1 
 

 

 

 

 

 

The Graduate School of Business Administration 
 

Faculty of Commerce, Law and Management 
 
 

Factors Influencing Digital Banking Adoption: An Empirical Study in 
South Africa  

 

 
A research study submitted in the Faculty of Commerce, Law and 

Management, University of the Witwatersrand for the degree of 

Master of Management in Strategic Marketing 

 

Student 

Shaun Amukelani Bvuma 

0608172A 

 

 

 

https://www.wits.ac.za/postgraduate/academic-programmes/faculty-of-commerce-law-and-management-/


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ABSTRACT 
 

Purpose 

Various factors influence banking customers to adopt digital banking, also known as 

online banking or e-banking. This study sought to determine which factors influence 

continuous intention to use online banking among individuals over the age of 45 in 

South Africa 

Design/methodology 

The study employed a quantitative approach. A convenience sampling method was 

used from a total of 256 participants who reside in South Africa. The participants were 

aged between 45 and 65 years, who had used online banking within the past 6 months 

completed an online questionnaire. The data was analysed using SPSS 28 and 

Structural Equation Modelling AMOS 28. 

Findings 

All the hypotheses were significant, with perceived ease of use, perceived usefulness 

and convenience having the strongest relationship on continuous intention to use 

online banking. This is an interesting finding amongst the 45 – 55 year old generational 

cohort, showing that technology and convenience play a major role in this age 

segment. 

Practical Implications 

The findings show that favourable banking conditions need to be in place, especially 

for Generation X (45-55 years) customers, who were the majority of participants. The 

findings could better assist marketing managers in the banking industry with 

developing strategies for this generational cohort. 

Originality/value 

The findings of the current study add value to the body of knowledge on online banking 

usage amongst the elderly population, especially because it involves online consumer 

behaviour. 

Keywords 

Digital banking, Generation X, baby boomers; convenience, banking, online consumer 

behaviour.  



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DECLARATION 

 

I, Shaun Amukelani Bvuma (0608172a), declare that this research report is my own 

work except as indicated in the references and acknowledgements.  It is submitted in 

partial fulfilment of the requirements for the degree of Master of Management in 

Strategic Marketing at the University of the Witwatersrand, Johannesburg.  It has not 

been submitted before for any degree or examination in this or any other University.   

   

Name and surname:            Shaun Amukelani Bvuma                                                                                     

.                                                                       

   

Signed at                                Centurion, Gauteng       

   

   

On the         22nd          day of                    December                                      2023.                                    

 

 

 

 

 

 

 

 

 

 

 

 

 



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DEDICATION  

 

This report is dedicated to my grandfather George Mashangu Bvuma who’s teachings, 

stern words and guidance has made me the man I am today – and to my two late 

grandmothers Mthavini Johanna Chauke and Mujaji Lillian Bvuma who both showered 

me with love and nurturing throughout my childhood until their departures. May both 

your precious souls continue to rest in eternal peace. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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ACKNOWLEDGEMENTS 

 

I would like to express my gratitude to my supervisor, Dr Neo Ligaraba, for her 

guidance, understanding, patience and support throughout our journey. The road was 

not easy, but your unwavering support made journey much more worthwhile. May you 

continue shining and making your mark in the boarder academia field of marketing. 

My deepest gratitude goes out to my parents Mr VT and Mrs TB Bvuma and to my 

loved ones Fanisa Bvuma, Shiluva Bvuma and Langavi Mathebula. None of this would 

have been possible without the special role that each of you played in my life. 

  

Special gratitude goes out to my line manager Victor Bosman and the Absa Life 

Executive Committee who presented me the opportunity to further my studies. By 

doing so you have ensured that “My story matters” 

 

Special shout out to my Wits MMSM colleague Len Sello for your awesome energy 

and positive vibes. You are a star in the making. 

 

With that said, all of this would not have been possible without my heavenly father 

above ku nga Yeso Mukutsuri Wanga. I give him all the glory as you are my light and 

my salvation. 

 

 

 

 

 

 

 

 

 



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TABLE OF CONTENTS 

ABSTRACT ............................................................................................................................... 2 

DECLARATION ......................................................................................................................... 3 

DEDICATION ............................................................................................................................. 4 

ACKNOWLEDGEMENTS ......................................................................................................... 5 

TABLE OF CONTENTS ............................................................................................................ 6 

LIST OF FIGURES .................................................................................................................. 10 

LIST OF TABLES .................................................................................................................... 11 

CHAPTER 1: OVERVIEW OF THE STUDY ........................................................................... 12 

1.1 Introduction ............................................................................................... 12 

1.2 Background of Study ................................................................................ 12 

1.3. Context of the Study .................................................................................... 15 

1.3.1 Overview of the Retail Banking Industry ................................................................................ 15 

1.3.2 Overview of the Global Banking Industry ............................................................................... 15 

1.3.3 Overview of the South African Retail Banking Industry ..................................................... 16 

1.4 Problem Statement ....................................................................................... 17 

1.5 Research objectives ..................................................................................... 19 

1.6 Research Question ....................................................................................... 20 

1.7 Purpose of the Study .................................................................................... 20 

1.8 Contribution of the Study ............................................................................. 20 

1.8.1 Practical Contribution .................................................................................................................. 20 

1.8.2 Theoretical Contribution ............................................................................................................. 21 

1.9 Delimitation of the Study .............................................................................. 21 

1.10 Definitions of Key Terms ............................................................................ 22 

1.11 Organisation of the Study .......................................................................... 23 

1.12 Chapter Summary ....................................................................................... 23 

CHAPTER 2: LITERATURE REVIEW .................................................................................... 24 

2.1 Introduction ................................................................................................... 24 

2.2 Banking Industry ........................................................................................... 24 

2.2.1 Global Banking Industry from a Digital Banking Perspective ........................................... 24 

2.2.2 South African Banking Industry from a Digital Banking Perspective ............................. 24 

2.2.3 Category of Consumers and Digital Banking ........................................................................ 25 

2.2.4 Digital Banking and Marketing .................................................................................................. 26 

2.2.5 Digital Advertising ........................................................................................................................ 26 

2.2.6 Psychological Factors ................................................................................................................. 26 

2.3 Theoretical Grounding .................................................................................. 27 



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2.3.1 Technology Acceptance Model (TAM) Theory ...................................................................... 27 

2.3.2 Theory of Diffused Innovation (TDI) ......................................................................................... 28 

2.3.3 Theory of Planned Behaviour (TPB) ........................................................................................ 29 

2.3.4 The Extended Unified Theory of Acceptance and Use of Technology (UTAUT2) ........ 30 

2.4 Conceptual Development ............................................................................. 31 

2.4.1 Perceived Ease of Use ................................................................................................................. 33 

