Abstract

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.

Abbreviation

ATM, Automated Teller Machines; CSA, Central Statistical Agency; DB, Dashen Bank; EPRDF, Ethiopian People Revolutionary Democratic Front; ETB, Ethiopian Birr; FY, Fiscal Year; ICT, Information Communication Technology; IT, Information Technology; NBE, National Bank of Ethiopia; PIN, Personal Identification Number; POS, Point of Sales; SMS, Short Messaging Service; SNNPR, Southern Nations, Nationalities and Peoples Region; UB, United Bank.