An Investigation Into Internet Banking Technology Adoption Among Commercial Banks In Kenya

Abstract

Internet banking is a subset of electronic banking. It has been in operation since the 1960s, developing from a simplistic form to a sophisticated one. Internet banking is based on the Internet as a typical open network. The new situation in the banking industry has diversified business strategies, resulting in the trespass on business borders (from "virtual" or "brick-and-mortar" to "click-and-mortar" model). The situation has been changing rapidly. While more and more banks in other economies have offered a wider variety of e-banking services including Internet banking, Kenya seems to be lagging behind and not taking up this new technology promptly, thus the concern of this study. The main objective of this study was to analyze the extent of Internet banking adoption, major factors responsible for and barriers to Internet banking technology adoption. Perhaps, the sluggish developments in Internet banking have shown a typical case to which the most modem competition forces business model applies. The major focus of literature review was on the major developments in retail banking over time, various aspects of Internet banking technology, conceptual framework using a unified theory of acceptance and usage of technology model and finally, drivers and barriers to Internet banking technology adoption. A survey of the 43 commercial banks was conducted with 31 valid responses. Data was collected using self- administered semi- structured questionnaires and analyzed using both descriptive and inferential statistics. The project found that, for the banking sector in Kenya, the determinants of Internet banking technology adoption decision revolved around the drivers of perceived ease of use, usefulness of the technology, facilitating conditions as well as prior intention to adopt the technology, thus confirming the venkatesh UTAUT model tested. Internet banking has contributed greatly to saving costs and has intensified the competition severely, making the banking industry more beneficial for customers, but less attractive for new entrants. A number of barriers were also identified from the survey .