NEW GLOBAL VISION COLLEGE

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMRNT OF PROJECT MANAGEMENT

CHALLENGES OF MOBILE BANKING ADOPTION IN

COMMERCIAL BANK OF ETHIOPIA, IN CASE OF
SHASHEMENE DISTRICT
BY: MENGISTEAB HEBEN
ID No:
ADVISOR:

A PROPOSAL SUBMITTED TO PROJECT MANAGEMENT

DEPARTMENT IN PARTIAL FILLFILLMENT OF THE REQUIREMENT
FOR THE MASTERS OF PROJECT MANAGMENT

MARCH, 2023
SHASHEMENE, ETHIOPIA
 Abbreviation
M-Banking – Mobile Banking

M-Money – Mobile Money

E-Commerce – Electronic Commerce

E-Payment – Electron Payment

CBE – commercial Bank of Ethiopia

NBE – National Bank of Ethiopia

E-Banking – Electronic Banking

SPSS – statistical Package for social science

IS – Information System
 Contents
CHAPTER ONE..............................................................................................................................4
INTRODUCTION...........................................................................................................................4
1.1 Background of The Study..........................................................................................................4
1.2 Statement of The Problem.........................................................................................................4
Research Questions......................................................................................................................5
1.3 Research Objectives...................................................................................................................5
1.3.1 General Objective...............................................................................................................5
1.3.2 Specific Objective...............................................................................................................5
1.4 Significant of The Study............................................................................................................5
1.5 Scope of The Study....................................................................................................................6
1.6 Organization of The Paper.........................................................................................................6
CHAPTER TWO.............................................................................................................................7
LITRATURE REVIEW...................................................................................................................7
Theoretical review...........................................................................................................................7
2.1 Definition of Mobile Banking...................................................................................................7
2.2 Background of Mobile Banking Technology.............................................................................7
2.3 Mobile Banking in Ethiopian Banking Industry........................................................................8
2.4 Benefits of Mobile Banking.......................................................................................................9
2.4.1 Benefits of Mobile Banking to Banks..............................................................................10
2.4.2 Benefits of Mobile Banking for Customers......................................................................10
2.5 Factors Influencing Usage of Mobile Banking........................................................................11
2.5.1 Technology Acceptance Model (TAM).............................................................................11
2.5.2 Innovation Diffusion Theory (IDT)..................................................................................12
2.6 Services Available on Mobile Banking.........................................................................18
2.6.1 Mobile Accounting...........................................................................................................18
2.6.1.1 Account Operation...................................................................................................18
2.6.1.2 Account Administration..........................................................................................19
2.6.2 Mobile Financial Information...........................................................................................19
2.6.2.1 Account Information...............................................................................................19
2.6.2.2 Market Information.................................................................................................21
2.7 Technologies Employed to Provide Mobile Banking Services...............................................21
 2.7.1 SMS (Short Message Service)..........................................................................................21
2.7.2 Browser-Based..................................................................................................................22
2.7.3 Client-Based (Downloadable Applications).....................................................................22
Empirical Review..........................................................................................................................23
BANKING ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN.......24
Research Gap.................................................................................................................................24
CHAPTER THREE.......................................................................................................................26
Research Methodology..................................................................................................................26
3.1 Research Design......................................................................................................................26
3.2 Sample Design.........................................................................................................................26
3.2.1 Study Population...............................................................................................................26
3.2.2 Sample Size......................................................................................................................27
3.2.3 Sample Selection Techniques...........................................................................................27
3.3 Survey Design..........................................................................................................................28
3.3.1 Source of Data..................................................................................................................28
3.3.2 Data Collection Methods..................................................................................................28
3.4 Data Analysis Method..............................................................................................................28
Chapter-Four..................................................................................................................................29
4.budget breakdown and work plan...............................................................................................29
4.1 Budget breakdown...............................................................................................................29
4.2 work plan.............................................................................................................................30
 CHAPTER ONE
INTRODUCTION
1.1 Background of The Study
The spread of mobile technology across the globe is one of the most remarkable achievements in
the last decades. Mobile phones have increasingly become tools that consumers use for banking,
payments, budgeting and shopping. Advance in mobile technology have revolutionized almost
every facet of society, from information to education granting enhanced access to an ever
growing number of people (Kalkidan, 2006).
According to Petrova K. (2002) M-Banking can be defined as the ability to conduct bank
transactions via a mobile device, or more broadly to conduct financial transactions via a mobile
terminal. This definition is a suitable working one as it includes not only basic services such as
bank account statements and funds transfer but also electronic payment options as well as
information based financial services e.g. alerts on account limit or account balance, access to
stock broking (NBE Birritu no,119, 2008).
Commercial banks are exploring this avenue to make their services more convenient for their
customers. The growing number of mobile subscribers in the country forms the most valuable
support base for the growth and success of mobile banking. Developments in the banking sector
as indicated with increased competition on account of technological developments coupled with
the process of globalization have produced new challenges for banks. Hence, the study attempted
to explore the major challenges facing m-banking outreach and identify the existing
opportunities for creating inclusive financial system through mobile banking.

1.2 Statement of The Problem

When compared with the banking industry operated in developed country, without doubt the
banking industry in Ethiopia is underdeveloped and therefore, there is an all immediate need to
embark on capacity building arrangement and modernize the banking system by employing the
technologies being used elsewhere in the world. Over the year’s traditional branch-based retail
banking remained the most widespread method for conducting banking transactions in Ethiopia.
Currently commercial banks in Ethiopia have started adoption of mobile phone based electronic
banking systems to improve their operations and to reduce costs (Kalkidan, 2006).
Even though in their efforts of introducing new ways of reducing cost, modernizing the banking
system, adoption of new technologies and trying to develop the m-banking outreach, there are
still major challenges hindering m-banking systems from fully functioning and being effective
and efficient regarding reaching its stated goals in commercial banks of Ethiopia. Therefore, this
study aimed at filling that gap by assessing the issues that influence customer’s usage and
identified the existing opportunities, challenges and benefits for creating inclusive financial
system through Mobile banking.
Research Questions

Based on the above statement of the problem the research question is stated as: -

• What are the challenging factors influencing for the usage of mobile banking in
shashemene CBE district?

• What are the benefits realized by adopting mobile banking?

• What are the driving forces for the usage and adoption of mobile banking in Ethiopian
banking sector?

1.3 Research Objectives

1.3.1 General Objective
The general objective of the study will be to assess the challenges and prospects of mobile
banking adoption in shashemene, commercial bank of Ethiopia district particularly, with the
following specific objectives.

1.3.2 Specific Objective

The specific objectives of the study will be: -

• To examine the challenges of using mobile banking

• To examine the benefits of using mobile banking
• To assess the efficiency and effectiveness mobile banking on the performance to CBE
• To analyze the current status of mobile system in CBE

1.4 Significant of The Study

This study is expected to fill the gap stated above and to contribute in better understanding of the
mobile banking system used in Ethiopian context and in general giving awareness to users while
letting the providers understand from the user’s perspective.
The major significance of the study will be: -

• To provide knowledge for improving the services

• Will be useful for banking management to understand the factors influencing the
adoption
of mobile banking service.

