The Impact of Customer Demographic Variables on the Adoption and Use of Internet Banking in Developing Economies

Abstract

Whilst most banks introduced internet banking services for the benefit of their customers, the adoption and use of the service had been very low. Strategies to increase the adoption and use of internet banking services eventually lead to the banks’ goal of maximizing profit. It is therefore essential for banks to understand the factors that affect the adoption of internet banking services. The purpose of this paper is to determine demographic factors that influence the adoption of internet banking services in a bid to improving the situation. Due to the limitations in accessing the population of developing economies, a sample of one bank was selected from a developing nation, Ghana. Ghana was strategically chosen due to the high internet penetration rate. Out of 506,203 customers of the chosen bank, only 32,337 customers who subscribed to the internet banking services were used for data analysis. 31, 886 representing 98.61% of internet banking customers were resident in Ghana whilst the remaining 451 representing 1.39% were non-residents, suggesting that the data for analysis represented the behavior of Ghanaians as citizens of developing economies, though the restriction to just one bank may limit the generalization of the findings. Chi-square techniques were employed in the study, using historical data of over eight years. The findings of the study revealed that demographic factors such as gender do not have significant effect on customers in adopting and using internet banking services. The study further concluded that there is a strong correlation between employment status, educational level and customer adoption and usage of internet banking services in Ghana. These findings will help banks to develop appropriate strategies in attracting and retaining their customers, through the design of specific marketing campaigns geared towards certain category of internet banking customers who are likely to adopt and use internet banking services.