Victor Lyimo Dev Jani August University of Dar es Salaam Business School 1

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1 Victor Lyimo Dev Jani August University of Dar es Salaam Business School 1

2 Background Rapid innovation and rising rivalries has revolutionized the services scenery, resulting in providers shifting from traditional face-to-face encounters, to ones that are technology-based, in order to accelerate efficiency and reduce in service costs (Laukkanen, T. and Lauronen, 2005 and Leung, L.S.K. and Matanda, 2013). Banking system in Tanzania started using new technology after the financial sector liberalization on 1991 (BOT, 2010). The need to make the world as one village has necessitated commercial and financial institutions adopting internet banking to connect banking activities more easily than it was in the past. By using internet banking enables customers to conduct most of their business online and making transaction without going physically on the bank. Technology adoptions in developing countries are growing time to time, but little have been done due to changes in countries economy, political, environment and cultural University of Dar es Salaam Business School 2

3 THE PROBLEM AND OBJECTIVES. The introduction of technology enables people to be efficiency and effective in the business operations. Internet banking is in revolutionary while its adoption is in evolutionary stages. Various organizations including banks have adopted the technology so as to increase the productivity in the organization. Even though what is observed is not similar to the expectations of many people, as the technology has been introduced but it adopted slowly (Maurer, 2008). Different studies have shown that developing countries are late adopters of the internet and its application with regard to internet banking (Bhagya, 2009, Shah, 2010, and Rudi, H. Paul, N and Pauline, 2001). Tanzania as among of the developing countries also experiences the same problem. GENERAL OBJECTIVE Testing the impact of perceived benefits, subjective norm, social influence and lifestyle on the adoption of Internet banking SPECIFIC OBJECTIVE To assess the variation in the internet banking with demographic variables To evaluate the influence of perceived benefits on the adoption of internet banking service in Tanzania. To determine the role of complexity on the adoption of internet banking service in Tanzania. To assess the contribution of subjective norms in the adoption of internet banking in Tanzania To assess the contribution of lifestyle in the adoption of internet banking in Tanzania To determine the role of social influence in the adoption of internet banking in Tanzania University of Dar es Salaam Business School 3

4 LITERATURE REVIEW INTERNET BANKING: Is an electronic banking means which uses telephone, PC or wireless device to provide financial services to the customers electronically. Banks provide this service in order to give customers more access to their personal accounts because internet banking can be done anywhere, anytime through online as long as internet is available. ADOPTION: Adoption is the process whereby a person does something thing new from previously (i.e. acquiring of new idea, purchasing of new product and/or service, and acting new behavior etc.). Stages in adoption process are Awareness, Interest, Evaluation, Trial and Adoption. COMPLEXITY : This refers to the difficulty that the user experiencing in using and understanding the innovation. PERCEIVED BENEFITS: The degree to which an innovation is perceived as being better than the idea it supersedes (Rogers, 1983) University of Dar es Salaam Business School 4

5 THEORETICAL FRAMEWORK TECHNOLOGICAL ACCEPTANCE MODEL: The theory was proposed by Davis, 1989 and was measured by three factors which are perceived usefulness, ease of use and attitude towards usage. DIFFUSION OF INNOVATION THEORY: This is the oldest theory developed by Rogers, It explains how an idea or product gain a momentum and diffuses or spread over the population or society. THEORY OF PLANNED BEHAVIOR: This is the theory that is linked with beliefs and behavior. The theory explains human behavior. It was proposed by (Netemeyer, Ryn, & Ajzen, 1991) to improve the theory of reasoned action in 1975 (TRA) originally proposed by Fishbein and Ajzen University of Dar es Salaam Business School 5

6 CONCEPTUAL FRAMEWORK Independent variables= complexity, perceived benefits, social factor, lifestyle and subjective norms. Dependent variables= Adoption of internet banking University of Dar es Salaam Business School 6

7 Figure 2.1: Conceptual framework for adoption of internet banking. Life Complexity Ho H1 Social factors Subjective norm H2 H3 Adoption internet 0, 1 Perceived benefits H4