• It will be useful for researchers for further study in similar case areas.
 • It will give general overview to the reader about the significance of mobile banking
service in improving the banking industry.

• It will give current information about mobile banking system in Ethiopia specially in
commercial bank of Ethiopia context.

1.5 Scope of The Study

The introduction and use of mobile banking system highly depends on the development of
ecommerce meaning e-payment which is currently at a startup stage but could play the major
role in the banking industry. Therefore, this study will focus on the challenges and prospects of
mobile banking in commercial bank of Ethiopia in shashemene district at shashemene city.
Regarding this it might not be used to generalize the findings of this research to all branches and
districts of the commercial bank of Ethiopia and it will not be possible to include all factors
regarding the challenges as well as benefits of mobile banking in one study. so, selected factors
will be considered to this study.

1.6 Organization of The Paper

The paper will consist five chapters. The first chapter will deal with the introduction part and
consists of background of the study, statement of the problem, research objectives, significance
of the study and organization of the paper. The second chapter will deal about literature review.
The third chapter will deal with research methodology consisting research design, sample design,
survey design, and data analysis methods. The fourth chapter will focus on data analysis and
interpretation and chapter five will contain conclusion and recommendation.
 CHAPTER TWO
LITRATURE REVIEW
Theoretical review
2.1 Definition of Mobile Banking
The Federal Reserve survey defines mobile banking as “using a mobile phone to access your
bank account, credit card account, or other financial account. Mobile banking can be done either
by accessing your bank’s web page through the web browser on your mobile phone, via text
messaging, or by using an application downloaded to your mobile phone.” Mobile banking is an
application of mobile commerce which enables customers to access bank accounts through
mobile devices to conduct and complete bank-related transactions such as balancing cheques,
checking account statuses, transferring money and selling stocks (Kim et al. 2009; Tiwari and
Stephan 2007). Luo, Li, Zhang and Shim (2010), defined mobile banking as an innovative
method for accessing banking services via a channel whereby the customer interacts with a bank
using a mobile phone.

Mobile banking also means performing banking activities which primarily consist of opening
and maintaining mobile/regular accounts and accepting deposits; furthermore, it includes
performing fund transfer or cash-in and cash-out services using mobile devices (NBE Directive,
FIS-01-2012). In the broader sense mobile banking enables the execution of financial services in
the course of which – within an electronic procedure – the customer uses mobile communication
techniques in conjunction with mobile devices (Pousttchi and Schurig 2004 as cited in Singh
2011).

Mobile banking can perform various functions like mini statement, checking of account history,
SMS alerts, access to card statement, balance check; mobile recharge etc. via mobile phones
(Vinayagamoorthy and Sankar 2012). Banks are constantly updating their technology and want
to increase their customer base by reaching to each and every customer. There are many
advantages of using mobile banking, such as people in the rural or remote areas can get an easy
access to mobile banking whenever required.
Mobile banking is a developing mobile technique that has combined information technology and
commerce applications together. Since mobile banking was introduced, consumers have been
able to use it to obtain special services 24 hours a day without having to visit the traditional bank
branch for personal transactions.

2.2 Background of Mobile Banking Technology

The for the first time, in 1999, U.S. bank to use SMS banking services, it was not unique to bank.
So that same year the U.S. the post office using SMS technologies to be aware of the position of
the customer letter. Since, according to the law Klein Cohen many organizations and
governmental agencies in America Use in order to reduce the cost of Internet and mobile
services. WAP system was introduced to the business world in 1999, and led to the reduction in
the cost of information technology to develop use and innovation new methods, and lead to
reduction and control services (Farnood, 2008). In the past, the use of Internet banking by
providing access to the bank at any time, have a great impact on the bank services
to Customer. Therefore, those customers were able to review the status of your bank account,
carry out other transactions such as deposit accounts, and pay bills from home or office easily.
Major restrictions of this model electronic banking are computer and internet access. Therefore,
mobile banking has been introduced as a model of e-banking provides customers who need only
a mobile phone. The reasons for the superiority of this approach to banking with internet banking
are no restrictions in space, using the minimum facilities and another reason is the great growth
of mobile phone use among users. This way has provided the development of mobile banking.
(PoorniCk,2010). The evolution of mobile banking continues as the following:

• The introduction of GPRS technology in late 1999 and in 2000

• The introduction of Personal Office Mobile Services
• The introduction of mobile money (In 2000)
• The introduction of Third Generation Mobile (In late2001)
Mobile banking beginning in the late 1990s, has experienced five distinct stages:

The first stage, mobile banking will be summarized in simple banking operations, especially
pays bills and send SMS from the bank to the customers and vice versa. The second stage is to
add some of the accounts of depositors and related services to mobile banking services. In the
third stage, were used banking services via mobile network, other media such as the Internet and
telephone, this phase was completed with this phase was completed with the emergence of
intelligent mobile phones. The fourth step is to continue, development has been made as of JP
Phone and Android, and this progress has led to the providing of services such as mobile Internet
access and connection to the operating systems of bank. In the fifth stage,
this is starting; technologies have been used such as radio frequency identification chips for
mobile payments, and Banking Network Connection to Visa Card and MasterCard systems.
Qualitative and quantitative development of these technologies can be connected to make chips
for mobile devices such as mobile phone, watches, TV and IPad even connected sunglasses.

Porteous (2006) classified mobile banking into two; firstly, transformational mobile banking,
which is the provision of banking services using a mobile phone to reach the unbanked
population. Secondly, additive mobile banking, in which the mobile phone is simply an
additional channel that is used to provide banking services to those already banked.

2.3 Mobile Banking in Ethiopian Banking Industry

The electronic banking service was ushered into the Ethiopian market in 2001 when the largest
state owned, Commercial Bank of Ethiopia (CBE) introduced ATM to deliver service to the local
users (Gardachew 2010). After this the electronic banking service scope was further expanded to
mobile banking when Dashen Bank signed an agreement with iVery, a South African E-payment
technology company, for the introduction of mobile commerce in April 21, 2009.
According to the agreement, iVery Payment Technologies has licensed its Gateway and MiCard
E-payment processing solution to Dashen Bank. Dashen’s Modbirr users can transfer 500 birr to
other Modbirr users in 24 hours a day. This would make Dashen Bank the first private bank in
Ethiopia to acquire E-commerce and mobile merchant transactions (Amanyehun 2011).
However, mobile banking came into full practice after several years of trials and errors as well as
wait-andsee attitude by customers. Since then, mobile banking has shown a gradual growth
across many various parts of Ethiopia.

Despite the very high mobile penetration rate, the use and adoption of mobile banking services
remains low. With the advent of new mobile technologies, such as Blackberry, iPhone, Androids,
etc., which serves as a catalyst, mobile banking is on the edge to draw millions of new users
within the world teeming population (Agwu 2012).

