Effect of business operational factors on adoption of E-banking by saccos in Kisumu county, Kenya

Abstract

Despite the fact that business operational factors (technological, cost and security) among other factors employed by SACCOs are key to the adoption of e-banking, SACCOs in Kenya have continued to comparatively register low e-banking adoption rates. Although previous research outcomes present positive relationship between independent variables (technology, cost, and security) and dependent variable (adoption of technology) there exist contradictory findings with cases of inconsistency coupled with low adoption and non-usage of technology hence calling for further research attention. This study sought to determine the effect of business operational factors on adoption of e-banking by the SACCOs in Kisumu County, Kenya. The specific objectives were; to investigate the association of technological factors, security factors and cost factors and adoption of e-banking, to investigate whether technological factors, security factors and cost factors have any significant effect on adoption of e-banking by SACCOs in Kisumu County, Kenya. The study area was Kisumu County which is a home to a large number of SACCOs. This study draws from diffusion of innovation theory explaining how technology, cost and security affect SACCOs adoption of e-banking. A Correlational research design was adopted for this study. The target population for the study was 91 employees drawn from the senior and middle level management comprising of the chief executive officer, Deputy chief executive, finance manager, credit officer, Fosa manager, one senior teller operator and internal auditor of all the 13 registered, SASRA licensed and active SACCOs operating within Kisumu County of which nine (9) were used for pilot study to test the reliability and validity of the data collection instrument and Cronbach alpha was used to measure its internal consistency and 82 left for main study. A census survey (saturated sampling) was be used in data collection. Primary data consisting of opinions on association of technological factors, security factors, cost factors and adoption of e-banking, effect of technological factors, security factors, cost factors on adoption of e-banking was collected using a structured questionnaire. Descriptive, correlational and regression was used to analyze data and the results presented in tables. The Findings indicate that technological factors (r = 0.82, p<0.05), security factors (r = 0.37, p<0.05) and cost factors (r = 0.31, p<0.05) had a positive and significant relationship with adoption of e-banking. The study concluded that since all the variables had some effect on adoption of e-banking. This means that understanding the effect of business operational factors by SACCOs can help them adopt e-banking and help them achieve efficiency and customer satisfaction in addition to controlling costs of acquisition and implementation costs.