2.4.2 Perceived Usefulness .................................................................................................................. 34 

2.4.3. Facilitating Conditions ............................................................................................................... 34 

2.4.4 Hedonic Motivation (Perceived Enjoyment) ........................................................................... 34 

2.4.5 Convenience ................................................................................................................................... 34 

2.4.6 Security ............................................................................................................................................ 35 

2.4.9 Continuous Intention ................................................................................................................... 35 

2.5 Conceptual Model and Hypothesis Development ...................................... 36 

2.5.1 Conceptual Framework ............................................................................................................... 37 

2.5.2 Hypotheses Development ........................................................................................................... 37 

2.6 Chapter Summary ......................................................................................... 40 

CHAPTER 3: RESEARCH METHODOLOGY ........................................................................ 41 

3.1 Introduction ................................................................................................... 41 

3.2 Research Philosophy.................................................................................... 41 

3.3 Research Design ........................................................................................... 42 

3.4. Population and Sampling ............................................................................ 43 

3.4.1 Target Population .......................................................................................................................... 43 

3.4.2 Sampling Frame ............................................................................................................................ 44 

3.4.3 Sampling Method .......................................................................................................................... 44 

3.4.4 Sampling Size ................................................................................................................................ 45 

3.5 Measures ....................................................................................................... 45 

3.5.1 Perceived Ease of Use (PEU) ..................................................................................................... 46 

3.5.2 Perceived Usefulness (PU) ......................................................................................................... 46 

3.5.3 Facilitating Conditions (FC)........................................................................................................ 46 

3.5.4 Hedonic Motivation (HM) ............................................................................................................. 46 

3.5.5 Convenience (CIB) ........................................................................................................................ 47 

3.5.6 Security (SITB) ............................................................................................................................... 47 

3.6 Data Collection .............................................................................................. 47 

3.7 Data Analysis ................................................................................................ 48 

3.8 Validity and Reliability .................................................................................. 48 

3.8.1 Internal Validity .............................................................................................................................. 48 

3.8.2 External Validity ............................................................................................................................ 49 

3.8.3 Content Validity ............................................................................................................................. 49 

3.8.4 Reliability ......................................................................................................................................... 49 

3.9 Ethical Considerations ................................................................................. 49 

3.9.1 Permission ...................................................................................................................................... 49 

3.9.2 No Harm to Subjects .................................................................................................................... 49 



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3.9.3 Informed Consent ......................................................................................................................... 50 

3.9.4 Confidentiality, Privacy and Anonymity .................................................................................. 50 

CHAPTER 4: DATA ANALYSIS AND RESULTS PRESENTATION ...................................... 51 

4.1 Introduction ................................................................................................... 51 

4.2 Descriptive Statistics .................................................................................... 51 

4.2.1 Age Group ....................................................................................................................................... 53 

4.2.2 Education Level ............................................................................................................................. 53 

4.2.3 Monthly Individual Income ......................................................................................................... 54 

4.2.4 MAIN Bank That You Currently Bank With ............................................................................. 55 

4.3 Structural Equation Modelling ..................................................................... 55 

4.4 Reliability Measurements ............................................................................. 55 

4.5 Validity Measurements ................................................................................. 59 

i. Convergent Validity ............................................................................................................................. 59 

ii. Factor Loading and Items ................................................................................................................. 60 

iii. Discriminant Validity ......................................................................................................................... 62 

4.6 Convergent Validity ...................................................................................... 63 

4.7 Model and Model Fit Assessment ................................................................ 64 

4.8 Model Fit Assessment Results .................................................................... 66 

4.9 The Structural Model Fit and Analysis of Path Modelling ......................... 67 

4.10 Hypotheses Testing .................................................................................... 68 

4.11 Discussion of Hypotheses Results from the Conceptual Model of the 

Study .................................................................................................................... 69 

4.12 Results of Structural Model: Hypothesis Testing .................................................................. 71 

4.13 Chapter Summary ....................................................................................... 72 

CHAPTER 5: DISCUSSION OF RESULTS ............................................................................ 73 

5.1 Introduction ................................................................................................... 73 

5.2 The Study’s Demographic Characteristics ................................................. 73 

5.3 Discussion of Hypotheses Displayed from the Model under 

Investigation ........................................................................................................ 74 

5.4 Chapter Summary ......................................................................................... 77 

CHAPTER 6: CONCLUSION AND RECOMMENDATIONS .................................................. 78 

6.1 Introduction ................................................................................................... 78 

6.2 Conclusion of the Study ............................................................................... 78 

6.3 Implications and Recommendations of the Study ..................................... 78 

6.4 Limitations of the Study and Future Research ........................................... 82 

REFERENCES ........................................................................................................................ 84 



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APPENDICES .......................................................................................................................... 93 

Appendix A: Participation Information Sheet ................................................... 93 

Appendix B: Research Instrument .................................................................... 94 

Appendix C: Ethical Clearance Certificate ........................................................ 99 

Appendix D: Standard Regression Weights ................................................... 100 

Appendix E: Turnitin Report ............................................................................ 101 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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LIST OF FIGURES 
Figure 1.1 The proportion of the banked population that used a banking channel to make 

transactions (FinScope survey, 2019) ................................................................................. 13 

Figure 2.1: Conceptual framework of the study ................................................................... 36 

Figure 4.1 Age Group.......................................................................................................... 51 

Figure 4.2 Education Level.................................................................................................. 51 

Figure 4.3 Monthly Individual Income .................................................................................. 52 

Figure 4.4 Main Bank of Choice .......................................................................................... 53 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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LIST OF TABLES 
Table 4.1: Demographic Data Profile of Respondents ......................................................... 50 

Table 4.2: Reliability Measures ........................................................................................... 55 

Table 4.3: Composite Reliability .......................................................................................... 57 

Table 4.4: Factor Loadings and Items ................................................................................. 59 

Table 4.5: Inter-Construct Correlation Matrix ....................................................................... 61 

Table  4.6: Average Variance Extracted .............................................................................. 62 

Table 4.7: CFA Model ......................................................................................................... 63 

Table 4.8: Summary of Model Fit Assessment .................................................................... 65 

Table 4.9 : Structural Model Fit Assessment ....................................................................... 66 

Table 4.10: Hypothesis Results and Path Coefficients ........................................................ 67 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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CHAPTER 1: OVERVIEW OF THE STUDY 
 

1.1 Introduction 

The chapter takes a glance at the banking industry in South Africa, focusing on the 

sub-sections which break-down the main problems which the study is seeking to 

address, such as the background of the study, its context, and problem statement 

which will all help answer the question on the factors which influence consumers to 

adopt digital banking.  

