Factors hindering consumer adoption of internet banking in commercial banks in Kenya
Abstract
In the face of rapid expansion of electronic payment (E-payment) systems throughout the
developed and the developing world, Kenyan financial sector cannot remain an exception in
expanding the use of the system (Gardachew, 2010). The increasingly competitive
environment means that there is pressure to stabilise or market internet banking (IB) to be
adopted and accepted by all. It was expected that large organisations would be able to
pioneer these services due to their availability of resources and skills. (Daniel, 1999).
E-banking has enabled banking institutions to compete more effectively in the global
environment by extending their products and services beyond the restriction of time and
space (Turban, 2008). However, mirroring the development of E-commerce, the adoption
and diffusion of electronic banking (E-banking) system is not well developed in Kenya.
This study sought to fill the existing research gap by conducting a study to determine factors
hindering consumer adoption of internet banking in Kenya. This study adopted a descriptive
survey. The target population of the study was 44 Commercial Banks in Kenya. The study
being a census survey, it means that data was collected from all the 44 Commercial banks in
Kenya, where one senior person in operation department was selected from each bank thus
forming a sample size of 44 respondents.With regard to factors hindering consumer adoption
of internet banking in Kenya, the study used a survey questionnaire administered to each
member of the sample population Quantitative data collected was analyzed by the use of
descriptive statistics was used .The information was displayed by use of bar charts, graphs
and pie charts and in prose-form. Content analysis was used to test data that is qualitative in
nature or aspect of the data collected from the open ended questions. The study revealed that
in the Internet banking context, consumers‟ relative rewards/benefits cannot be guaranteed by
means of any legal contract. Because consumers do not have experience with the Internet
bank prior to its adoption, they are likely to draw upon their trust in the physical bank to infer
about the operations of the Internet bank. Thus, having high trust in the physical bank could
lead the consumer to have high trust in adopting Internet banking. Internet banking can
mitigate consumers‟ uncertainty about the security and privacy of their technological
infrastructure and services by providing structural assurances that promote a sense of security
and privacy about the pertinent technological infrastructure used.