A logit analysis of electronic banking in New Zealand

Abstract

Financial institutions have been adopting internet banking since the mid 90s, predominantly due to lower operating costs associated with internet banking, and pressure from non-banks interested in entering the internet banking market. In addition, customers utilizing internet banking facilities are increasing, as the cost savings on transactions over the internet are substantial (Mols, 1998; Sathye, 1999). Internet banking enables speedy transactions, access, time and money savings through providing free paper, and complete and up-to-date transactions. The competitive landscape of financial institutions is shifting as internet banking is no longer a competitive advantage but a competitive necessity for banks.The literature has featured numerous published research papers, articles and books addressing a wide range of issues relating to electronic banking (see Pyun, Scruggs and Nam, 2002; Li, 2002; Mols, 1999). However, there is little empirical research on the effect of electronic channels on consumer's buying behaviour (Hendrikse and Christiaanse, 2000) or banking channel preferences in New Zealand.The purpose of this research is to examine consumers' decision-making between electronic banking and non-electronic banking in New Zealand. The research uses the consumer decision making process (or paradigm) to identify factors that consumers use when deciding between electronic banking and non-electronic banking. These factors include service quality dimensions, perceived risk factors, user input factors, price factors, service product characteristics, and individual factors. The demographic variables include age, gender, marital status, ethnic background, educational qualification, employment, income, and area of residence.