 

1.2 Background of Study 

In a rapidly growing economy, where technological advances and innovation are 

fundamental towards an organisation’s pursuit of achieving sustainable competitive 

advantage, the concept of digital banking and consumers’ adoption of digitisation are 

key focus areas which will assist banks in achieving this objective. Technology has 

revolutionalised the way the modern-day consumer transacts in the economy and 

obtains services from services providers. Coetzee (2018), attested this due to an 

exponential rate going into the fourth industrial revolution. Furthermore it has been 

noted that with the rise of globalisation, banks have been forced to make use of new 

and various channels in order to gain competitive advantage (Koenaite, Chuchu & 

Venter de Villiers, 2019) In addition, Koenaite et al. (2018), are of the view that banks 

have been under significant pressure to  reduce their costs and increase their financial 

positions through the development of innovative products and services. This has 

resulted in the banks adopting a multi-channel distribution approach giving the banks 

an overview of their customers ability to access banking services from across the 

region. 

South Africa comprises of five commercial banks; namely, Amalgamated Banks of 

South Africa (ABSA), First National Bank (FNB), Nedbank, Standard Bank and 

Investec. The first four are the traditional big banks, with a vast majority of consumers 

having a primary bank account with one of these banks. Investec is the smallest of the 

five in terms of assets; however, Investec has retained its position as the country’s 

best-performing lender due to its high scores for operational efficiency, asset quality 

and liquidity (Business Tech, 2022). Capitec Bank and African Bank rank in sixth and 



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seventh places, respectively, and this can be attributed mainly to their target market 

and the various banking products which they have to offer. 

The way in which banks operate has changed dramatically over the last few years, 

with advancements in technology and the ever-changing consumer preferences being 

the main drivers. According to Masocha et al., (2020) technology has been integrated 

into banking product and services offerings for the better part of the last three decades 

through the use of Artificial Intelligence (AI), biometrics and robotics, to name a few. 

An outlook study conducted by the Financial Sector Conduct Authority (FSCA) in 2021 

established that there has been an increase in the adoption of digital channels by 

consumers in South Africa (FSCA, 2021). The findings from the study are illustrated 

in Figure 1.1, and are as follows: 

 The proportion of individuals that used a banking app and cell phone banking 

increased by 4% points between 2018 and 2019. 

 Retail stores have become increasingly popular as a distribution channel for 

simple transactions, with Tyme Bank partnering with Pick ‘n Pay and the 

Checkers Money Markey product, as examples. 

 Individuals that used the retail stores to perform transactions between 2018 and 

2019 increased 4%. 

 Consequently, banks have been reducing the number of physical facilities 

available for transactions. 

 The aggregate number of bank branches owned by the 5 largest banks 

decreased by 56 branches in 2020, from 3 204 branches in 2019. 

 The number of ATMs available decreased in 2020. 

 



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Figure 1.1 The proportion of the banked population that used a banking channel to make transactions (FinScope survey, 
2019) 

The lockdown measures placed around the globe in 2020 further accelerated the rate 

at which consumers adopted the utilisation of and reliance on technology, especially 

in relation to their daily banking needs, leaving them with no choice but to adapt their 

banking habits. During this period, many branches were compelled to temporarily 

close, resulting in heavy reliance on mobile banking apps to conduct daily banking 

activities. For the millennials and generation Y consumers, however, this would be 

familiar territory, as they would have been already accustomed to the virtual world, as 

the internet has always been accessible and used extensively by these type of 

consumers. The most profitable segment of banking customers in South Africa  

comprises of Baby Boomers and generation X individuals. Understanding the  

behaviors and banking needs of seniors becomes an important task for banking 

institutions (Ramlall, Hattingh & Van Deventer, 2020). Due to this, banks must see to 

it that their product offerings are tailored in such a way that they constantly meet the 

needs of these customers while ensuring that they do not neglect the needs of the 

other customers in lower age groups. A summary report from the PBWM indicated that 

customers aged between 45 - 57 years of age had the highest growth rate between 

the years 2021 – 2022 (PBWM, 2022). Findings from this report may serve as extra 

motivation to take care of this segment of customers. New players, such as Discovery 

Bank and Tyme Bank, have also recently joined the banking industry, with the latter 

being earmarked as a fully-fledged digitised bank. Tyme Bank was launched in 

November 2018. However, to date it does not have any physical branches. Therefore, 

their operations and clientele base would not have been impacted by the global 



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pandemic, as the structure of their operating model (of being a fully digitised bank) 

alleviated them from that risk exposure. 

 

1.3. Context of the Study 

This section situates the study within online consumer behaviour, and the banking 

industry, in particular, to facilitate understanding of the study. 

1.3.1 Overview of the Retail Banking Industry 

Studies in consumer behaviour have shown that consumers can be fickle and that 

consumer behaviour is unpredictable and ever-changing (Schiffman & Kanuk, 2000). 

Consequently, banks relentlessly seek to understand the individual and group factors 

which influence consumer behaviour in the adoption of digital banking. An 

understanding of these factors will help management to keep abreast with 

technological advancements and in banks’ efforts to adopt these developments into 

the banking operations and tendencies of their clients.  

1.3.2 Overview of the Global Banking Industry 

The banking sector can be roughly categorised into three types; namely, traditional 

banks, digital banks and open banks. According to Rubanov (2019), traditional banks 

typically offer services such as loans, deposits and payments. Digital banks use 

several channels of services to clients, while open banks collaborate to provide their 

clients with numerous banking services.  

Since the 1990s, the banking sector has started to shift from its traditional financial 

delivery channels towards autonomous, self-service delivery channels (Pikkarainen et 

al., 2004). The advent of new technologies globally has revolutionised the way 

financial institutions conduct their business with their clients. This has, naturally, 

enabled greater market access and reach (Tan and Teo, 2000), significantly 

benefitting the commercial sector by allowing banks to provide better services to 

customers (Afshan and Sharif, 2016). In affirming that the banking sector has been 

impacted by these new technologies, a PriceWater-Cooper Digital Consumer Survey 

(2021), has revealed that within an eighteen-month period, since 2020, many US 

banking customers had switched to digital interactions for services such as payments, 

loan applications, insurance and investing habits. As stated previously, a few of these 



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shifts were attributed during the lockdown period, when over-the-counter or traditional 

banking was a high-risk activity for the transmission of the virus. Thus, the lockdown 

period, due to the global pandemic, can be credited with having facilitated the 

digitisation of banking globally, to an appreciable extent. 

According to the survey, US banks were failing to meet consumer demands, as about 

25% of the clients surveyed indicated that they would open a new digital banking 

account but could not do so at their current bank. Another trend which was observed 

were generational preferences. The survey showed, for example, that 60% of clients 

over 55, the so-called baby boomers, considered their primary banking account to be 

the one where they had a cheque account, compared to about half of Generation Z 

clients, who are clients aged 18 to 24 years. 

