Internet banking adoption decisions and e-service quality of rural customers

Abstract

Worldwide, banks are embracing information technology because of the rapid development in this field. In South Africa, banks have continued to supplement traditional over-the-counter banking with online banking in line with this global trend. Owing to factors unique to developing countries, however, internet banking adoption has not been as rapid as was expected. In particular, Internet banking adoption in rural areas remains problematic, and it is difficult to determine how rural customers are experiencing the quality of internet banking services. The purpose of the study was, therefore, to explore internet banking characteristics and factors influencing internet banking adoption and its relationship with the e-service quality, with specific reference to banking customers residing in rural areas of South Africa. The research study was conducted in positivist paradigm and was quantitative in nature. A survey design was used and self-administered questionnaires were distributed to banking customers residing in a rural area of South Africa. The final sample consisted of 390 banking customers who are using internet banking or who have knowledge of internet banking. The questionnaires were distributed personally by the researcher with the assistance of trained field workers. Descriptive and inferential statistics were used to analyse the data. The findings revealed that dimensions of innovation characteristics such compatibility, trialability and observability had moderate scores, but relative advantage and complexity had low scores. The results also showed that various factors influencing internet banking adoption, such as convenience, prior knowledge and usage, security, perceived risk and information, had low scores. The following dimensions of e-service quality received low scores, namely efficiency, system availability, fulfilment, privacy, loyalty intention and perceived value. It was only the contact dimension of e-service quality that was perceived positively. The Pearson’s Product Moment Correlation results indicated a medium and positive correlation between e-Service Quality and Innovation Characteristics, and a small, significant correlation was found between e-Service Quality and Factors Influencing Internet Banking Adoption. In view of the dearth of literature on internet banking in South Africa, the implications of this study are that the rate of internet banking adoption in rural areas should be accelerated. This study could provide useful assistance for retail banks to develop appropriate strategies to increase the internet banking adoption rate of rural customers.