Factors influencing adoption of digital banking services by customers in Kenya: a case of commercial banks in Thika sub county- Kenya

Abstract

In the wake of the 21st century, banks have rapidly embraced the use of modern technology in the provision of services to their growing clientele. This is in line with remaining relevant to the dynamics of the economic environment coupled with competition from other institutions. This notwithstanding, the uptake of these services has not been to the desired levels as evidenced by the long queues in banking halls and a rising number of branch networks in the country and beyond. The purpose of this study was to investigate the factors that influence the adoption of digital banking services in Kenya. The study was guided by 4 objectives namely: To establish the influence of awareness, customer trust, perceived usefulness and the perceived ease of use of technology on adoption of digital banking services. The study targeted 282,877customers of Thika Branches of four Commercial Banks namely Co-operative, Equity, Family and KCB. The four banks were chosen because they that have the highest number of client base and market presence in the town. Stratified random sampling technique was used to select a sample size of 384 customers. Information was collected using a Bank Customers Questionnaire. Data was analysed using SPSS program version 21. Data was presented using frequency tables. Student‘s t-test was used to establish if there are any significant differences between genders. ANOVA was used to establish if there are any significant difference in the customers‘ responses toward digital banking services and age, status of employment, banks and highest level of education. Pearson product correlation coefficient was used to establish the relationship between perceived awareness, trust, usefulness and ease of use on adoption of DBS. A model for the prediction of adoption of DBS using the four variables was developed using a regression analysis. The study found out that majority of the customers were male. It also established that majority of the customers 205 (60.5%) preferred mobile banking, followed by agency banking 99 (29.2%) and those who preferred internet banking were 36 (10.6%). The study established that there was a significant difference in the perceived awareness of digital banking services by age (F = 5, 9.934 at .The respondents aged 28-37 years were more aware about digital banking services than the rest. The study found out that awareness, perceived usefulness and perceived ease of use positively influenced adoption of DBS while lack of trust negatively influenced the adoption of DBS. Overall score ( = 4.78) showed that the respondents agreed that the digital banking services were perceived as useful. The respondents agreed they used the Digital Banking Services due to its perceived ease of use ( = 4.78). The value of R2=0.23 obtained showed that awareness(x1), trust(x2) perceived usefulness(x3) and ease of use (x4) accounted for 23% of the total variation of adoption of digital services(y). The regression equation obtained was y = 9.179 + -.183x1+ 0.028x2+ 0.014x3 +.0215x4. The study recommends aggressive advertisement to increase awareness of digital banking services as it had the largest contribution among the four factors. The study recommends a further study to find out the influence of culture and personal traits on adoption of digital banking services