1.3.3 Overview of the South African Retail Banking Industry 

PriceWater-Cooper (2022) further reported that banks in South Africa have noted the 

new developments and positioned themselves for relevance in a “marketplace without 

boundaries”. Consequently, the Big Four banks in South Africa are introducing new 

banking products to meet the ever-changing needs of their clients. Although the Big 

Four are already well-established in terms of clientele, they still strive to keep abreast 

with their clients’ individual and group banking needs and preferences, and seek 

innovative and competitive ways to deliver banking products, to meet the consumers’ 

growing needs. This is intended to ensure that they maximise their profits. 

The PriceWater-Cooper Digital Consumer Survey (2021) showed that there is a 

growing section of banking clients which does not want to conduct its banking activities 

at branches at all, called digital natives. These are clients who avoid visiting branches 

altogether, preferring rather to conduct all their banking activities digitally. Additionally, 

the survey identified another group of banking clients, called phygital bankers, who 

are mainly digital, but retain the option of using a traditional bank to conduct some of 

their banking needs. According to the survey, US banks were failing to meet consumer 

demands, as about 25% of the clients surveyed indicated that they would open a new 

digital banking account but could not do so at their current bank. Another growing trend 

was generational preferences; for example, 60% of clients over 55, the so-called baby 

boomers, considered their primary banking account to be the one where they had a 



17 
 

cheque account, compared to about half of Generation Z clients, who are clients aged 

18 to 24 years. 

 

 1.4 Problem Statement 

Most banks in South Africa provide digital banking opportunities for their clients 

because digital banking enables the use of technology to conduct banking transactions 

in a seamless manner (Alkhowaiter, 2020) however there still is a gap in the 

motivational factors which influence the uptake of digital banking applications and  

technology (Widjaja, 2016).  Services offered by banking institutions continue to 

challenge and cater for the attitudes of consumers in their acceptance towards new 

technology (Chong et al., 2019). According to Chang, Wong, Lee, and Jeong (2016) 

most digital savvy banks changed their business processes and operational models 

to align with fintech capabilities who were now seen as their main competitor in the 

digital market. This can be ascribed to several noteworthy advantages concomitant 

with digital banking. These include providing the bank customers with options to 

conduct banking activities, such as transfers and bill payments, from the comfort of 

their homes, without a need to visit the branches. For instance, Zheng (2010) asserts 

that digital banking allows bank customers to make transactions on their accounts, 

without having to physically visit the banks. Instead, they use the banks’ software over 

the internet and on mobile phones. An added advantage is the convenience of secure, 

year-round banking, 24 hours a day. In echoing these sentiments, Wu (2005) posits 

that digital banking improves clients’ safety by reducing the need to carry large 

amounts of cash. Similarly, Redlinghuis and Rensleigh (2010) concur that 

convenience is one of the key factors influencing costumers’ preference for digital 

banking. 

According to Karsh (2020), Generation Z customers have the highest awareness level 

in financial technology (Fintech) than older generations. Sachdev (2019) revealed in 

his study that the Generation Z banking customers intensively depend on using 

technology in their lives. Conducting a study on factors influencing Generation Z 

customers adoption to digital banking would not have yielded much new findings as 

this generation was literally born with a smartphone in hand (Karsh, 2020). According 

to White (2021) the two groups which use mobile banking apps the most are 

millennials and Gen Z customers. In addition, White (2021) discovered that 99% of 



18 
 

Gen Z and 98% of millennials use a mobile banking app for a wide range of tasks, 

including viewing account balances, checking their credit score and depositing a 

check. Based on this, investigating banking customers aged 45 and above would have 

yielded more positive results as there is still a gap in this segment when it comes to 

digital adoption. 

Despite all the advantages outlined above, however, a considerable section of banking 

customers still has not embraced digital banking. This is problematic because the 

expansion of a banking product depends on its popularity among its users, as 

measured by the percentage of the customers adopting it: the larger the percentage, 

the lower the bank costs and the higher the profitability, for the bank. Some of the 

pushback to the adoption of digital banking may be attributed to the rapid rise in cyber-

attacks and cyber-crime around the globe, in the form of phishing, smishing and 

vishing, to name a few. A study conducted by Alwan and Al-Zubi (2016) stressed the 

need for commercial banks to place extreme measures on issues surrounding privacy 

and security within the banking sector as a way of mitigating this risk. From a South 

African context, the recent implementation of the Protection of Personal Information 

Act (POPIA) in 2020 required organisations to have measures in place and operational 

capability to ensure that customers personal information is protected at all times and 

any organisation which do not comply with this legislation shall face severe sanctions 

in the form of hefty fines (up to 10 million rands) and  from a banking  perspective, 

possible debarment from operating as a financial service provider (FSP). Cyber-

attacks do not only result in financial losses for the bank, but non-financial losses, such 

as reputational damage, will also occur, resulting in a loss of confidence from 

customers towards their respective bank in terms of keeping their personal 

information, or in this case, money safe. Therefore, the issue of cyber-crime can be 

deemed as determining factor which may impact or influence consumers decision in 

adopting to digital banking. Determining factors which affect customer’s adoption of 

digital banking will help the bank understand their client’s needs, thereby assist the 

bank in tailoring their banking products to meet these customers’ needs and make 

more profits in the long-term. Although the aspect of cyber-crime is one which could 

influence clients to delay digital banking adoption, it is not always clear what other 

individual and group factors influence banking customers to adopt a new technology. 

The proposed study, therefore, sought to investigate the factors which influence the 



19 
 

adoption of new technology by banking customers. It is envisaged that the findings will 

help the banks to meet their customers’ ever-changing needs, while remaining 

competitive and profitable. According to Samans & Drzenick (2016), the success of 

future businesses and countries hinges on the adoption of digital technology.  

 

 1.5 Research objectives   

The study sought to investigate the factors which influence the adoption of digital 

banking in  South Africa. The specific objectives are as follows: 

 To determine bank customers’ understanding of the concept digital banking 

 To understand bank customers’ experiences of using internet banking and the 

banking app. 

 To understand the individual and group factors influencing the adoption of the 

two digital banking methods in South Africa. 

 To find out which digital banking applications participants are aware of. 

 To find out if participants are aware of the benefits of using digital banking 

 

According to Nor and Pearson (2008), understanding the barriers which influence 

consumers to switch to digital banking is crucial, particularly from a managerial 

perspective. Agapito, et al., (2020: 191) concur, contending that it is important for the 

banking industry to increasingly seek to understand the factors influencing consumers’ 

decisions to switch to digital banking. This is because management decides which 

new bank products are appropriate to achieve digital transformation, based on the 

available best practices models. Furthermore, the bank switching to technology makes 

financial sense because the bank effectively remains open for 24 hours a day, with the 

added advantage of requiring fewer human resources. 