2.4 Benefits of Mobile Banking

Mobile banking allows anytime, anywhere (within the network coverage) banking with all the
inherent advantages (Pousttchi & Schurig 2007). The high penetration of mobile phones across
the strata of society makes it a natural tool for taking electronic banking to its next level. It is
more than likely that Internet banking and mobile banking would exist as allies rather than
competitors for each other. Convenience is one of the benefits of mobile banking as banking
transactions and other related activities can be performed in the comfort of customer’s home or
offices. The usefulness of conducting banking transactions at home or from the office eliminates
the difficulties that are associated with driving to the bank, the cost of petrol, and parking.
Mobile banking also allows customers to perform banking transactions 24 hours a day, 7 days a
week, and 365 days a year (Eckhardt, et al 2009). General benefits include: -

• Offering innovative, personalized mobile services can also assist banks to attract and
retain customers. (Dr Lennart, Soderberg 2008), M-banking offers financial institutions
the opportunity to target and acquire new customer segments that value mobility and real-
time control of their finances, leading to increased customer growth and revenue.

• Reduced customer support costs; Mobile banking solutions also offer a full range of
benefits for financial institutions, ranging from reduced customer support costs to
improved customer satisfaction and retention as well as revenue growth.
(www.mobileaware.com)
 • Offers more cost effective channel; According to Nasikye, 2009 mobile phone offer
more cost effective channel and hold greater promise for making financial services reach
much lower income and remote client. It’s the most cost effective service suitable for a
developing country (Abunyang, 2007).

• Mobile banking extends the convenience of existing online services; such as account
balance information, funds transfer, bill payment and mini statements by making them
accessible from any mobile device. (Nyaoke William, 2008).

• Drastically cuts down the costs of providing service to the customers; this is the
biggest advantage that m-banking offers to banks. According to the newly-appointed UK
International Development Secretary Andrew Mitchell, m-banking can also provide a
route out of poverty.

• M-banking enables ‘Anywhere banking'; Customers now don't need access to a

computer terminal to access their banks; they can now do so when they are traveling or
when waiting for their orders to come through in a restaurant.

2.4.1 Benefits of Mobile Banking to Banks

Banks can utilize the time saved by the channel migration of customers to mobile banking for
expansion of business through better marketing and sales activities. Mobile banking enables
banks to reduce cost of courier, communication, paper works, etc. and also it reduces costs in
setting up a branch and the resources to process transactions (Sunil and Durga, 2013). Also banks
providing mobile banking services can have competitive advantage over those banks, which are
not providing this service. It has also been found to increases customer loyalty that is using
mobile banking customers need not to go in banks braches for fund transfer or for information,
which creates a good relationship between banks and customers which helps in increasing
loyalty towards the banks. Goswami and Raghavendran (2009) point out, mobile banking
services will enable banks to not only increase fee-based income but also enable significant cost
savings, improve service quality and provide cross-selling opportunities.

2.4.2 Benefits of Mobile Banking for Customers

Customers don’t need to stand at the bank counter for various enquiries about their account.
Customers can save their valuable time and travelling cost in reaching the bank for their financial
transactions (Sunil and Durga 2013). Customers can pay their utility bills on time and save
themselves from paying penalties, since alerts are received from the bank. Ubiquitous access,
convenience and mobility are the main benefits that mobile banking confers to customer (Laforet
and Li 2005). Delport (2010) points out that with mobile banking customers no longer need to
use scarce time and resources to travel to bank branches. Nevertheless, despite the widespread
proliferation of mobile phones and the numerous advantages that mobile banking offers, mobile
banking is still not widely adopted (Riquelme and Rios 2010).

2.5 Factors Influencing Usage of Mobile Banking

Several theories are offered in order to identify factors that cause people to accept new
technologies and information systems and use them (Rao and Troshani 2007). The next section
presents some of these theories and based on that conceptual frame work for this particular study
is formulated.

2.5.1 Technology Acceptance Model (TAM)

TAM was first introduced by Fred Davis in 1989 to predict user acceptance of new technologies.
According to (Davis 1989), TAM suggests that perceived usefulness (PU) and perceived ease of
use (PEOU) are the two most important factors in explaining individual users’ adoption
intentions and actual usage. Davis (1989) defines perceived usefulness as the degree to which a
person believes that using a particular system will enhance his or her job performance.

Perceived Ease of Use refers to the degree to which the person believes that using the system
will be free of effort. TAM has been extensively tested and validated and is a widely accepted
model, which can be modified or extended using other theories or constructs according to author
in (Masinge, 2010) and its usage has captured the attention of IS community attested by the
authors in (Mathieson et al 2001). Masinge (2010) conducted a study on the factors influencing
the adoption of mobile banking services at the bottom of the pyramid (BOP) in South Africa, and
added perceived cost, trust and perceived risk constructs to TAM. The results of the study
revealed that perceived usefulness (PU), perceived ease of use (PEOU), perceived cost, and
customer’s trust had a significant effect on the adoption of mobile banking at the BOP while
perceived risk (PR) was found to have no significant effect. As a result of this many other models
of extension have been suggested by the authors in (Luarn and Lin 2005). The perceived
credibility, perceived financial cost and perceived self-efficacy has been adopted based on the
literature, as an extension of Technological Acceptance Model (TAM) to investigate and
understand the behavioral intention of users of mobile bankers (Luarn and Lin 2005).

Perceived usefulness is defined as the extent to which an individual believes that he or she
would benefit from using mobile banking. (Bhatti 2007; Kim, Chan and Gupta 2007) argued that
an individual often evaluates the consequences of their behavior and makes a choice based on the
desirability of perceived usefulness. Therefore, perceived usefulness will influence their
intention to accept and adopt a system. In the context of mobile banking, one of the reasons
people use mobile banking is that they find the systems useful to their transactions and saves
their time as well. Benefits are also observed by banks in the form of declining the number of
branches which reduces the cost per transaction. Perceived usefulness is found to be the most
significant factor influencing the intention to use mobile banking. This finding suggest that if
mobile banking is to be accepted by users, they should perceive it as a useful and quicker way of
doing banking transactions compared with the traditional banking system. (Luarn and Lin 2005)
found that perceived usefulness is a vital factor determining the mobile customer usage. (Wang
et.al 2003) also agree that most customers choosing mobile services because they see their
benefits. On another side, (Suoranta 2003) support that lack of awareness of its usefulness and
benefits realization are important factors which hinder mobile banking acceptance.

