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.