A few of the previous studies on this topic have focused on managerial factors, 

adoption of internet banking in foreign contexts, consumer perceptions, inter-

generational comparisons and customer loyalty in banking. Furthermore, most were 

conducted in foreign countries. Studies on individual and group factors which influence 

consumer switch to digitisation have, according to the available studies, and to the 

best of this researcher’s knowledge, have not been investigated in South Africa by 

researchers before. 



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1.6 Research Question 

Main research question 

Which factors influence continuous use of online banking amongst 45-65 year olds in 

South Africa? 

 

 1.7 Purpose of the Study 

The research purpose for individuals and groups was to generate information on each 

of the nature of digital banking, and how it is different from other forms of banking. 

The study also sought to investigate respondents’ experiences of using internet 

banking or the banking app. A review of the literature on this topic in South Africa 

yielded just one study. This shows that there is a dearth of studies on this topic in the 

South Africa. The research study is expected to yield findings which include unusual 

explanations, such as the effects of the Covid-19 pandemic. The research study also 

sought to investigate the major individual and group factors which influence 

consumers to adopt digital banking across all regions in South Africa, be it a rural or 

urban setting, which most studies in the adoption of digital banking were located. 

 

 1.8 Contribution of the Study 

The proposed study will contribute to knowledge on digitization in the banking industry, 

both practically and theoretically, across all geographic spheres in South Africa. This 

knowledge will benefit both the local and international banking industry. 

1.8.1 Practical Contribution 

It is envisaged that the research study will contribute to the body of knowledge on 

consumer behaviour in general, and switching to digital banking, in particular. This is 

particularly so because individual and group factors influence consumers’ buying 

power, which in turn influence the profitability of banks. A good understanding of bank 

clients’ behaviour is therefore essential for the profitability of these banks. 

In addition, both local and international banks can use the findings of this study to 

improve their product offerings, in accordance with consumer sentiments regarding 

their banking needs and preferences. Success in meeting the needs of banking 

customers will also help in improving bank profitability as more clients switch to 



21 
 

evolving technology. Furthermore, as Fintechs offer most of the services offered by 

commercial banks, Fintechs will also benefit from the findings of the proposed study.  

According to Diener and Spacek (2021) digitalisation is also consistent with the United 

Nations Sustainability Development Goals. These goals state, among other things, 

that the current businesses have to be transformed, in order to achieve sustainable 

and economic environmental challenges. In that regard, digitisation implies fewer trips 

to the bank because the consumer can make bank transactions from home or 

anywhere convenient to them. This, in turn, implies less pollution, as cars are not 

required to reach the banks. 

1.8.2 Theoretical Contribution 

Researchers, both seasoned and novices, investigating the effect of consumer 

behaviour on digital banking, will benefit from the findings of the present study. This is 

because the findings of previous studies can be used to guide future research. The 

suggested directions for future research will enrich the theoretical databank of digital 

banking adoption, leading to a broader understanding of consumer behaviour in 

general, and specifically adoption of digital banking. Furthermore, the current study 

focuses on both individual and group factors influencing the adoption of digital 

banking. No known study has taken this approach before. Therefore, the study could 

be one of the pioneers in research on the adoption of digital banking. Finally, majority 

of the research study was conducted in areas comprising of respondents who reside 

in the rural and suburban areas of South Africa. Presently, in South Africa, few 

researchers have focused on respondents from rural areas, preferring respondents 

from urban areas, only. Therefore, the study could add to the body of knowledge on 

the uptake of digital banking by respondents in both geographical areas. 

 

1.9 Delimitation of the Study 

The study focused on the general banking consumers. This means that the findings 

may not be consistent with those which have focused specifically on respondents from 

urban and semi-urban settings. Secondly, the findings may not be consistent with 

stakeholders of the some of the areas where the surveys were completed. Finally, the 

study used questionnaires as the research instruments. Therefore, different research 

methodologies might have yielded different outcomes. 



22 
 

1.10 Definitions of Key Terms 

Consumer behaviour: It is the study of individuals, groups, or organizations and the 

processes they use to select, secure, use, and dispose of products, services, 

experiences, or ideas to satisfy needs and the impacts that these processes have on 

the consumer and society (Mothersbaugh et al. 2020). 

Digital Banking/e-Banking: It is the utilisation of banking services through  

digital platforms, such as the internet, mobile and UPI (Unified Payment  

Interface), to name a few. 

Generation Y: These are consumers born between 1977 to 1994 and are sometimes 

referred to as millennials. They are characterized by a strong sense of independence 

and autonomy coupled with a sense of being, innovative, and curious.  Many of these 

consumers are familiar with digital banking. 

Generation X: These are consumers born between 1965 to 1976. These types of 

consumers have shown a reluctance towards digital banking adoption and are the 

ideal sample population for this study. In the proposed study consumer behaviour 

means how potential consumers choose whether or not to adopt digital banking, also 

known as eBanking. 

Fintech: It refers to any app, software, or technology that allows people or businesses 

to digitally access, manage, or gain insights into their finances or make financial 

transactions (Trificana, 2022) 

Internet of Things (IOT): It is a network of interconnected devices, systems and 

services within the existing internet infrastructure. The core of the IoT is that it allows 

for ‘all things connected’ in the communication between devices and objects, creating 

a more direct integration between the physical world and computer-based systems. 

(Hollensen, 2020) 

 Digital Adoption: It is the incorporation new digital tools and systems to   

 improve workflows and achieve overall objectives. In the proposed study,  

digital adoption consists of the utilisation of technology such as software, hardware, 

and online platforms in various industries to optimize operations, enhance 

communication, and promote innovation (Walk Me, 2023) 

 



23 
 

1.11 Organisation of the Study 

The proposal is divided into thirteen sections. It starts with the introduction, in which 

the researcher presents the background on digital banking from a local and global 

perspective. This is followed by a literature review on relevant research pertaining to 

digital banking locally and internationally. The definition of concepts defines the 

various terms and concepts to be used in the study, to prevent confusion for the 

reader. The study overview presents a snapshot of the areas the study focuses on, 

followed by a theoretical grounding, which discusses the theories which underpin the 

study. The aims and objectives of the study then follow. These are followed by the 

problem statement and research questions, which the study seeks to answer. The 

organization of the study outlines the study layout. These are followed by the 

contribution of the study as well as the delimitation of the study. The last part of the 

proposal presents the research methodology, where sampling, as well as methods for 

data collection and analysis are detailed.  

 

1.12 Chapter Summary 

This chapter presented the introduction of the study on the factors influencing bank 

customers to adopt digital banking in South Africa. The researcher traced digital 

banking both locally and internationally, and examined the various factors which 

contextualise the proposed study. The chapter concluded by outlining the benefits and 

rationale of conducting the proposed study. 

