Role of Internet Banking In Kenya

When first introduced, Internet banking was used mainly as an Information presentation edium in which banks marketed their products and services on their Web sites.

With the development of asynchronous technologies and secured electronic transaction technologies, however, more banks have come forward to use Internet banking both as a transactional as well as an Informational medium. As a result, registered Internet banking users can now perform common banking transactions such as writing checks, paying bills, transferring funds, printing statements, and inquiring about account balances.Internet banking has evolved into a "one stop ervice and information unit" that promises great benefits to both banks and consumers. Internet banking services are crucial for long-term survival of banks in the world of electronic commerce (Burnham 1996). The market for Internet banking is forecast to grow sharply In the next few years, affecting the competitive advantage enjoyed by traditional branch banks (Duclaux 1996; Liao et al.

1999).Indeed, It also was estimated that financial institutions that failed to respond to the need for Internet banking services would likely lose more than 10% of their customer base by he year 2000 (Orr 1998; Tower croup 1996). From the consumers' perspective, Internet banking provides a very convenient and effective approach to manage one's finances as It Is easily accessible 24 hours a day, and seven days a week. Besides, the information is current.For corporate customers, sophisticated cash management packages offered through Internet banking provide them with up to the minute information, allowing for timely funds management decisions (Kalakota and Whinston 1996).

1. 2Deflnition of Terms Internet banking refers to the use of the Internet as a remote delivery channel for anking services (Furst et al. ,2002). Internet banking includes the systems that enable financial Institution customers, businesses or Individuals to access accounts transact private network, including the Internet. Technology adoption is the choice to acquire and use a new invention or innovation.

. 2 Objectives of the Study General Objectives To aim at enriching the knowledge and understanding of factors affecting adoption of Internet Banking Services in Kenya. Specific Objectives To investigate the adoption and use of internet for banking transactions by ndividuals in Kenya as an example of a developing country. To quantify constructs concerning the current state of consumer beliefs and attitudes toward internet banking, and develop validate the relationships between the factors that drive the adoption and acceptance of such services.To propose opportunities for both participants and research to uncover unseen problems, thereby improving the use and acceptance of internet banking.

2. 1 Theoritical Framework The need to understand what factors are influencing the adoption of internet banking is important for managers, providers and researchers. IT adoption is faced by barriers like poor quality of information systems, lack of top management support and capable users (Kwon and the developing world, the same barriers to be often impenetrable(Danowitz et al. 1995:Knight, 1993). Problems found in developing counties are attributed to lack of national infrastructure (OderA et al.

, 1993). Theory of planned of planned Behavior (TPB) is the model widely used in predicting and explaining human behavior while also considering the roles of individual organizational members and social systems in the process the three influencers in this theory,i. attitude for technology role, subjective norm for organizational members and social systems roles, and perceived behavioral control for individual role.It provides a comprehensive way to understand how an individual's attitude, subjective norms and perceived behavioral control can influence his or her intention to use banking services on the Internet. A model, named Technology acceptance model (TAM) (Davis, 1989) has been et. , 2003a).

This model interactively placed use of on-line shopping setting into both system into both system features such as ease of use and usefulness and trust in e- endors. This result indicated that these variables are good predictors for behavior intention to use on-line shopping. . 2Conceptual Framework To illustrate the fundamental concepts of factors influencing the adoption issues of internet banking in Kenyan firms, one needs to understand the following conceptual framework integrating the independent variables versus the dependent variable. In the context of the framework, intention to adopt Internetbanking services is thus the dependent variable, whiles the independent variables comprise attitude, subjective norms, and perceived behavioral control.

These factors determine the extent to which the internet banking will grow.Independent Variable Variable 2. 3Review of Conceptual Framework The framework postulates that a person's intention to adopt Internet banking is determined by three factors. They are (1) attitude, which describes a person's perception towards Internet banking; (2) subjective norms, which describe the social influence that may affect a person's intention to use Internet banking; and(3) perceived behavioral control.

which describes the beliefs about having the necessary resources and opportunities to adopt Internet banking.Intention to adopt Internet banking services, in return, is expected to affect the actual adoption of Attitude It is defined as an individual's positive or negative feelings (evaluative affect) about performing a target behavior (Fishbein and AJzen 1975). It is related to behavioral intention because people form intentions to perform behaviors toward which they have positive affect. The attitude-behavioral relationship is fundamental to TPB, TAM, and related models presented by Triandis (1977) and Bagozzi (1981).Taylor and Todd (1995b) suggest that the different dimensions of attitudinal belief toward an nnovation can be measured using the perceived attributes (relative advantage, compatibility, complexity, and trial ability) of an innovation.

