THE IMPACT OF INFORMATION TECHNOLOGICAL INNOVATION ON FINANCIAL PERFORMANCE OF CBE (COMMERICAL BANK OF ETHIOPIA) IN Aksum, TIGRAY REGION

Abstract

This thesis investigates the relationship between technological innovation and the financial performance of Commercial Bank of Ethiopia in the Aksum, Tigray Region. The study evaluates key financial metrics, including return on assets (ROA), return on equity (ROE), and net profit margin (NPM), to assess the impact of innovations like mobile banking, ATMs, and electronic fund transfers (EFT) on profitability, efficiency, and risk management. The banking sector has been significantly transformed by technological advancements, redefining how services are delivered and managed. While global studies suggest a positive impact of these innovations, this research focuses on a local context where the relationship between technology and financial outcomes has been underexplored. A quantitative research design was used, with data collected from 4 Commercial Bank of Ethiopia, employing multivariate regression analysis to determine the effects of technological innovation on financial performance. The findings indicate a positive correlation between technological innovation and financial performance, particularly in the areas of mobile banking and ATMs, which have significantly boosted ROA and profitability. However, challenges such as the cost of technology implementation and regulatory pressures limit the extent of these benefits. In conclusion, technological innovation is essential for enhancing the financial performance of Commercial Bank of Ethiopia. Recommendations include increased investment in customer-centric technologies and addressing barriers to innovation. The study provides insights for Commercial Bank of Ethiopia, regulators, and policymakers in maximizing returns from technology adoption.