Factors influencing the adoption of internet banking: a case study of commercial banks in Mauritius
| Pages | 204-234 |
| Date | 26 July 2012 |
| Published date | 26 July 2012 |
| DOI | https://doi.org/10.1108/20425941211250552 |
| Author | Thanika Devi Juwaheer,Sharmila Pudaruth,Priyasha Ramdin |
| Subject Matter | Public policy & environmental management,Environmental technology & innovation |
Factors influencing the adoption
of internet banking: a case study
of commercial banks in Mauritius
Thanika Devi Juwaheer, Sharmila Pudaruth and Priyasha Ramdin
Faculty of Law and Management, University of Mauritius, Reduit, Mauritius
Abstract
Purpose – The purpose of this paper is to investigate the factors influencing the adoption of
internet banking services in Mauritius. Drawing from the technology acceptance model, theory
of reasoned action, theory of planned behaviour and the extensive literature on demographic profiling
of internet banking users, trust and security aspects associated with adoption rate of inter net banking,
this paper combines various predetermined constructs in one model. The different constructs such as
perceived ease of use, perceived usefulness, subjective norms, attitudes, behavioural intentions,
security and trust aspects, the level of awareness on internet banking services and demographic
variables such as age, income, gender and education into one integrated framework. Hence, the paper
will deepen understanding of the specific factors underpinning the adoption of inter net banking in
Mauritius.
Design/methodology/approach – This paper reports upon the empirical findings of the customer
survey on the various factors impacting on the adoption of internet banking by the questionnaire
method. The Internet Banking Services Acceptance Model (IBSAM) is fur ther validated through a
survey instrument administered to 384 respondents visiting various banking institutions across the
nine districts throughout Mauritius to ensure proper geographical coverage. The questionnaires were
further processed and analysed with the statistical programme SPSS, by using descriptive and
inferential analysis.
Findings – Data analysis showed that perceived ease of use and perceived usefulness have a
direct influence on the adoption of internet banking in Mauritius. Results have also indicated that both
trust and security aspects are deemed crucial factors to explaining inter net banking adoption in
Mauritius. Further examination of the inferential analysis highlighted that level of education and
income level of respondents may be a major determinant in influencing the adoption of internet
banking.
Practical implications – This research provides banking institutions with significant information
on the various aspects that need to be highlighted in their banking communications strategies to
increase the adoption rate of internet banking services. Banking institutions ne ed to stress upon
the benefits of internet banking services, ease to use, trust and secu rity aspects. The ndings of the
research provide valuable insights for the banking industry and also urge upon a reshaping of their
e-marketing strategy in relation to internet banking services in Mauritius. The research findings
revealed that secured web contents and design are key tools to increase the adoption rate of internet
banking. Practical recommendations to increase web usefulness and trust, and guidelines to reduce
perceived risk are also provided in the present research paper.
Originality/value – The purpose of the study is to fill up significant gaps in the literature on
internet banking landscape in the context of developing countries like Mauritius. The findings
are expected to be of significant use to the commercial banks and other financial institutions
offering or planning to offer internet banking solutions in the near future. An understanding
of the factors influencing the adoption of internet banking services is essential for marketing
practitioners so as to capitalize upon the underlying benefits of internet banking and hence, offer
banking customers an online experience coupled with a greater level of personalization and
customization.
Keywords Internet banking,Adoption rate of internet banking,Innovation, Trust and securityissues,
Demographic variables, Mauritius, Internet, Banking
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2042-5945.htm
WorldJour nal of Science, Technology
and Sustainable Development
Vol. 9 No. 3, 2012
pp. 204-234
rEmeraldGroup PublishingLimited
2042-5945
DOI 10.1108/20425941211250552
204
WJSTSD
9,3
Introduction
The growing popularity of internet banks stems from the fact that their services are
considered as more attractive than those offered by traditional banks. The inter net is
the fastest growing banking channel today, both in the fields of corporate and retail
banking in developed countries such as USA and UK (Alam et al., 2007). Similarly,
internet banking is predicted to transform and revolutionize the traditional industry
(Mols, 1999; Daniel, 1999). Banking activities are easily digitized and automated as
argued by various researchers (Elliot and Loebbecke, 2000; Daniel, 1998; Cervantes ,
1997; MSDW, 2000) and the widespread of internet banking is due to its benefits such
as greater convenience and comfor t (Nor et al., 2010). Moreover, online banking is one
of the fastest growing services that banks can offer in order to gain and retain new
customers (Moody, 2002).
According to Polatoglu and Ekin (2001), internet banking is very attractive to banks
and to consumers who display a higher acceptance of new technolo gy and increasingly
understand more complex banking products. This impressive growth of internet
banking is not limited to the US and Canadian banking industries. Even, Europe and
major Asian markets have also experienced such impressive growth in internet
banking (Eurostat, 2008). It should be pointed out that this g rowth has occurred
despite growing concer ns for the confidentially and security of financial transactions
on the internet. In addition to the rapid acceptance of inter net banking, banks are also
investing massively in related information technology (IT) because they have realized
that it is a major vehicle for cost-cutting and client retention (Zuccaro and Savard,
2010). Similarly, it was only in the mid-1990s that internet banking appeared in the
developing countries (Peterson, 2006). The banking and finance world is unable to
standstill with the internet revolution and banking institutions have to face the fact
that there will be little return from investments in technology if customers fail to accept
or fully utilize its capabilities (Yousafzai and Yani-de-Soriano, 2012). Consequently,
recent research suggests that the financial services industry must place greater
emphasis on proactively advertising the benefits of new technology, in an effort to
encourage customers to adopt internet banking in preference to visiting a branch
(Durkin et al., 2008). Despite the steady growth of internet banking in the UK in the
past few years, half of UK customers still visit a branch each month, which suggests
that bank managers need to encourage customers to use the internet for routine
operations in order to release branch and call-centre employees for higher-value
interactions (Forrester Research, 2009). In addition, Forrester Research (2009) classified
the UK as an internet banking laggard, falling well behind the USA and its Europe an
counterparts, such as Ger many and France. Ziff-Davies (2000) argued that the concept
of internet has outstretched customer’s sensitivity to speedy customer service and
many banks have been using this development to design and deliver new services.
In Mauritius, it is also expected that banking sector growth remains steady and that
there will be an on-going regional expansion of banks (The Maur itian Economy
Outlook, 2012). In 2011, the banking sector comprised of 20 banks licensed to carry out
banking business in Mauritius. Besides traditional banking facilities, around 13
banking institutions also offer card-based payment services, such as credit and debit
cards and they provide internet banking and phone banking facilities. Indeed, the
number of internet banking users has increased from 131,648 in 2010 to 176,553 in
2011. Banks are encouraging more customers to use internet banking by providing
an increasing range of services on the internet while the number of inter net banking
transactions has decreased from 197,452 in 2010 to 192,964 in 2011, the average value
205
Adoption of
internet banking
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