Perceived ease of use is also defined as the degree to which a person believes that using a
particular system would be free of effort. Prior studies show that perceived ease of use has a
significant effect on usage intention, either directly or indirectly through its effect on perceived
usefulness (Davis 1989; Venkatesh 2000; Venkatesh and Davis 1996). A system perceived to be
easier to use will facilitate more system use and is more likely to be accepted by users
(Venkatesh and Morris 2003). TAM points that perceived ease of use influence the innovation
acceptance. It decreases the effort paid in learning and applying new technologies. Many
researches give support to TAM that perceived ease of use has positive impact on perceived
usefulness and mobile services adoption (Porteous 2011, Ezeoha 2005). (Bong-Keun & Tom
2013) stated on their empirical investigation that perceived ease of use has a major significance
on the adoption of mobile banking. This finding suggests that customers seek a simple, easier,
faster process and
environment for banking transactions. It was also showed that perceived ease of use is a major
determining factor explaining the attitude difference between adopter and non-adopters toward
obile banking.
In the context of mobile banking, customers may find mobile banking services uneasy when the
system is not easy to learn and easy to use. Information such as details of products or services,
their benefits, and usage guidelines needs to be provided as it will make it easier for customers to
adopt mobile banking. Furthermore, perceived ease of use helps in building trust with banks as it
may send a signal that banks have really put in thought about their end users (Wang, Lin and
Tang 2003). Many previous empirical studies further show that perceived ease of use has a
positive influence in the adoption of mobile commerce (Khalifa and Shen 2008, Kim et al 2009;
Wei et al.2009).
2.5.2 Innovation Diffusion Theory (IDT)
Rogers (2003) identifies three characteristics of innovations: relative advantage, compatibility,
and complexity. Adopters have invariably been found to have different perceptions about these
characteristics in comparison with non-adopters. According to (Kotler 2000), the characteristics
of an innovation affect its rate of adoption. Some products catch on immediately, whereas others
take a long time to gain acceptance.
If the innovation is perceived to be better than the existing system (a measure of its relative
advantage), is consistent with the needs of the potential adopter (a measure of its compatibility),
and is easy to understand and use (a measure of its complexity), it is more likely that a favorable
attitude towards the innovation will be formed (Ching and Ellis 2004). Lee et al. (2005) found
that the perceived relative advantage, compatibility and complexity of the innovation played a
key role in the adoption of mobile banking. Therefore, this study identifies how these
characteristics of innovation influence the adoption of mobile banking in Ethiopia. The
remaining parts of this section identify these characteristics of innovations as established in prior
studies.
Chaipoopirutana, Combs, Chatchawanwan, and Vij (2009) and Lin (2011), claimed that the
adoption of mobile banking is ‘complex’ as it has the negative relation with intention to adopt
mobile banking. In this paper they have discussed the (Rogers 2003) innovation diffusion
model’s attributes: complexity, compatibility, relative advantage and triability and found that
Relative advantage, compatibility, ease of use (opposite of complexity) has a significant effect on
attitude to adopt mobile banking services. They have also suggested that compatibility has a
positive relation with the adoption of mobile banking. Customers have a favorable attitude
towards adopting mobile banking services, if they have positive belief about the relative
advantage of mobile banking. On the other hand, (Lee et al. 2005) performed eight interviews to
collect transcripts from participants and concluded that relative advantages and compatibility
were positive factors affecting the adoption of mobile banking.

Relative advantage describes the degree to which an innovation is perceived as being better
than its precursor (Rogers 2003). Gerrard and Cunningham (2003) identify a perceived relative
advantage as being a significant factor driving the adoption of mobile banking. According to
(Kotler 2000) when individuals pass through the innovation-decision process, they are motivated
to seek information in order to decrease uncertainty about the relative advantage of an
innovation. Potential adopters want to know the degree to which a new idea is better than an
existing practice. Hence relative advantage is often the content of network messages with regard
to an innovation. Relative advantage, in one sense, indicates the strength of the reward or
punishment resulting from the adoption of an innovation. There are a number of sub-dimensions
of relative advantage such as the degree of economic profitability; decrease in discomfort; time
saving; and effort (Rogers 2003). Relative advantage also refers to the comparative benefits that
a user of mobile banking may avail which he/she could not get from other traditional banking
services as mentioned by (Pikkarainen et. al 2004) that users are more likely to adopt mobile
banking if they believe using mobile banking will gain more relative advantages as compared to
other traditional banking channels such as ATM or non-mobile internet banking. It includes
perceived cost and time.
a) Perceived Cost Savings refer to the transaction cost of conducting mobile banking
transactions, including the airtime and bank charges. Perceived cost is defined as the extent to
which a person believes that using mobile banking will cost money (Luarn & Lin 2005). The
cost may include the transactional cost in the form of bank charges, mobile network charges for
sending communication traffic (including SMS or data) and mobile device cost.
b) Perceived Time Saving refer to the time required to complete a transaction. Lee (2009)
found in his study that time plays an important role in adopting mobile banking service by the
users. It has been observed by researchers that when user perceives relative advantage or relative
usefulness of a new technology over an old one, they tend to adopt it (McCloskey 2006; Rogers
2003). Therefore, mobile banking adoption is affected by the benefits available such as
immediacy, convenience and affordability to customers (Lin 2011).

Compatibility refers to the degree to which a service is perceived as consistent with users’
existing values, beliefs, habits and present and previous experiences (Chen et al. 2004).
Compatibility is defined as the degree to which an innovation is perceived as being consistent
with the existing values, past experiences and the needs of potential adopters. An innovation can
be compatible or incompatible with socio-cultural values and beliefs; with previously introduced
ideas; or with client needs for innovations (Rogers 2003). The compatibility of an innovation, as
perceived by members of a social system, is positively related to its rate of adoption.
Compatibility is a vital feature of innovation as conformance with user’s lifestyle can propel a
rapid rate of adoption (Rogers 2003). Study on compatibility is a significant antecedent in
determining customers’ attitude towards electronic banking adoption in Malaysia (Ndubisi and
Sinti 2006). Compatibility has further been found influential in the adoption of virtual store,
mobile payment and mobile banking (Koenig-Lewis 2010; Lin 2011). Al-Gahtani (2003) found
that compatibility had significant correlation with computer adoption and use.

Complexity is defined as the degree to which an innovation is perceived too easy to understand
and use. Adoption will be less likely if the innovation is perceived as being complex or difficult
to use (Rogers 2003). Complexity can be considered as the exact opposite of ease of use in the
Technology Acceptance model, which has been found to directly impact the adoption of the
Internet (Leaderer, et al. 1999). Customers will reject an innovation if it is very complex and not
user friendly. In this context, Cooper and Zmud (1997) report ease of use of innovative products
or services as one of the three important characteristics for adoption from the customer's
perspective. For example, the userfriendliness of domain names, navigation tools and the
graphical user interface are important determinants of the user-friendliness of a web page design.
Research by Davis (1989) has found that perceived complexity is associated with the adoption of
electronic technologies. Since mobile banking adoption is at the early stages of adoption in
Ethiopian banking industry the complexity factor will be included in perceived to ease of use
factor.

Observability Rogers (1995) argues that observability is the “degree to which the results of an
innovation are visible and tangible to others”. Liu and Li (2009) assert that the more it is easy to
describe and observe an innovation the more positive impact it will have on people which will
eventually encourage usage of the innovation. Cruz et al. (2010) affirm that probability of
adopting an innovation increases when the benefits and usage of innovation can be easily
observed.

Trainability is defined as the “degree to which an innovation can be tried on a limited basis
(Rogers 1995). As per Rogers, there is faster adoption of new ideas when these can be tried
before their full implementation whilst adoption tend be slower where prior trial is not possible
(Puscel et al. 2010). Tan and Teo (2000) assert that if given the opportunity to evaluate
innovation, customer minimize the particular concerns of the unknown, which led to acceptance.
Therefore, repeating the evaluation and assistance in the use of mobile banking during the trial
period can reduce the uncertainty about mobile banking, eventually creating positive customer
attitudes to using mobile banking. Trainability can also be viewed as the degree to which an
innovation may be experimented with on a limited basis (Huisman and Iivari 2006) This research
used an extended TAM containing the following constructs – perceived usefulness, perceived
ease-of-use, perceived trust and awareness and also three IDT constructs relative advantage,
perceived risk and compatibility to explore the adoption of mobile banking. Therefore; the
research integrated the TAM and IDT along with trust and awareness to investigate the main
factors influencing mobile banking adoption. The additional TAM constructs perceived risk,
awareness and trust as indicated in different literatures are stated as follows.

