Recent Shifts in Determinants of Internet Banking Adopters: Empirical Evidence from 2001 and 2004 SCF

Article excerpt

The purpose was to investigate whether there were shifts in the factors affecting the probability of adopting Internet banking. The technology acceptance model, the theory of planned behavior, and previous research were used to develop a model. Data were drawn from the 2001 and 2004 Survey of Consumer Finances. Three shifts were identified. In 2004, households adopted Internet banking regardless of income while income was a determinant in 2001. Second, the length of the planning horizon was not significant in 2004 suggesting that household's use Internet banking was a convenience and not a result of long-term planning. Third, occupation as a proxy for social norm influenced the probability of adopting Internet banking.


Security First Network Bank (SFNB) was founded in October, 1995 in Atlanta, Georgia. This institution claimed to be the first ever 'pure' Internet bank (Cramer and Harrell, 1996). Even though it has only been a decade since SFNB was established, no respectable financial institution in the world today functions without extending its offer via Internet. Advancement in information technology, which enabled implementation of digital services, has rapidly gained recognition of financial institutions in the last years. Accessing banks online has become a regular practice of 35% of U.S. households, and it is a forecast that 55 million households will use online banking services by 2010 (Bruene, 2005).

The phenomenon of rapid advancement in implementation of information technology by banks has attracted a significant amount of researchers' attention. Numerous studies, employing a variety of methodologies addressed the adoption of Internet banking. Kim, Widdows and Yilmazer (2005) investigated the determinants of Internet banking adoption based on individuals' benefits and costs. Their study used the 2001 Survey of Consumer Finances (SCF). A similar study by Gerrard and Cunningham (2003) addressed the economic benefits of Internet banking adoption among customers in Singapore. Chang (2003) found that 25% of the population in Korea adopted electronic banking, which means, that in some countries Internet banking has become a widespread service. Some researchers have also addressed the adoption of Internet banking based on the diffusion of innovation and technology acceptance model, or theory of planed behavior (Chang, 2003; Lee, Lee, and Eastwood, 2003; Chau and Lai, 2003). Jun and Cal (2001) addressed the problem of determinants of Internet banking adoption incorporating perceived service quality as a relevant factor explaining adoption. The problem has also been explored from the supply side perspective (Gopalakrishnan, Wischnevsky, and Damanpour, 2003; Tan and Teo, 2000) and in the qualitative studies of adoption of Internet banking among corporate customers (Rotchanakitumnuai and Speece, 2003).

While the previous studies answer the questions about determinants of consumers' adoption of Internet banking, no one has investigated the shifts in the determinants of Internet banking adoption with data from the U.S. Some researchers admit that due to the turbulent nature of the electronic services market, the determinants of adoption of online services still need attention (Kolodinsky, 2004). Providers of online banking services could benefit from learning how these determinants have evolved over recent years. This knowledge could help to adjust market offers by targeting the most promising groups of potential customers. Bank managers understand why they should encourage customers to utilize the electronic banking channel. Their benefits are described by Chang (2002), who compared the average costs of money transfer transactions. For traditional checking transaction the cost is estimated at approximately $1, for ATM or telephone banking it varies between $.30 and $.50, while the cost of Internet transaction is less than $.01.

The purpose of this research is to determine the dynamics of change in the determinants of adoption of online banking services. …