Electronic Banking in Ethiopia: Practices, Opportunites and Challenges

Abstract

The paper examines the practices, opportunities and challenges of E-banking services in Ethiopia. Ethiopian banking system is still underdeveloped compared to the rest of the world. In Ethiopia Cash is still the most dominant medium of exchange and electronic payment systems are at an embryonic stage. Commercial Bank of Ethiopia (CBE), despite, being the pioneer in introducing ATM based payment system; it lagged behind private commercial bank, Dashen Bank, which worked aggressively to maintain its lead in electronic payment systems. At the end of June 2009, Dashen bank has installed more than 40 ATMs in its area branches, university compounds, shopping malls, restaurants and hotels and has maintained its leadership in introducing and expanding e-banking in Ethiopia. Low level of infrastructural development, lack of suitable legal and regulatory framework, high rates of illiteracy, frequent power interruption and security issues are the main challenges for developing e-banking in Ethiopia. All banks in Ethiopia are too late to move with technological advancement. In order to promote and develop viable e-banking in Ethiopia, they should clearly chart out the time schedule for their integration and technological advancement.