Perceived risk is the “uncertainty about the outcome of the use of the innovation” (Gerrard and
Cunningham 2003). Perceived risk as defined by (Pavlou 2001), “It is the user’s subjective
expectation of suffering a loss in pursuit of a desired outcome”. The quality of electronic services
offered with the possible risk of illegal activities and fraud has always been a concern for both
customer and service providers (Ba and Pavlou 2002). On a study conducted by (Masinge 2010)
on the factors influencing the adoption of mobile banking services at the bottom of the pyramid
(BOP) in South Africa, perceived risk, perceived cost, trust was added to constructs of TAM. In
the study, the risk factor as perceived by bank customers in electronic transactions may comprise
of five facets of security/privacy risk, performance risk, time/convenience risk, financial risk and
social risk.
According to (Lee 2009), performance risk refers to the loss incurred by malfunctioning of
mobile banking servers. Security/privacy risk refers to a potential loss due to fraud or a hacker
compromising the security of a mobile banking user. Time risk refers to the loss of time and any
inconvenience incurred due to the delays of receiving payments or the difficulty of navigation.

Social risk refers to the possibility that using mobile banking may result in disapproval by one’s
friends, family, or work group. Financial risk refers to the potential for monetary loss due to
transaction errors or bank account misuse.

According to (Dineshwar and Steven 2013), perceived risk and reliability were found to be the
main obstacles to mobile banking usage in the African country of Mauritius. Risk in mobile
banking is perceived to be higher than conventional banking because information exchange on
wireless infrastructure, which produced inherent doubts among customers as hacking and other
malicious attacks, might cause financial and personal data loss. Further an empirical analysis
conducted by (Cheah, et al. 2011) on factors affecting Malaysian mobile banking adoption
perceived risks was found to be negatively associated with mobile banking adoption.

Perceived Trust According to (Gefen 2003), trust is defined as “a psychological state

comprising the intention to accept vulnerability based upon positive expectations of the
intentions or behavior of another”. Trust is important because it helps customers overcome
perceptions of uncertainty and risk and helps build appropriate favorable expectations of
performance and other desired benefits. In any business or commerce deal trust is an important
element. When dealing with technological and information technology enabled system for
commerce activities like electronic commerce and mobile commerce then it is important to
comprehend about the security and privacy concerns (Howcroft Hamilton & Hewer 2002;
Hosein 2011). Trust can be developed through spreading the right information and giving
customers or users of mobile banking furnished details about the mobile commerce system to
ensure the easily manageable use of mobile banking system (Pavlov 2003). A study by
(Bhattacherjee 2002) provided a definition and measurement of the customer’s trust of an e-
commerce service provider, based on the three dimensions or typology of trust: ability, integrity
and benevolence. (Bhattacherjee 2002) defined these as follows:

• Ability refers to the perception of the customer about the competency and salient
knowledge
of the mobile banking service provider to deliver the expected service;
• Integrity refers to users’ perceptions that the service provider will be fair, honest and
adhere to reasonable conditions of transactions;
 • Benevolence refers to the extent to which a service provider will demonstrate receptivity
and empathy towards the user. The service provider will make a good faith effort to
resolve users’ concerns and intends to do good to the users beyond profit motives.
Customers’ confidence about privacy and security of a system may significantly influence
adoption and usage of mobile banking. In this study, trust is defined as the extent to which an
individual believes that using mobile banking is secure and has no privacy threats. Perceived
Trust therefore is an important construct which affects customer behavior and determines the
success of mobile banking adoption (Wei et al. 2009). (Sadi and Noordin 2011), in an
exploratory analysis of the factors influencing adoption of M-commerce in Malaysia reveals that
rust identified as a key factor influencing the adoption of M-commerce. A similar study carried
out by (Mashagba et al 2013) revealed that trust, risk and security had an effect on mobile
banking adoption Security and privacy are found to be the major obstacle in adoption of
electronic based banking activities. Customers tend to use those facilities which they believe to
be the secured one and which are from some credible source. People generally first think about
the trustworthiness of communication network and then about the service provider (Yeh & Li
2009). Many researchers have found privacy and security that concerns which encompasses the
trust factor, is found to be the most important and significant factor impeding the adoption of
mobile banking activities (Horton et al. 2002; Gunsaekaran&Ngai 2003; Nasri 2011). he trusting
intention represents users' willingness to engage in subsequent transactions with the service
provider (Bhattacherjee 2002). The higher levels of trust in a service provider will therefore lead
to a greater intention on the part of user to engage in mobile banking transactions (Gu, Lee &
Suh 2009; Lee et al. 2007).

Awareness The level of information customers have on mobile banking is one of the major
factors impacting the adoption and usage of online banking according to the author in (Sathye
1999). The research
further states that the adoption rate of an innovation could be determined by level of awareness
of the customers. The use of mobile banking services is new to many customers and the banks
need to create enough awareness to capture the attention of the customers.

Adoption is the acceptance and continued use of a product, service or idea. According to (Sathye
1999), customers go through “a process of knowledge, persuasion, decision and confirmation”
before they are ready to adopt a product or service. The adoption or rejection of an innovation
begins when “the customers become aware of the product”. Hence for adoption of mobile
banking, it is necessary that the banks offering this service make the customers aware about the
availability of such a product and explain how it adds value relative to other products of its own
or that of the competitors. Customers must become aware of the new brand or technology. An
important characteristic for any adoption of innovation service or product is creating awareness
among the customers about the service or product (Sathye 1999). Awareness creation speeds the
sales of products and evidences from different participants, lay credence to this. The level of
awareness (Palvia 2009) is an important factor in encouragement of consumers to adopt related
self service facilities. The amount of information customers has about online banking has been
identified the major factor impacting the adoption. According to (Sathye 1999) while the use of
online banking service is fairly new experience to many people, low awareness of online banking
is major factor in causing people not to adopt online banking. In an empirical study of Australian
customers found that customers were unaware about the possibilities, advantages or
disadvantages involved in online banking.

2.6 Services Available on Mobile Banking

Mobile Banking, as defined above, includes a wide range of services. According to (Tiwari &
Stephan 2007) these services may be categorized as follows:

2.6.1 Mobile Accounting

Tiwari & Stephan (2007) defined mobile accounting as transaction-based banking services that
revolve around a standard bank account and are conducted and/or availed by mobile devices. Not
all mobile accounting services are however necessarily transaction based. Mobile accounting
services may be divided into two categories to differentiate between services that are essential to
operate an account and services that are essential to administer an account (Renju 2014).
Moreover, additional services are required that inform a customer about his/her transactions and
other activities involving their account. It is for this reason that Mobile Accounting is offered
almost regularly in combination with services from the field of Mobile Financial Information.

