THE IMPACT OF DIGITAL BANKING ON CUSTOMER SATISFACTION: A COMPARATIVE STUDY OF TRADITIONAL AND DIGITAL BANKING IN CASE OF COMMERCIAL BANK OF ETHIOPIA IN ALEM BANK, ADDIS ABABA, ETHIOPIA

Abstract

This study investigates the impact of digital and traditional banking service determinants on customer satisfaction, focusing on selected public and private commercial banks in Ethiopia. A quantitative research design was employed using a structured questionnaire administered to 350 customers. Data were analyzed using descriptive statistics, correlation analysis, and multiple regression models to identify the most influential factors affecting satisfaction levels. The findings revealed that all six determinants have varying degrees of influence on customer satisfaction across digital and traditional banking platforms. In digital banking, service quality, ease of use, transaction speed, and customer support were found to be statistically significant contributors to customer satisfaction. In contrast, in traditional banking, service quality, customer support, and trust were more dominant. The grand mean scores showed that digital banking had slightly higher ratings for ease of use and satisfaction (grand mean = 4.12), while traditional banking was rated higher for trust and in-branch service quality (grand mean = 4.15). The regression model indicated a high explanatory power (R² = 0.875), demonstrating that the independent variables collectively explain a substantial portion of the variance in customer satisfaction. The regression analysis revealed that in digital banking, service quality, ease of use, transaction speed, and customer support were statistically significant predictors of customer satisfaction. For traditional banking, the significant variables were service quality, customer support, and trust, highlighting the importance of both efficient service and relational factors in shaping satisfactionThe study recommends that banks adopt an integrated service delivery model that combines technological efficiency with human-centered service to maximize customer satisfaction and loyalty in a competitive banking environment.