CHAPTER 1: INTRODUCTION 1. 1 Background of Study The use, acceptance, adoption and application of internet technology to businesses to boast their performances are not something new. Saffu et al. , (2008), states that there has been a significant increase in the use and application of e-commerce in businesses in the past decade. E-commerce has benefits such as reduction in costs, increased business opportunities, reduced lead time and providing more personalized service to the customers (Turban et al. , 2008).
Internet banking or e-banking is one of the many tools of e-commerce adopted by the banking industry. Tools of information technology such as internet banking have significantly improved the quality of services offered by the banking industry and/or financial institutions (Dawes and Rowley, 1998). Currently, there are thousands and thousands of e-banking web sites all over the world. Botswana is a developing country, located in the southern part of Africa. She has a population of just about 2 million.
Being a developing country, internet technology has not been quite a thing for the citizens. Majority of people who get to use the internet are those in tertiary schools, work places and government departments, since they can get to use internet there. “In October 30th 2008, Botswana completed the multi-million pula Trans-Kalahari fibre-optic project, covering approximately 2000 kilometres. The project is expected to act as a catalyst to the growing ICT industry in the country. ” (Botswana Guardian. 2008) This study focused on the information technology (IT) adoption in a developing country; Botswana, where internet technology let alone internet banking is still at its infancy stage, but could offer potential benefits and usefulness to the entire population and to the banking industry in the not so distant future. “The Botswana government together with that of Namibia recently contributed US$37. 5 million each to secure the West African Cable System (WACS) landing point.
The 14 000 kilometre cable will bring direct and fast connectivity between Namibia, Botswana, West Africa, the United Kingdom and the rest of the world with a design capacity of 5. 12 terabit. These developments are expected to mark the beginning of cheaper bandwidth in the country. Both countries, Namibia and Botswana are at the dawn of an infrastructure revolution on the ICT landscape where broadband communication services will be further enhanced to benefit businesses, ndustry, internet community, academia and the entire population. ” (Telecom Namibia, 16 February 2011) For the business industries in Botswana to stay competitive, they would have to implement e-commerce to enable them to be more competitive and efficient. This without any doubt includes the banking industry, which by no means have to implement and manage effectively the Internet banking services. The importance of e-commerce in Botswana is very critical since Botswana is a landlocked country and has no access to sea ports. The Botswana government is looking at making the country the communication harbour in the region. Under the government of Botswana’s plans, developing e-business is a critical step and a vital pillar of the economy. ” (Botswana Guardian. , 2011). Given the importance of e-business and of Internet banking, it should be the key strategy of the banking industry in Botswana, just like in other developed and developing countries.
Although the Botswana government is willing to spend money to invest on internet technology, thus improving e-commerce infrastructure, the ultimate success of Internet banking is still depending on consumers’ perceptions and whether they are willing to use internet banking. Therefore, users and/or customers ought to be willing to use, adopt and accept the technology. 1. 2 Problem Statement “Internet usage in Botswana remains very low as a result of the high cost to access it, the high cost of computer hardware and generally low levels of Internet awareness.
Botswana remains on the wrong side of the digital divide with little access to development and innovation. The Internet banking service is a new technology in Botswana which means it needs a lot of efforts and sources to be adopted by both banks and customers. ” (Chippa Legodimo. , 2007). Although previous studies into internet banking adoption show that Internet banking has been implemented completely in many developed countries such as the United States of America and Europe (Pakkarainen et al. 2004) and thus showing more on the factors affecting Internet banking adoption and/or acceptance on innovation adoption in the context of such developed countries (Daniel, 1999; Mols, 2000), there is a growing trend in the adoption of Internet banking by the banking industry in the developing countries too (Gurau. , 2002). It should be noted, that even though Botswana is one of the developing countries; her economy is not growing at the same rate as those of other developing countries. This could be mainly due to her geographical location.
Therefore; e-commerce infrastructure is still less developed, thus the adoption of Internet banking is still at its infancy stage when compared to other developing nations. Given that in several countries, studies have been carried out measuring the factors affecting adoption of Internet business; and since there has never been any research or study on the factors affecting the decision to adopt Internet banking in Botswana, this study tried to study and measure such factors. 1. 3 Research Objectives
The primary objective of this study was to comprehend the consumers’ perception towards the adoption of internet banking in Botswana and to identify the factors affecting the decisions to adopt internet banking. The objectives of this research are as follows: 1. To identify the key factors affecting the decision to adopt Internet banking system in Botswana. 2. To examine whether socioeconomic influences the decision to adopt Internet banking in Botswana. 3. To identify the most significant factor that affect the decision to adopt Internet banking in Botswana. 1. 4 Definition of Terms
Internet Banking (Internet banking): Computerized service that allows a bank’s customers to get Internet with the bank via internet or telephone lines to view the status of their account(s) and transaction history. It usually also allows them to transfer funds, pay bills, request check books and so on (Business dictionary. , 2011) Internet: Global network of networks using universal standards to connect millions of different networks (Kenneth C Laudon and Jane P Laudon. , 2010). Information Technology (IT): The hardware and software technologies a firm needs to achieve its business objectives (Kenneth C Laudon and Jane P Laudon. 2010). Information System Literacy: Broad-based understanding of information systems that includes behavioral knowledge about organizations and individuals using information systems as well as technical knowledge about computers (Kenneth C Laudon and Jane P Laudon. , 2010). Adoption: The ability to accept and be willing to use. Privacy: The claim of individuals to be left alone, free from surveillance or interference from other individuals, organizations or the state (Kenneth C Laudon and Jane P Laudon. , 2010).
