Internet banking refers to the use of the internet as a delivery channel for banking services, which includes all traditional services such as balance enquiry, printing statement, fund transfer to other accounts, bills payment and new banking services such as electronic bill presentment and payment (Frust, Lang, & Nolle, 2000) without visiting a bank (Mukherjee & Nath, 2003). According to channel (Chau & Lai, 2003), the rapid growth and popularity of the internet has created great opportunities as well as threats to companies in various business sectors, to endorse and deliver their products and services using internet as a distribution channel. Beside opportunities of this channel, banks and financial institutions across the world face new challenges to the ways they operate, deliver services and compete with each other in the financial sector.

Driven by these challenges, banks and financial institutions have implemented services delivery using internet banking (Chan & Lu, 2004). The objectives of launching internet banking include cost reduction, performance improvement, wider coverage, revenue growth, and customer convenience (Bradley & Stewart, 2002; Chau & Lai, 2003). From the customer’s perspective, internet banking facilitates a convenient and effective approach to manage personal finances, as it is accessible 24 hours a day and 365 days in a year without visiting the bank and from any locations (Rotchanakitumunai & Speece, 2003). Although there is a significant growth of internet users in Kenya, the number of financial transactions carried out over the internet remains very low. This tread however is the same globally and it has been observed that potential users either do not adopt internet banking or do not use it continually after adoption.

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Mearian (2001) indicated that huge number of customers in USA is accessing most of the banks’ websites but only a minority of customers has made online financial transactions. Gartner expressed that out of 61% online users, only 20% of consumers carries out online banking in the USA (Brown, 2001). Commercial banks in Kenya are going through massive transformation efforts to cope with the economic downturn, rapidly changing market trends, and volatile financial markets have all added to the pressure on organizations to come up with effective responses to survive and succeed. The role of banks in an economy is paramount because they execute monetary policies and provide means for facilitating payments for goods and services in the domestic and international trade (Shambe, 2003) The Kenyan banking industry has been expanding branch networking amid the introduction of branchless banking system.

The annual reports of CBK clearly indicate that, branch network has been slowly expanding since 2002. By the end of December 2010, Kenya had a total branch network of 975, as compared to 486 branches in the period ended December 2002. The slow growth of branches can be attributed to the rapid rise of alternatives, which include electronic financial product through mobile phones and Personal computers. A strong banking industry is important in every country and can have a significant effect in supporting economic development through efficient financial services. In Kenya the role of the banking industry needs to change to keep up with the globalization movement, both at the procedural level and at the informational level. This change will include moving from traditional distribution channel banking to electronic distribution channel banking. Given the almost complete adoption of e-banking in developed countries, the reason for the lack of such adoption in developing countries like Kenya is an important research that will be addressed by this paper.

One main advancement technology has brought to us is the introduction of electronic banking or E-banking. Traditional banking is characterized by physical decentralization, with branches scattered around populated areas to give customers easy geographical access (Ainin et al., 2005). E- Banking does away with the need for most visits to the bank. However, according to Locket & Littler (1997), physical banks assure customers that their banks has substantial resource and guarantee the security of their savings.

A study indicated that although electronic banking has been available in the UK since the early 1980s, It is not clear whether all customers want or are comfortable with electronic banking (Daniel& Storey, 1997). Technology is changing at a rapid pace making it difficult for both the customer and the bank to determine the best approach. Particular problems arise with trying to integrate new channels with legacy channels. It is for these reasons that academic research is needed in this newly emerging delivery channel (Daniel &Storey, 1997). So through this research i will be able to identify the challenges of E-banking adoption among the commercial banks in kenya and whether customers are contented with the system.

This study intends to investigate the factors influencing e-banking adoption among commercial banks in Kenya, and the challenges faced by commercial banks in the adoption of E-banking.

Objective of the study

General objective The main objective is to identify the challenges of e-banking adoption among commercial banks in kenya. Specific objectives 1.To investigate the technological risks facing banks due to adoptions of e-banking 2. To analyze security challenges affecting e-banking. 3. To investigate cost challenges facing banks due to adoption of e-banking.

Research Questions

The study seeks to answer the following 1. What are the technological risks facing banks due to adoption of e-banking? 2 .How security challenges affect e-banking? 3. What are the costs challenges facing banks due to adoption of e-banking? Significance of the Study

The findings of this research will be helpful to all the user groups of E-banking services. They Include; 1.CEOs and bank managers who implement E-banking services and makes operational and strategic decisions. 2.The professionals involved with on-line applications as well as IT. 3.Agents who are able to understand the challenges on behaviour of their clients and indicate future potential demand for different E-banking services. 4.Academicians and researchers for future research will have an opening from this research Project Finally, my study adds to the existing literature, and is a valuable tool for students, , institutions, and individuals who want to learn more about mobile and internet banking.

Limitations of the Study

Within the scope of the study, the problem of getting most appropriate interviewees to answer the questionnaire willingly is envisaged. However, I will ensures that respondents give relevant information concerning the study. Furthermore, some important official documents that will allow the me to carry out the study are not released by the bank since they are confidential. Therefore, referencing some of the information from records is not detail. Time and resource constraints also limited my study.