8 Methods Convenient sampling in 2 major banking premises Structured questionnaire: demographics & 5 point Likert scales for research variables. Descriptive analyses for demographics and internet bank usage. Logistic regression: DV being usage (1) and non usage (0) of internet banking University of Dar es Salaam Business School 8

9 Sample profile Category Descriptive measure Frequency Percent Cumulative Percent Age and above Gender Male Female Status Single Married Others Education level Standard seven Technical/Vocational certificate Diploma Bachelor s degree Masters/Postgraduate PhD Income Below and above University of Dar es Salaam Business School 9

10 Internet banking usage Variable Frequency % Start using Internet banking less than 6 months one year ago 2 years ago 3 and above years Frequency of use Have not used recently Once a year Once in 6 months once in 3 months Once a week Almost everyday University of Dar es Salaam Business School 10

11 Descriptive for Scale items Item Mean Std. Std. Error t-test value Dev. Mean learning to use internet banking * interaction with internet banking is clear and understandable * easy to become skillful by using internet banking * helps me to manages my finances * internet banking does not require mental efforts * easy to use internet banking to accomplish my banking tasks * internet banking is safe and secured * internet banking can save time * internet banking save transaction fees * internet banking offer wide range of banking products, services and investments * internet banking makes me comfortable in accessing services at anytime * internet banking suits my life style * makes lifestyle more convenient * using internet banking fits into my work style * people who are important to me convince me * people who influenced me think I should use it * people's opinions ** my decision to adopt internet banking was influenced by my family * decision to adopt internet banking was influenced by my colleagues University of Dar es Salaam Business School * 11 decision to adopt internet banking was influenced by my friends **

12 Reliability statistics Items Cronbach s Alpha Mean Standard deviation Number of Items Lifestyle Social factor Subjective norms Complexity Perceived benefits University of Dar es Salaam Business School 12

13 Logistic regression So what for Lifestyle: Easy the process, educate them, promote in the right manner. So what for PB: communicate the benefits, further enhance the benefits, service bundling. Variable B S.E Wald df Sig. Exp(B) Lifestyle Comp (easy) Socfact Subje. norm Perceived benefit Constant University of Dar es Salaam Business School 13 So what for Social factors and Subjective norms:!!!!!!!!.

14 Internet usage & Demographics So what for Gender: Need further exploration on why?. Relationship Chi-Square P-value Age* Internet banking Education* Internet banking Gender*frequency Income*frequency Gender* Internet banking Using: Male (126/115) Vs female (74/84) Not using: Male (105/115) Vs female (95/84) Monthly income* Internet banking <1m (132/137) Vs not using (142/137) 1m-2.5m (53/47) Vs not using (41/47) 2.5m- 3.5m (9/13) Vs not using (17/13) 3.5m- 4.5m (2/1) Vs not using (0/1) M>F!!! (Fisher s) Income Interne t banking!!! (Logical) >4.5m (4/2) Vs not using (0/2) So what for Income: Micro Internet credit for low income to boost usage?? University of Dar es Salaam Business School 14

15 Conclusion & Limitations Perceived benefits, complexity, lifestyle, social norms and social factor have influence on the contribution on adoption of internet banking. Unlike other studies, this focused on actual behavior Cross sectional study for customers of 2 banks in Dar University of Dar es Salaam Business School 15

16 Challenges and future studies Respondents provided number of challenges that face them with regard to internet banking adoption in Tanzania. Large number of respondents reported that they don t have enough education on internet banking. This led them to use other transaction methods because they don t know even the different between internet banking and Sim Banking. Banks should provide education and awareness to its customers. Network failure/instability was another problem to adopt because there is limited network during the operations which lead to delay of transaction and loss of their funds. Network failure is the problem since it may lead to delay of notification messages or process during the transaction. Security is another challenge on the adoption of internet banking because customers do not trust the online transaction since it is easy to be tracked by hackers. Another challenge is that customers regard internet banking as an expensive service because if you want to use it you need to have smart phone or computer which many don t have especially low income earners. Future studies: longitudinal to trace how of the adoption process University of Dar es Salaam Business School 16