2.6.1.1 Account Operation

The term Account Operation, as used in this study, refers to an activity that involves monetary
transactions. Such transactions may involve an external account and/or internal account. Mobile
services that are used to operate an account are (Tiwari & Stephan 2007).
• Money remittances: - Mobile devices may be used to instruct the bank to remit money
in order to conduct one-time transactions, such as paying bills or transferring funds. This
service can also include the facility to cancel an ordered remittance.

• Issue standing orders: - The house bank may be entrusted with standing orders for
payment of regularly recurring payments such as payment of standing payments, monthly
rent or telephone bill.

• Transfer funds to and from sub-accounts: - Funds from one sub-account may be
transferred to another as and when needed, for instance from a savings account to
checking or other types of account and vice versa (Sunil and Durga 2013).
 • Subscribing insurance policies: - Standardized, low-cost insurance policies like travel
insurance policy may be purchased via mobile devices. This service could be particularly
attractive in time-critical situations, for instance, if a bank customer has to set out on an
urgent, unplanned journey, he may still be able to subscribe to a travel insurance policy
offered by his house bank.

2.6.1.2 Account Administration

The term Account Administration refers to tactical situations, for instance, if a bank customer
has to set out on an urgent, unplanned journey, he may still be able to subscribe to a travel
insurance policy offered by his house bank. This may involve activities like access
administration and cheque book request. Mobile Accounting services that are used to administer
the account are (Tiwari & Stephan 2007), (Sunil and Durga 2013):
• Access administration: - Mobile devices may be used to administer the access to an
account, for example to change the individual PIN or to request new transaction
numbers.

• Change operative accounts: - Through this service a customer can change his default
operative account and do transactions using a different account. This option is attractive
for customers holding several sub accounts. Funds of sub-accounts may be hereby
utilized in a targeted manner without first transferring the amount to the default account.

• Blocking lost cards: - Mobile non-voice telecommunication systems such as Wireless

Application Protocol, Short Message Service (WAP, SMS) can be used round the clock
to speedily block lost credit and debit cards irrespective of the current geographic
location.

• Cheque book request: - Instead of going personally to the bank, the customer can
request for a cheque book to be mailed to his or her address as per the records of the
bank. This saves his/ her valuable time (Sunil and Durga 2013).

• Bill Payment: - for those companies which register with the bank for this service, the
payment is made on request on mobile phone banking.

• Change of Primary Account: - the customer has the option to change the primary
account to another new account number for carrying out transactions (Sunil and Durga
2013).
2.6.2 Mobile Financial Information
Mobile Financial information refers to non-transaction-based banking- and financial services of
informational nature (Tiwari & Stephan 2007). This sub-application may be divided into two
categories: Account information and Market information (Cruz et al. 2010).

2.6.2.1 Account Information

The term Account Information refers to information that is specific to a customer and his bank,
even though it does not necessarily involve a monetary transaction. Mobile services that belong
to this category are:
• Balance inquiries: - mobile devices may be employed to check the current financial
status of own bank or securities accounts (Sunil and Durga 2013).

• List of latest transactions: - mobile devices may be used to request a list of the latest
transactions performed on an account. This service works with a standard, pre-specified
number of latest transactions that are reported, as and when demanded. Most of the banks
provide a list of transactions.

• Statement request: - unlike the request for a list of latest transactions, it generates a list
of all transactions in a given period, for instance in a week or in a month. Statements may
be requested either manually, as and when needed electronically. With Mobile Banking
the account statements can be requested via and/or delivered on mobile devices (Cruz et
al. 2010).

• Transaction and balances: - the bank may be instructed to automatically alert the
customer via SMS whenever transactions (credits as well as debits) exceeding a certain
amount are performed on the account. In addition, a similar threshold alert may be
activated for the balance status of the account. The customer may be informed via SMS
whenever the balance falls below a certain predefined level. This service may be useful to
help the customer avoid unpleasant situations by not being able to honor his
commitments (Cruz et al. 2010).

• Threshold alerts for stock prices: - the bank may be instructed to send an alert on
mobile devices, via SMS, when prices of some particular stocks fall or jump to a
predefined threshold value and ask for further instructions (Suoranta and Matila 2004).
 • Returned cheques or cheque status: - the customer may be informed without time delay
if one of her or his deposited cheques has not been honored and corrective steps are
required.

• Credit card information: - the customer may check anytime and anywhere the current
status of his credit cards and the amount that he may utilize at that given point of time.

• Branch and ATM locations: - mobile devices may help finding the nearest branch or
ATM affiliated with a bank. The current location of the customer may be determined by
positioning the mobile device. This service may be particularly useful while travelling
(Crosman, 2011).

• Helpline and emergency contact: - mobile devices may be provided with content that is
required in emergency situations, for instance to block a lost credit card and cheque book.
The information may be either embedded in the telephone menu, for example in
cooperation with a network carrier or the information may be provided on a WAP page
analogue to a web page.
• Information on the completion statutes of an order: - the bank may use “push”
services to inform the customer via his mobile device regarding whether or not his orders
could be carried out. This ensures that urgent information can be provided to the
customer while on the move.

• Product information and offers: - the bank can provide information about its products
and new offers to a customer on the move. A customer can “pull” the information that he
wishes to access. On the other hand, the bank can “push” the information or offers that
the customer has identified as interesting and is willing to receive.

2.6.2.2 Market Information

The term Market Information as opposed to Account Information refers to information with a
macro scope. This information is not directly related to the customer account. It is generated
either externally like exchange rates or central bank’s interest rates, or internally by the
individual bank (Tiwari & Stephan 2007), for example bank-specific interest rates. The
individual bank customer does not play a direct role in this process. The information may be later
sorted out to cater the individual needs and preferences of a particular customer, if so desired by
him, and subsequently delivered to a mobile device of his choice, or a PDA. Information in this
category generally concerns: Foreign exchange rates, interest rates, Stock market news and
reports and
Commodity prices (For example: - Gold and raw materials)

2.7 Technologies Employed to Provide Mobile Banking Services

Customers can use mobile banking technologies for various banking services ranging from
planning to pay their bills via their cell phones. Mobile technologies used in the mobile banking
include the browser-based applications, messaging-based applications and client-based
applications (Kim et al. 2009; Tiwari & Buse 2007).