 

 

 

 

 

 

 

 



24 
 

CHAPTER 2: LITERATURE REVIEW 

 

2.1 Introduction 

The chapter discusses the banking industry with reference to the global banking 

industry, South African banking industry, category of consumers, marketing, 

advertising, and psychological factors. The theoretical groundings of the study consist 

of the Technology Acceptance Model (TAM), Theory of Diffused Innovation (TDI), 

Theory of Planned Behaviour (TPB) and Extended Unified Theory of Acceptance and 

Use of Technology (UTAUT). The Empirical literature makes reference to perceived 

ease of use, usefulness, facilitating conditions, hedonic motivation, security and 

continuous intention. The chapter concludes with the conceptual model and 

hypothesis development.   

 

2.2 Banking Industry 

The banking industry has seen a dramatic shift in the ways it conducts its business in 

the last few decades. This industry has seen rapid digitisation, moving away from the 

traditional ways of conducting its business. The digitisation process is so intense that 

some banks will become extinct if they do not transform fast enough. 

2.2.1 Global Banking Industry from a Digital Banking Perspective 

Banks globally are changing drastically in the ways they provide the various services 

to their customers. At the same time, they are also changing dramatically. This is 

because there is a rapid shift in technologies, which influences customer behaviour 

and choices throughout the world. The advent of new technology, for example, has 

resulted in banking services being more conveniently available while also requiring a 

switch in technology, to enjoy these benefits. 

2.2.2 South African Banking Industry from a Digital Banking Perspective 

According to Nzama (2020), banking in South Africa forms an integral part of the 

economy, with the country boasting some of the biggest banking corporations on 

the African continent (SARB, 2018). Furthermore, there are financial organisations 

in the South African banking industry which have attracted attention locally and 

globally. Presently, the top five biggest banks on the continent are from South Africa.  

These are the following: Standard Bank group, ABSA, FirstRand, Nedbank. 



25 
 

However, an emerging bank; namely, Capitec bank group is fast catching up with 

them (BusinessTech, 2019:17). 

 In the South African context, digitisation has changed the way the banks conduct 

their business, including the available possibilities for the customers to connect with 

their clients. Digitisation has also brought along several benefits for the banking 

customer, leading to cost-effective, efficient and convenient banking experiences. 

There is a big war in progress in South Africa among the four major banks. The aim 

of the war is to win over customers through the banks’ digitisation attractions. .  

2.2.3 Category of Consumers and Digital Banking 

Herring (2019) identifies four main groups of consumers based on age. According to 

him there are Baby Boomers, who were born between 1946 and 1964; Generation X, 

who were born between 1965 and 1979; Millennials, born between 1981 and 1996; 

and finally, Generation Z, born between 1995 and 2012. According to Herring, Baby 

Boomers are traditionalists, who prefer visiting the branch for banking, and consider 

technology to be a means to stay connected with family members. The next group, 

Generation Z is a little more advanced than the baby Boomers in that they are both 

traditionalists and tech-savvy. They are also loyal to their favourite brands. Herring 

believes that the Millennials, who are the largest group, are less loyal to brands and 

prefer digital banking to traditional banking. According to Herring, the last group, 

Generation Z, is intertwined with technology. Furthermore, Generation Z consumers 

are conservative and many of them have not visited a bank branch in half-a-year. 

Thus, consumer behavior, for Herring, is influenced by generational group. Banks are 

therefore likely to focus their marketing based on group willingness to embrace new 

technology. The larger the groups, the higher the profitability for the bank. 

However, according to Naidoo (2002), despite the development of new technology in 

the banking industry, the uptake of the technology has been slow. In a study on 

consumer behaviour among First National Bank clients, Naidoo found that factors such 

as internet costs, lack of infrastructure and consumers’ mindsets are hindrances to the 

uptake of new technology. Lantos’ (2019) views about consumer behaviour are slightly 

different from the preceding ones; for example, for Lantos, a consumer undergoes a 

decision journey from the moment he/she contemplates what needs to be bought, until 



26 
 

the ‘post-purchase phase.’  In the end, however, it is multimedia which map the 

ultimate journey taken, according to Nash (2019).   

2.2.4 Digital Banking and Marketing 

Despite the propensity to regard technology as the key to success in consumer 

behaviour, Ngoma & Ntale (2019) believe Word of Mouth (WOM) still has a significant 

role to play in marketing. The two researchers contend that this type of marketing is 

being underutilized by businesses. The researchers believe positive WOM is what is 

required to drive a business enterprise to greater heights, the same way marketing 

technology can.  

Srinivasan and Thameemul Ansari (2019: 509) studied the impact of eBanking on 

Users of eBanking services. The two researchers first point out the various terms used 

synonymously in banking; namely, eBanking, online banking, internet banking and 

digital banking, among others. According to these researchers, all these terms refer to 

the same thing. According to the two researchers, eBanking has several advantages 

over traditional banking, including being safe, convenient, allowing full banking 

services and being accessible 24 hours a day. Bank products which provide the 

preceding conveniences are likely to be adopted. 

2.2.5 Digital Advertising 

 According to Agapitos, et al, two of the factors which influence consumer behaviour 

in online banking are digital advertising and the convenience of paying for goods and 

services in the digital environment.  

A further factor which influences consumers, according to Polanco-Diges and Debasa 

(2020), is what they shared on economy platforms. Based on these, banks try to come 

with digital strategies to sway customers who prefer this type of platform, to influence 

the customers to remain with the bank.  

2.2.6 Psychological Factors 

According to Hoyer, MacInnis & Pieters (2001), consumer behaviour comprises of four 

aspects; namely, a psychological component, a decision-making component, a 

consumer culture component and consumer behaviour outcomes. The finalisation of 

a decision by a consumer depends on the ‘successful’ engagement of all the four 

components. A consumer, according to these authors, will be motivated to decide to 

acquire, use and dispose of a product. These, according to the authors, depend on 



27 
 

three major steps, which must all work in tandem. The outcomes of this motivation 

include goal-relevant behaviour, significant processing of information and serious 

intent. According to Schifffman and Kanuk (2009) psychological factors are ‘the inner 

intrinsic qualities of the individual consumer. This differentiation is based on the fact 

that there are individual differences based on factors such as motivations, personality, 

perceptions, learning and attitude. A detailed examination of these factors by the two 

researchers include activities, interests, and opinions. 

Using Maslow’s hierarchy of motivation, one could say all three outcomes (acquire, 

use and dispose) must be at a very high level (must-have) before an individual will 

acquire such a product.  In the context of digital banking, for example, a consumer will 

not adopt digitalisation unless he/she has a need for it, there is personal drive and 

attitudinal factors favour the use of such a system.  