Relative advantage: Internet banking services allow customers to access their banking accounts from any location, at any time of the day, it provides tremendous advantage and convenience to users. It also gives customers greater.Control over managing their finances, as they are able to check their accounts easily. In view of the advantages that Internet banking services offer, it would thus be expected that individuals who perceive Internet banking as advantageous would also be likely to dopt the service. individuals' Job responsibilities and value system. Internet banking has been viewed as a delivery channel that is compatible with the profile of the modern day banking customer, who is likely to be computer-literate and familiar with the Internet.

t is expected that the more the individual uses the Internet, and the more he or she perceives the Internet as compatible with his or her lifestyle, the more likely that the individual will adopt Internet banking. Complexity: As the Internet is very user friendly with its "point and click" interface, it s likely that potential customers may feel that Internet banking services are less complex to use, and hence would be likely to use such services. Trial ability: customers are given the opportunity to try the innovation; certain fears of the unknown may be minimized.This is especially true when customers find that mistakes could be rectified, thus providing a predictable situation. : The greater the trial ability of Internet banking, the more likely that Internet banking will be adopted. Risk: A recognizable obstacle to electronic commerce adoption has been the lack of ecurity and privacy over the Internet (Bhimani 1996; Cockburn and Wilson 1996; Quelch and Klein 1996; Rhee and Riggins 1997).

This has led many to view Internet commerce as a risky undertaking. Thus, it is expected that only individuals who perceive using Internet banking as a low risk undertaking would be inclined to adopt it.The lower the perceived risk of using Internet banking, the more likely that Internet banking will be adopted. Subjective norms Subjective norms refer to "the person's perception that most people who are important to him think he should or should not perform the behavior in uestion"(Fishbein and AJzen 1975, p. 302).

Terms of a consumer-oriented service, the consumer-relevant groups around the individual may influence the individual's adoption. Chua (1980) suggests that the adopter's friends, family, and colleagues/ peers are groups that will potentially influence the adoption.Although there is no basis on which to predict how each of these groups will affect intentions to adopt Internet banking, it is nonetheless expected that the influence of these groups as a whole will be significantly related to the individual's intention to adopt Internet banking . The beliefs associated with subjective norms are significantly related to an individual's intention to adopt Internet banking.

Perceived behavioral control Perceived behavioral control refers to the factors that may impede the performance of the behavior. This definition encompasses two components.The first component is self-efficacy and is defined as an individual's self-confidence in his or her ability to perform a behavior (Bandura 1977 1982). The second component is "facilitating conditions" and it reflects the availability of resources needed to engage in the behavior (Triandis 1979). Hill et al. (1986) found that self-efficacy predicts intentions to in having the skills in using the computer and the Internet is more inclined to adopt Internet banking.

This is because the individual is comfortable in using the innovation.The greater the self-efficacy toward using Internet banking, the more likely that Internet banking will be adopted. The second component is "facilitating conditions" refers to the easy access of technological resources and infrastructure. Goh(1995) suggests that, as supporting technological infrastructers become easily and readily available ,lnternet commerce pplications such as banking services will become for feasible. The greater the extent of perceived technological support for Internet banking, the more likely that Internet banking will be adopted.

The greater the extent of perceived government support for electronic commerce, the more likely that Internet banking will be adopted. 3. OCONCLUSlON The types of products and services offered through Internet banking should be those frequently used and requiring few interactions with bank officers. Such services include account balance and enquiries, bill payments, summary reports of ransactions, and check facilities.

Advanced, value-added banking and services that require interactions with bank officers ought to be introduced at a later phase if customers warrant their provision.Not only is IT critical in the processing of information, it provides a way for the banks to differentiate their products and services. Banks find that they have to constantly innovate and update to retain their demanding and discerning customers and to provide convenient, reliable, and expedient services. Driven by the challenge to expand and capture a larger share of the banking market, some banks invest in more ricks and mortar to enlarge their geographical and market coverage.