2.7.1 SMS (Short Message Service)

On the messaging-based applications, the communication between the bank and the customer is
carried out via text messages. For example, by using a registered mobile number, the customer
sends a predefined command to the bank, and then uses text messages to conduct transactions
with the bank. An example of messaging-based applications is the Unstructured Supplementary
Service Data (USSD), which has compatibility with most mobile phones. Existing mobile
banking applications based on USSD includes WIZZIT in South Africa (WIZZIT 2005),
MPESA in Tanzania (Camner & Sjoblom 2009), M-PESA in South Africa (Nedbank 2010b) and
FNB mobile banking (FNB 2010). The term “SMS Banking” refers to the provision of banking
and financial services via means of text messaging service, known as SMS. SMS allows the
financial institutions to communicate with their customers. Almost all mobile phones have the
ability to use SMS; SMS is so suitable for sending messages from banks for a number of banking
operations. In order to create a query, the customer sends an SMS containing the service request
to a special number which is considered for this purpose. The customer sends a customized SMS
(a command based instructed with Arabic number) to the bank with the predefined commands for
each offered service. The server of the bank receives the SMS, interprets the commands and
executes commands and instructions, if the request is found to be authorized. The authentication
is carried out with the help of a special Mobile Banking, Personal Identification Number
(MPIN). Furthermore, the requests are only accepted from a mobile phone number that has been
registered as the authorized number of operating that particular bank account. With the
integration made with the mobile banking server one can get all the financial and non-financial
information. After completion of the whole process, the information will be gathered in the
oracle database for future reference. For example: - Dialing to 889, Inserting the command and
the PIN, Navigation of the financial or non-financial information, Logging off.

2.7.2 Browser-Based
The browser-based application is essentially a Wireless Access Protocol (WAP)-based internet
access (Kim et al. 2009). This requires a compatible mobile phone which is WAP-enabled. The
mobile phone is used to access banking portals through the Internet. Brower-based customer
needs to be connected to the internet to use this service. The interface is generated from the
server which is transported to mobile device, and this allows the content to be displayed through
the browser. This method is extremely fast depending on the server that the customer is
connected to but one its disadvantages is that, it requires the subscriber (customer) to stay online
all through the transaction process and could lead to higher cost for the customers.

2.7.3 Client-Based (Downloadable Applications)

This method requires the customers to use software installation, and this will serve as a user
interface that can allow customers to use the mobile device while offline to access some basic
transactions before going online. Typing details before connecting to the internet could reduce
cost. This client based application is particularly useful because it allows customers to stay
offline and while preparing transaction such as entry of account details and afterwards the
transmission is made by sending out the data, this banking process conducted offline reduces
online connection time and cost (Pendharkar 2004). These are mobile banking applications that
the users should download on their phone. Using the properties of these applications,
transactions can be encrypted completely in both source and destination. Since this software has
been designed for special purposes, mobile banking application designers can optimize the
applied interface for the financial transactions. The independence of application is one of the
advantages of these applications for financial institutions (Ming 2007). Once customers have
downloaded the software on their phone, they can use the Mobile Banking application. In other
words, the application should be compatible with the various needs and functions for a large
number of mobile phones and this is expensive. The phone should also support one of the
environments such as the Microsoft Windows Mobile. Another problem of mobile banking
applications is that the customers should download the software, install it on their devices, and
update its new versions, and maybe this is a new problem for some of the customers.

Empirical Review
Several studies have been conducted on mobile banking and the performance of commercial
banks overall the world. From those studies, the researcher tried to review some from Ethiopia,
Africa and the rest of the world.
Kalkidan Gezahegn (2016), studied on factors influencing usage of mobile banking in Addis
Ababa, Ethiopia. Her study tried to build on two widely used models for technology adoption,
the Technology Acceptance Model (TAM) and Innovation Diffusion Theory and to identify
factors influencing customer's usage of mobile banking. The research results found relative
advantage, compatibility, perceived trust, perceived usefulness, and perceived risk as major
influencing factors for mobile banking adoption whereas perceived ease of use and awareness
were found to have insignificant effect on mobile banking usage for bank customers located in
Addis Ababa, Ethiopia. The study recommended banks to consider investing in campaigns and
arranging information sessions to demonstrate the features of mobile banking services, and its
benefits over traditional channels.
Pako Maradung (2013), also studied on Factors affecting the adoption of mobile money
services in the banking and financial industries of Botswana. His study set out to investigate
factors affecting the adoption of mobile money services in the banking and financial industries of
Botswana in the light of the Technology Acceptance Model (TAM) and demographic variables
(that is, age of individuals, income, education level, bank account) from mobile money service
adoption literature. The analysis of the results revealed that gross income and ownership of bank
accounts appeared to be insignificant in determining the use of mobile money services in
Botswana. However, the age of individuals did seem to be significant in determining whether an
individual used mobile money services or not, with more young people preferring to use mobile
money services than older people.
Farhana Yasmin (2014), researched on Factors Influencing the Adoption of Mobile Banking:
Perspective Bangladesh. The paper focused on trust, perceived cost and perceived risk including
the facets of perceived risks: performance risk, security/privacy risk, time risk, social risk and
financial risk. The research model includes the original variables of extended technology
acceptance model (TAM). The research has found that customers will consider adopting mobile
banking as long as it is perceived to be useful and easy to use. But the most critical factor for the
customer is cost; the service should be affordable. Trust was found to be significantly negatively
correlated to perceived risk. Thus, trust plays a role in risk mitigation and in enhancing customer
loyalty.
A research conducted by James Mwendwa, Dr. Odiek and Dr Douglas (2014), on The Effects
of Mobile Money Services on the Performance of the Banking Institutions: A Case of Kakamega
Town, focused on to examine how various mobile money services transactions’ impact on the
performance of banking institutions in Kakamega town. From the findings of the study; it can be
inferred that the introduction of mobile money services has contributed positively to the financial
performance of the banking institutions. Convenience and reliability of various mobile money
services has largely led to increased customer satisfaction and loyalty despite occasional
technical itches that prove disappointing to the customers. Basing on the study findings, the
following recommendations are forwarded; The bank should conduct research on other possible
mobile money services packages that are user friendly and develop them so as to enable
deposit/withdraw of money using mobile phone which will meet different customer requirements
and capture market niches that competitors have not identified hence expand on the market share
leading to improved financial performance. Free training and refreshing training should be
provided to staff of the financial institution and if possible to customers to equip them with skills
in the ever changing technology.
A research conducted by RACHAEL W. MUTUA, in Kenya on EFFECTS OF MOBILE
BANKING ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN
KENYA focused on determining the effect of mobile banking on the financial performance of
commercial banks in Kenya. The researcher used descriptive research design. The study found
that there exists a weak positive relationship between mobile banking and the financial
performance of commercial banks in Kenya. The study recommends that the policy makers take
mobile banking awareness creation into consideration when drafting policies on the operations of
banks in Kenya. This was because of the indirect relationship of mobile banking and financial
performance especially as the industry moves into a technologically competitive environment.
The study also recommends that policy makers keep a keen eye on the developments of mobile
banking as it is a new platform for competition among commercial banks as the world moves
into a digital age to ensure it does not lose its regulatory role.

Research Gap
There have been a number of valuable studies in the area of mobile banking over the year’s back
in North America, Europe, Asia and some from African countries such as Kenya, Ghana, Nigeria
and Zimbabwe presented evidence for a number of variables that influenced customer behavior
intention to use mobile banking and its challenges and perspectives, however the study of mobile
banking has been given little attention in literatures in Ethiopia. As per the researcher knowledge
there is no study conducted with regards to assessment of challenges and prospects of mobile
banking adoption in commercial bank of Ethiopia, shashemene town. So, to specify the gap of
the research,
 The previous researches were conducted mainly outside Ethiopia like Africa and Asia and
the studies conducted in Ethiopia mainly focus on urban areas like Addis Ababa.