 

2.3 Theoretical Grounding 

A study of this nature requires sound theoretical underpinnings. This is because 

without such theoretical underpinnings, the study will be of little value. In absence of 

theories which are strictly for the banking industry will have to borrow from other areas 

and fields. For the purpose of this study four theoretical models will be borrowed from 

other fields. These are, Technology Acceptance Model (TAM), Theory of Diffused 

Innovation (TDI), Theory of Planned Behaviour (TPB) and Extended Unified Theory of 

Acceptance and Use of Technology (UTAUT). These are theories from consumer 

behaviour in general, and not specifically for use in banking research. 

2.3.1 Technology Acceptance Model (TAM) Theory 

The Technology Acceptance Model (TAM) was initially proposed by Davis in 1985, 

with the aim of studying the acceptance of a new technology by individuals. The 

theoretical model postulates that user’s overall acceptance or adoption to new 

technology will be based on their sentiments towards its “perceived usefulness” and 

“perceived ease of use (Davis, 1989). 

There are a few proponents of this model and its effectiveness in explaining consumer 

behaviour. TAM’s popularity is due to its effectiveness in clarifying customers’ adoption 

of information technology (Zaineldeen, Hongbo, Koffi & Hassan, 2020). According to 

these researchers, TAM is the best when it comes to explaining these decisions 



28 
 

because it is the most commonly-used model in consumer behaviour research (Liu, 

Wang & Koehler 2019).  To put it into further perspective, this model determines 

consumer adoption of new information technology. It argues that adoption will be 

facilitated if the consumers generally believe that the technology is useful and easy to 

use. When all these conditions are met, a consumer is likely to adopt the new 

technology. The model gauges claims that users’ (in the banking industry, customers’) 

adoption of a computer system depends on their intention to use such a system. That, 

in turn, depends on their attitude and beliefs; namely perceived ease of use and 

perceived usefulness.  

The model has been widely used to predict the acceptance and use of information 

systems. Lately, the system has also been used to predict the switch to digitisation in 

the banking industry.  

According to TAM posits perceived usefulness and perceived ease of use predict a 

person's intention to adopt an innovation. The two measures, perceived usefulness 

and perceived ease of use are also believed to influence one another.  

TAM users believe that the principles of perceived ease of use and perceived 

usefulness can be extended to the banking industry. For example, Rusu and Shen 

(2011) used the model in their e-banking study in the United Arab Emirates (UAE). 

The findings showed that the intention to adopt a new innovation was a factor in these 

two measures.   

2.3.2 Theory of Diffused Innovation (TDI) 

The financial services sector is highly dependent on technological services. Therefore, 

banks can attribute the importance of technological innovations as a form of 

competitive advantage and ensure their survival in an ever-changing global 

technological environment. “The innovation of delivering financial services through 

mobile devices represents a complex interaction between an intangible service and 

technology based service delivery”, (Black, Lockett, Winklhoffer & Ennew, 2001). 

Furthermore, the Diffused lnnovation theory is widely used to explain mobile banking 

adoption (Rogers, 1995). Rogers argued that the process of favouring innovation is 

determined by the way innovation is communicated, by means of different sources, 

over time, or amongst members in a social circle. In layman’s terms, the proliferation 



29 
 

of innovation is influenced by five factors; namely, relative advantage, compatibility, 

complexity, number of trials and observability of the innovation. 

Dearing and Cox (2018) define diffusion as “a social process that occurs among 

people in response to learning about an innovation such as a new evidence-based 

approach for extending or improving health care.” TDI was proposed by Rogers 

(1962). Rogers attempted to explain how ideas and technologies are not adopted all 

at once, some people are early adopters, while some are late adopters. The theory 

seeks to explain how adoption decisions are taken in waves. 

Innovators are the first to try out new ideas and technologies. This is because they are 

the brains behind the ideas or technologies. Rogers (1962) believe innovators 

constitute about 2,5% of the population. These are rich people. Early adopters are 

believed to be opinion leaders; they want to be the first to try out new ideas and 

technologies. Furthermore, they are influential and are of a high social standing. 

Rogers believes these constitute 13,5% of the population. Rogers (1962) proposes a 

third group called the Early Majority. These are the skeptical group who take their time 

before adopting new technology. According to him, these constitute 34% of the 

population. The last group -called Laggards- comprises of mainly the elderly members 

of the population who only social with close friends and family. They are not too keen 

to adopt new ideas and they are suspicious of new technologies. These constitute 

15% of the population. 

According to Rogers, an idea need not be new to be adopted. Rather, a new innovation 

needs to have four characteristics, to enhance adoption; namely, complexity, triability, 

adaptability, observability and compatibility. Rogers stresses the significance of 

communication in the diffusion of new innovation, to ensure that information reaches 

all members of society. He proposes a five-stage process for adopting new 

technologies. These awareness, persuasion, decision, implementation and 

continuation. The five stages explain how news about new technologies spread and 

reach potential customers. This theory can be applied to adoption of eBanking. 

2.3.3 Theory of Planned Behaviour (TPB) 

The Theory of Planned Behaviour was proposed by Azjen (1991). According to Azjen, 

one’s behaviour can be predicated by one’s intention to engage in that behaviour. This 

means, therefore, that the stronger the intention, the more likely that the individual will 



30 
 

engage in that behaviour. In the context of digital banking, the stronger the intention 

to adopt digital banking, the more likely that one will adopt the system. The onus 

therefore lies with the bank to ensure that potential customers have strong intentions 

to take up digital banking. According to Azjen, three variables influence this; namely, 

personal attitudes (attitudes towards digital banking, in the context of the proposed 

study); subjective norms, which refers to how we view other people’s ideas regarding 

the behaviour (adopting digital banking, in the context of the proposed study); and 

perceived behavioral control. Perceived behavioral control refers to our perception of 

internal (such as ability and determination) and external factors (such as availability of 

resources and support) in the adoption of a certain behaviour. According to Azjen, the 

more control we think we have, the more likely we are to adopt a certain behaviour, 

which is digital banking, in our case. This theory is therefore relevant for the proposed 

study.  

The theory of planned behaviour (TPB) is believed to be more effective in predicting 

than TAM. The theory was proposed as a framework to understand, predict and 

change human social behaviour. TPB model was proposed by Taylor and Todd 

(1973). According to this theory, intention precedes behaviour, and is influenced by 

attitude towards the behaviour. Several studies have provided empirical evidence that 

this theory is able to actually predict intentions and how intervention can change 

human behaviour. In the context of the proposed study, this model can be used to 

predict and help persuade consumers to adopt eBanking. 

