How customers’ offline experience affects the adoption of online banking

Abstract

Purpose-This paper aims to examine the impact of customers' offline transaction behaviour in the form of loyalty and cross buying on the adoption of self-service technology innovations by non-business customers in the context of online banking. Design/methodology/approach-This study extends the Diffusion of Innovation Theory, as well as the Technology Acceptance Model adapted to describe and model individual customer observed behaviours in the pre-adoption stage of the adoption process. The Log-logistic parametric survival model is applied using panel data for 1,357 randomly-selected new customers from a bank. Findings-Remarkable differences arise among customers' behaviours related to periodicity of interactions with the bank and quantity of products involved in the interactions, as well as convenience and risk of the interactions. Our results corroborate that those customers who are more likely to adopt the online banking faster show an offline behavioural pattern more related to higher periodicity of interactions and convenience, rather than a high number of products involved in their interactions, the use of high-risk products or the maintenance a higher average monthly liabilities. Originality/value-While previous research explaining the process of adoption of the online channel has mainly focused on the analysis of customer's attitudes (i.e., customers' perceptions) and demographics, in this research an additional explanation is proposed using customers' offline transactional behaviours. In addition, there is considerable amount of research about the adoption of new technologies, but there is a scarcity of studies looking specifically at the financial services and banking industry.

The Effect of Banks' IT Investments on the Digitalization of their Customers

“…In this sense, there are several ways to determine whether a particular bank customer is digitalized. Hence, in line with prior studies, we take into account the following dimensions of the digitalization process (Campbell and Frei, ; Estrella‐Ramon et al, ; Sathye, ; Szopiński, ): Adoption of online banking: this is measured as Digital bank customer , a dummy that takes the value 1 if the customer has a bank account that they have accessed online in the last year. Digital channel vs. branch: a digital bank customer is expected to be less attached to the physical branch of their bank. To determine the extent to which bank customers have replaced access through branches with the digital channel, we use the variable Digitally dominant , calculated as the ratio of the number of transactions conducted online to the number of transactions conducted in a physical branch over the last quarter. Digital online intensity: while having access to an online bank account is the first step in becoming a digital customer, it is important to examine the financial activities that a customer conducts online.…”

“…Socio‐economic characteristics are controlled for by taking into account gender (Laforet and Li, ; Laukkanen, ), age (Estrella‐Ramon et al, ; Laforet and Li, ; Luo et al, ), monthly household income (Laforet and Li, ; Veríssimo, ) and number of inhabitants (Hernando and Nieto, ; Laforet and Li, ). We control for the fact that effects on customers’ digitalization may differ depending on the extent of their current digitalization by including the last internet connection of the customer and the number of digital devices they own (Laforet and Li, ; Szopiński, ).…”

“…Harris et al () have found that although consumers of all ages are equally interested in currently emerging technologies such as online banking, younger users are more interested in the newest technologies. Young people are also early adopters of online banking (Estrella‐Ramon et al, ; Laforet and Li, ; Luo et al, ). In a similar vein, Laukkanen, () has shown that both age and gender are significant predictors of the adoption of digital banking.…”

“…In this sense, there are several ways to determine whether a particular bank customer is digitalized. Hence, in line with prior studies, we take into account the following dimensions of the digitalization process (Campbell and Frei, 2010;Estrella-Ramon et al, 2016;Sathye, 1999;Szopi nski, 2016):…”

“…However, if these digital services are perceived as costly (Gerrard et al, ) and complex (Mallat, ; Sathye, ), customers may decide not to use them. Socio‐economic factors such as age (Estrella‐Ramon et al, ; Kesharwani, ; Laforet and Li, ; Luo et al, ), income (Veríssimo, ) and geographic location (Xue et al, ) also play a role in the digitalization process.…”