Digital Transformation In Ethiopian Banking Industry: Challenges And Drivers: The Case Of Selected Commercial Banks

Abstract

Digital transformation in the banking and finance industry brings associated challenges including cyber security threats, business model disruption, regulatory challenges, integration problems, data management barriers, and cost implications obsolete and technology change. Thus, this study aims to investigate the challenges and drivers associated with digital transformation in the bank finance system. This study employed a concurrent research design, quantitative and qualitative approaches, stratified random sampling used to select banks and customers, and purposive sampling techniques used to select interviewees. It also used questionnaires and interviews as data collection methods. The study also used descriptive, regression, and qualitative data analysis techniques. The findings of the study reveal that the current status of digital transformation is at the infant stage which requires investment in digital technologies, enhanced digital channel utilization, and improvements in technological infrastructure. Likewise, the finding shows that monetary policy decisions, competitive pressures, adaptability to market dynamics, technological advancements, regulatory compliance, customer expectations, and business sustainability are the driving forces to adopt digital transformation. Conversely, legacy system integration, accurate data migration, data security, and encryption, building customer trust, maintaining data privacy, data security concerns, competitive pressures, and ensuring a positive user experience are the major challenges in the current digital transformation. To conclude, the current status of digital transformation needs improvement, key driving forces are diverse, and challenges are multifaceted and require collaboration tasks. Thus, banks should work to improve the current digital transformation, align their strategies with the current driving issues, and eliminate challenges to realize digital transformation in the Banking-finance system.