 The scope of previous studies is vast and intended to cover large scale of geographical area.
But this study covers only challenges and prospects of m-banking CBE shashemene district.
 CHAPTER THREE
Research Methodology
3.1 Research Design
A research design is the conceptual structure with in which research is conducted; it constitutes
the blue print for the collection, measurements and analysis of data as such the design includes
on outline of what the researcher will do from writing the hypothesis its operational implications
to the final analysis of data (Kothari, 2004).
The general objectives of this study will be to assess the challenges and prospects of mobile
banking in commercial bank of Ethiopia shashemene district. So, this study will adopt Mixed
research approach which is both qualitative and quantitative. Qualitative research designs are
usually meant for researches that require depth instead of breath and is concerned with subjective
assessment of attitudes, opinions and behavior. while quantitative research design involves the
generation of data in quantitative form which can be subjected to rigorous quantitative analysis
in a formal and rigid fashion (Kothari, 2004). Therefore, mixed research approach which
contains both qualitative and quantitative research approaches will be the right to use.
In order to answer the statements of the problem and meet the research objectives, the design of
the study will be descriptive type. Descriptive research studies are those studies which are
concerned with describing the characteristics of a particular individual, or if a group (Kothari,
2004).

3.2 Sample Design

A sample design is a definite plan for obtaining a sample from a given population. It refers to the
technique or the procedure the researcher would adopt in selecting items for the sample. Sample
design may as well lay down the number of items to be included in the sample i.e. the size of the
sample. Sample design is determined before data are collected (Kothari, 2004). In order to
undertake the study, we will use probability and non-probability sampling design, purposive
sampling for the employees and simple random sampling to select respondents. Nonprobability
sampling is that sampling procedure which does not afford any basis for estimating the
probability that each item in the population has of being will be included in the sample. In this
type of sampling, items for the sample will be selected deliberately by the researcher; his choice
concerning the items remains supreme (Kothari, 2004). Meanwhile, Probability sampling is also
known as ‘random sampling’ or ‘chance sampling’. Under this sampling design, every item of
the universe has an equal chance of inclusion in the sample (Kothari, 2004).
3.2.1 Study Population
A population is a group of individuals, persons, objects or items from which samples will be
taken for measurement (Kothari, 2004). In order to meet the research objectives, a given amount
of sample size need to be taken from the total population of employees of CBE and customers as
well. There are currently 66 employees for CBE shashemene district. In regard to customers of
commercial bank of Ethiopia, the total population from both branches average per day users will
be 100 then the total population is 166. From the average 100 per day users, the researcher will
target only 80 users and from 66 the 57 employees will be taken based on sample size formula,

3.2.2 Sample Size

Sample size refers to the number of items to be selected from total population to constitute a
sample (Kothari, 2004). From the above target population of employee and users, 57 and 80
respectively, 57 employees (41.60% of the target population) and 80 users will be selected
totaling the sample size 147. In regard to sampling customers, it is better to use scientific way to
calculate sample from the target population.
The researcher will use the following formula to determine the sample size of customers from
the target population of 100.
n= sample size
N= population
e = error (10%)
Sample size for customers
N
n=
1+ N ( e )2
100
n=
1+100 ( 0.05 )2
n = 80
Sample size for employees
The researcher will use the following formula to determine the sample size of employees from
the target population of 66.

N
n= 2
1+ N ( e )
66
n= 2
1+66 ( 0.05 )
n = 57
3.2.3 Sample Selection Techniques
As stated in the sample design, we will use non-probability and probability sample design. Non-
probability sampling technique will be used for the employees of commercial bank of Ethiopia.
The reason is, among the total employees the we will select those employees who have
knowledge and skill toward mobile banking usage and service. This will do by deliberately
selecting those who are related to the matter. In short non-probability sampling is that sampling
procedure which does not afford only basis for estimating the probability that each item in the
population has of being included in the sample. It is also known by different names such as
deliberate sampling, purposive sampling and judgmental sampling. Items for the sample are
selected deliberately by the researcher; his choice concerning the items remains supreme
(Kothari, 2004). On the other hand, the researcher used probability sampling technique
especially simple random sampling technique to select customers of CBE. This is because, CBE
provides its services to its customers equally on a routine manner so, all customers are treated
equally and selected through probability simple random sampling technique. Probability
sampling is defined as ‘random sampling’ or ‘chance sampling’. Under this sampling design,
every item of the universe has an equal chance of inclusion in the sample. It is, so to say, a
lottery method in which individual units will be picked up from the whole group not deliberately
but by some mechanical process (Kothari, 2004).

3.3 Survey Design

The task of data collection will begin after the research problem defined and research design will
be chalked out while deciding about the method of data collection to be used for the study, the
we will keep two types of data, primary and secondary (Kothari, 2004).

3.3.1 Source of Data

The study will be conducted by collecting data from primary sources. Primary data are those
which are collected fresh and for the first time, and thus happen to be original in character.
(Kothari, 2004). Primary data will be collected from the staffs of the commercial banks based on
some structured and unstructured designed questionnaires, which included both closed-ended
and open-ended questions which will provide the respondents an adequate expression of their
views on the questions. In addition, semi-structured interview will be used in order to get
sufficient and reliable data and to substantiate and improve the results of questionnaires.
 3.3.2 Data Collection Methods
In order to collect sufficient data so as to answer the research questions the we will use data
collection instrument like; questionnaire to get quantified results.
Questionnaires will consist of a number of questions printed or typed in a definite order on a
form or set of forms (Kothari, 2004). In this study structurally designed questionnaire will be
used. Which will include both close-ended and open-ended questions which will help the
respondents express their views deeply.

3.4 Data Analysis Method

The data, after collection, will be processed and analyzed in accordance with the outline laid
down for the purpose at the time of developing the research plan. Technically speaking,
processing implies editing, coding, classification and tabulation of collected data so that they are
amendable to analysis (Kothari, 2004). The relevant information will be obtained in a standard
form using tables, frequencies and percentages to analyze and interpret the information. The
results will be in charts and tabular figures. Those will ensure easy understanding of the analysis.

Chapter-Four
4.budget breakdown and work plan
4.1 Budget breakdown
No Material requirement Unit cost(birr) Number of units Total cost
. required
1 Pen and pencil 15&8 3&1 53

2 Flash memory 400 1 400

3 Paper 1200 1 package 1200
4 Telephone expense 100 3 300
5 Bag 1000 1 1000
6 Questionnaire and duplication 10 40 400
7 Transportation 100 4 400
8 Typing and printing 10 40 400
9 Miscellaneous cost 200
Total 3,953
4.2 work plan
No Activities Months Remarks
Jan Feb March April
1 Problem identification x x
2 Selecting the research topics x x
3 Literature review x x
4 Develop proposal x x
5 Submission of 1st draft proposal x x
6 Final draft submission of x x
proposal
7 Data collection x x
8 Data edition x x
9 Data analysis x x
10 Data summary write x x
11 Submission of essay report 1st x x
draft
12 Write up finding and x x
incorporating comment
13 Finalizing the research report x x
14 Submission of essay report final x x
draft
15 Defense x x