reserve, problems at the bank of England that would be performed by various employees (Farrell and many other central banks, a major Incident at the and Saloner, 1985). Danish payment processer Nets, and big banks such as Second, IT can facilitate transactions among customers HSBC and JPMorgan have all been affected. with in the same network. Since customers come from Seamless Information Technology supportive banking different socio-economic backgrounds banks could makes banking convenient for customers as it allows provide a wide variety of first-rate services to their more them to transact from anywhere, at any time 24/7 (United distinguished customers who will not settle for mediocre Bank, 2012). But this might not always hold true as services. As a result, the banking sector has shown a Agbada (2008) claims that some consumers might be tremendous expansion in almost all societies. This is impaired as a result of age, or might have learning partly due to the fact that banking services have impairment and other might be physically disabled. Multi- touched most aspects of contemporary society‟s life and channel delivery products like Mobile banking, Internet activities (Farrell and Saloner, 1985). banking, ATM banking and Fund transfer through IT are This article is an output of a research done on the operated by the customer itself. Customers with hearing *Corresponding author. E-mail: [email protected]. Author(s) agree that this article remain permanently open access under the terms of the Creative Commons Attribution License 4.0 International License 176 J. Econ. Int. Finance problem may require visual representation of auditory depth interviews and documentary analysis. Figure 1 summarizes information that a web site may provide in order to the conceptual framework behind the survey design. understand such information, particularly now that theuse of multimedia such as video streaming on websites have Study area increased. Besides, consumers with hearing impairments cannot locate or identify command or control that require The study was conducted on Bench Maji Zone, Mizan-Aman town. listening to menu items before pressing the button as we Bench Maji Zone is found in Southern Nations, Nationalities and have in voice-based interactive mobile phones. In Peoples Region (SNNPR), Southwestern Ethiopia. It is found at a distance of about 561 km from Addis Ababa and 842 km from the addition to this, in developing countries like Ethiopia, regional capital Hawassa. majority of bank customers are not literate enough to Dashen Bank is a private commercial bank established in 1995. handle the multi-channel transactions accordingly, and Headquartered in Addis Ababa, the Bank is the biggest private this in return led them to lose confidence on their bank Bank in Ethiopia and operates through a network of 196 branches, financial accounts. nine dedicated Forex Bureaus, 220 ATMs and 958 plus Point-of- The major problem to apply an IT based banking Sale (POS) terminals spread across the nation. It has established correspondent banking relationship with 464 banks covering 71 structure in developing countries like Ethiopia is the countries and 175 cities across the world. The Bank also works in problem of infrastructures like electricity and partnership with leading brands in the electronic payments industry telecommunication, both of which are controlled by a (American Express, VISA, MasterCard and UnionPay cards) and monopoly.