Computer Literacy: Knowledge about information technology, focusing on understanding of how computer-based technologies work (Kenneth C Laudon and Jane P Laudon. , 2010). Security: Policies, procedures and technical measures used to prevent unauthorized access, alteration, theft or physical damage to information system (Kenneth C Laudon and Jane P Laudon. , 2010). Risk Assessment: Determining the potential frequency of the occurrence of a problem and a potential damage if the problem were to occur. Used to determine cost/benefits of a control (Kenneth C Laudon and Jane P Laudon. , 2010). 1. 5 Scope of Study
This study focused on internet banking adoption in a developing country, Botswana; where internet banking is still emerging and seems promising. The study was carried out on individuals comprising of Botswana population, mainly in the two cities; Gaborone and Francistown and the two major towns Jwaneng and Lobatse. The study looked at factors affecting the decision to adopt internet banking services, particularly in Botswana. Some of the developing countries like Malaysia (Suganthi and Suganthi. , 2001) and Turkey (Polatoghu and Ekin. , 2001) have successful implemented and adopted internet banking services.
Adoption and implementation of internet banking is on the rising trend among the developing countries (Gurau. , 200). Likewise, Botswana as a developing country ought to implement and adopt internet banking services, therefore, this study looked at factors affecting the decision to adopt internet banking in Botswana. 1. 6 Significance of Study Banks: Comprehending the behaviour and perceptions of the customers is of great concern and importance to the survival of Banks (Devlin, Worthington, and Gerrard. , 2007). The banks and/or financial institutions will use this study to improve their service quality.
The study will facilitate useful feedback that will be used for the improvement of the services and facilities rendered by both banks and other financial institutions in Botswana. Internet usage is at its infancy stage in Botswana and this study will permit the banks to position themselves and acquire the necessary knowledge on how to sell the service more to their customers. Understanding the customer’s perception regarding a product and/or service, put the banks at an advantage, thus allowing them to formulate strategy and customize their services to the needs of their customers. Customers/users:
Customers/users ought to know and/or be aware of the cons and pros of using this facility. Therefore, the knowledge on the factors affecting the customers’ decision to adopt and use internet banking is a vital asset to all customers and potential customers as they will be in a position to make informed decisions. This study would enable customers to evaluate if they really need this service or not. Research: Since there is no study in previous researches on this topic in Botswana in particular, future and current researchers would be in a position to use it as a point of reference and/or to improve it.
It will also encourage other researchers to consider researching more on the adoption and use of internet banking in Botswana. It will serve as a starting point for them. 1. 7 Organization of Study Chapter 1: introduction This chapter inductions the subtopics such as background of study, research objectives, definition of terms, scope of study, significance of study and organization of study; to make the comprehension of the whole study visible and/or viable thus making it easier to comprehend the whole study.
It is more of a gate way into the whole study as it gives a brief but detail description and/or summary of the whole study. Chapter 2: literature review Based on the previous studies, this chapter discusses and explains internet banking in details and factors affecting the decision to adopt internet banking in Botswana. It clearly depicts the definitions of dependent variable, independent variables and moderating variables. References from the previous studies are used to enhance comprehension and to see how independent variables influence dependent variable, if ever they do.
Chapter 3: Methodology This chapter depicts the whole arrangement of the study. In includes such subtopics as, research framework, hypothesis development, data collection method, questionnaire design, data analysis techniques and summary. Such subtopics are discussed in detail. It is in this chapter that all factors affecting the decision to adopt internet banking in Botswana (independent variables) and moderating variables are discussed and sampled. Hypothesis statements are presented and data collection methods are well explained here.
Questionnaire is designed based on the independent variables and moderating variables to measure or see if there is any relationship and/or association between them and the dependent variable. Chapter 4: Data Analysis and Findings This chapter involves the incorporation of the interpretation of the collected data from respondents via quantitative method. The determination of the acceptance or rejection of the stated hypotheses statements was also tested. Software called SPSS (Statistical Package for Social Sciences) otherwise also known as Predictive Analytics Software (PASW) was used in the research to measure the results.
This chapter mainly focuses on analysis the data collected, modelling, graphing and tabling it and presenting it. It is in this chapter, where the acceptance and/or rejection of hypothesis testing statements were scrutinized. Chapter 5: Conclusion and Recommendations This chapter explains the outcomes of the testing of the hypotheses determined in chapter 4. The acceptance or rejection of the hypothesis is discussed as well. Additionally the concluded results of hypothesis testing from this study are compared with findings from previous researches. Limitations of this study were also discussed.