Towards the Development of a Framework for improving Internet banking in Kenya

Abstract

Internet banking IS a primarily a recent technology that enables customers access banking services and transact remotely through the Internet (WWW) using computers or other hand-held devices. The concept has gained popularity in developed countries and to a lesser extent in developing countries. Internet banking has the potential of time and cost savings to banks and customers hence our interest in the subject. The ultimate goal of our study was to develop a framework for improving Internet banking business in Kenya. Towards achieving this goal, the research set to examine the value of Internet banking in bank-customer relationship as well as appreciate the issues customers faced in their use of the service. Using these key customer issues, suitable technology considerations were proposed to mitigate.for increased customer satisfaction. The research therefore took a customer facing approach in proposing the framework. Literature review identified key models notably UTAUT, forces responsible for increasing and competitive change in the banking industry and Internet portal quality that formed the basis of our proposed framework. A survey was planned involving commercial banks and their customers. Data was collected using questionnaires followed by interviews for additional information. 1,0l3 questionnaires were distributed of which 615 useful responses received (60.7% response rate). The data was analyzed using frequency, percentage, means as well as regression and correlation analysis. Analysis of the results established that 70% of banks that participated confirmed that Internet banking was of strategic value in their bank-customer relationship and 12 of them were actually offering the service. Furthermore, only 28% of the identified Internet banking products had been implemented. Customers used Internet banking more for obtaining financial information and less for transactional needs. Favourable economic climate and increasing customer demands for better, cheaper and convenient services served to push banks towards rolling out Internet banking. Support for Internet banking transactions was the biggest challenge consumers of the service faced followed by slow systems and issues of security and trust. A generic framework for improving Internet banking was eventually proposed based on identified technology considerations to address these service gaps.