An Investigation into Factors Influencing Customer Adoption of Internet Banking in Uganda: A Case Study of the Banking Sector in Kampala District

Abstract

The purpose of this study was to investigate the factors influencing customer adoption of Internet Banking in the banking sector in Kampala District-Uganda with the specific aims of determining the factors that influence customers’ use of Internet Banking services, identifying the main factors that promote and/or discourage customers from using the technology, as well as proposing opportunities and solutions for both participants and researchers to unseen threats and problems in a bid to improve the acceptance and utilization of Internet Banking. A descriptive research design using both qualitative and quantitative approaches was adopted. This study mainly used primary data, which was collected using both self-administered questionnaire and interviews. A sample of 100 customers was selected using purposive sampling. Out of 90 customers reached through questionnaires, 80 clients responded representing an 89% response rate. Out of the 10 customers reached with interviews, all responded representing 100% response rate. Data was analysed using the International Business Machines Corporation (IBM) Statistical Package for Social Sciences (SPSS)™ version 16 software and was presented in the form of frequencies, percentages, tables, charts and graphs. The study determined that customer trust, perceived use of the internet and perceived ease of use of the internet were the top three factors influencing customer adoption of Internet Banking. The study also identified inadequate detailed information provided on Internet Banking usage, security concerns of the Internet Banking sites, operation challenges and poor quality of the internet services as some of the significant factors that restrain customers from using Internet Banking. From the findings, the study concluded that the success of Internet Banking adoption by customers in Uganda’s banking sector is heavily defined by how well the bank institutions’ leadership teams employ strategic measures to improve and excel on the three key parameters of customer trust, perceived use of the internet and perceived ease of use of the internet services. The study recommended that bank management needs to design user-friendly websites, strengthen the technological infrastructure, manage and minimize perceived security risks, and carry out aggressive marketing campaigns that specifically target non-users to improve the adoption of Internet Banking services by customers. Finally, the study recommends that banks need to develop online banking adoption risk-reduction strategies that foster a high level of confidence in potential customers.