2.3.4 The Extended Unified Theory of Acceptance and Use of Technology 

(UTAUT2) 

The UTAUT2 theory was introduced in 2012. It was an extension of the original 

UTAUT, which stated that four variables; namely, performance expectancy; effort 

expectancy; social influence and facilitating conditions, impacted individuals’ 

acceptance of technology and their overall intention to adopt to it (Venkatesh, Morris, 

Davis & Davis, 2003). When the UTAUT2 theory was later improved, three new 

variables were included; namely, habit; hedonic motivation and price sensitivity 

(Kumar, Rejikumar & Ravindran, 2012). The strength and accuracy of this theory is 

derived from the incorporation of individual, technological and environmental 

constructs, which are used to understand the drivers behind individual adoption 

intention (Nwagwu & Akeem, 2013). It has been noted that the UTAUT2 theory 



31 
 

garners greater strength because it consists of hedonic variables, in addition to the 

utilitarian constructs addressed by the original UTAUT (Lua, Liub & Weic, 2016). That 

said, researchers have recommended that this theory needs to incorporate trust and 

perceived risk, in order to increase its predictive power and allow for a more rounded 

understanding of technology adoption as a concept (Luo, Li & Zhang, 2010). 

The previous models that were developed prior to UTAUT2 succeeded in explaining 

the various variables involved in innovation adoption. However, it was felt that a unified 

model which provided a holistic understanding of the variables was required. This view 

led to the emergence of UTAUT. 

UTAUT2 is a theory that was developed to provide a unified theory of technology 

acceptance. This was through integration of key constructs which predict behavioral 

intention. This feat was achieved by reviewing “the seminal IS acceptance literature to 

draw up theoretical and contextual similarities among technology acceptance theories 

emerging from three research stream -i.e. social psychology, IS management and 

behavioural psychology (Marikyan & Papagiannidis, 2021). According to UTAUT, the 

perceived likelihood of adopting a technologydependson four constructs; namely 

performance expectance, which is the belief that using the new technology will lead to 

gains in job performance; effort expectancy, which refers with the ease of using the 

system; social influence, which is “the degree to which an individual perceives that 

important others believe he or she should use the new system (Venkantesh, et al., 

2003); and -finally-  facilitating conditions, which describes the degree to which an 

individual believes that support is available to use the new system. The developers of 

the theory acknowledge the moderation effects of consumer aspects such as age, 

gender, experience and voluntariness of use.  

UTAUT has succeeded in providing further insight into innovation acceptance models 

by comparing several innovation acceptance theories. This is not an easy task due to 

the interactive nature of some of the variables involved.  

  

2.4 Conceptual Development 

Several studies have been conducted on digital banking globally. However, most of 

them were on student adoption of digital banking. From the reviewed literature, there 

has not been a single study involving university staff’s adoption of either internet 



32 
 

banking or bank app use. According to Al-Fahim (2013), internet banking or online 

banking is a system of banking which requires the internet and a device such as a PC 

or a smartphone to conduct various transactions, such as checking balances, 

transferring funds, making bank loans or paying bills. He defines the adoption of digital 

banking as the acceptance and continued use of the product, service or idea. These 

decisions, according to research in consumer behaviour, are influenced by individual 

and group factors. The present study focuses on two forms of digital banking; namely, 

internet or online banking as well as the bank app. These are full online banking 

activities conducted using a personal computer or a smartphone. Full online services 

refers to activities, such as paying bills, transfers and loan applications. Therefore, the 

proposed study excludes any banking method which requires visiting bank counters, 

auto-teller machines or making telephone calls. 

According to Mothersbaugh, Hawkins and Kleiser (2020), individual factors are 

characteristics which differentiate people individually, such as consumer motivation 

and ability. Studies have shown that consumers are more motivated by what the 

individual is involved in. Furthermore, Mothersbaugh (2020, et al) define motivation as 

a ‘drive state created by consumer interests and needs. For example, a 

businesswoman will be more motivated by an advertisement of a product which 

provides new business solutions than a teacher. Ability, on the other hand is defined 

by Mothersbaugh (2020, et al) as ‘an individual’s capacity to attend to and process 

information’. Brand familiarity falls under this category. 

Researchers  have conducted many studies on factors which influence consumer 

behaviour globally. However, consumer behaviour, as it pertains to digital banking, is 

a relatively new area, as digital banking is a new area of research. According to Nor 

and Pearson (2008), this problem is aggravated by the fact that consumer behaviour 

does not have its own models to base their studies on. As a result, it has had to borrow 

some theories from other fields.  In one of the following sections, the researcher 

presents a model which is often used in consumer behaviour research. 

According to Milian et al (2019) advances in technology in the financial industry have 

led to the emergence of new buzzwords. Around 2018, the term or buzzword, financial 

technology (or FinTech) emerged. Fintechs, refer to financial technology startups 

which have changed the way banks operate. The word Fintech is a combination of 



33 
 

financial technology and computer technology. It also encompasses aspects of 

modern management practices, according to Milian (2019). In South Africa, Fintechs 

are relatively new. However, in rich countries Fintechs are engaged in activities such 

as cryptocurrency, money transfer, payments/billing and asset management, 

according to Mihan, et al (2019). Research on digital banking adoption is therefore 

relevant for Fintechs, too, as most of the products offered by Fintechs are also offered 

by regular commercial banks.  

Researchers base their studies on theories and model, to make the findings more 

compelling. According to Schindler (2022) a theory is “an empirically supported 

description of the relationships among concepts, constructs and hypotheses that are 

advanced to explain or predict phenomena.” Schindler adds that theories are made up 

of hypotheses which -though supported by data- can be challenged by new data. A 

construct, according to Schindler (2022), is “an abstract idea specifically invented for 

a given research and/or theory-building purpose.” Schindler (2022) believes 

constructs are built by combing smaller, more concrete concepts, particularly in 

situations where the intended idea cannot be observed directly. These aspects cannot 

be observed directly, and are thus considered construct, which are easier to describe. 

In the proposed study the constructs observed consist of the following: Perceived Ease 

of Use, Perceived Usefulness, Facilitating Conditions, Hedonic Motivation (Perceived 

Enjoyment), and Security which all lead to Continuous Intention.   

2.4.1 Perceived Ease of Use 

According to Al-Fahin (2013) perceived ease of use has to do with the extent to which 

a user believes that using a product will be effortless. Therefore, if customers believe 

a new product is easy to use, it will be easy to adopt it, boosting the profitability of the 

company selling it. 

A study by Cahete (2020:1) in Portugal found that consumers are “most willing to 

switch from traditional to digital if they are familiar with the system and the usability is 

friendly…”. However, Grant (2010: 253) contends that changes in consumer behaviour 

must be a result of “fundamental shifts in consumer buying behaviour, technology and 

a firm’s strategies.” This shows that consumer behaviour is unpredictable and changes 

constantly. These further necessitate a study on consumer behavior, to determine the 

influence of individual and group factors on adoption of new technology. 



34 
 

2.4.2 Perceived Usefulness 

In order to adopt a new technology, it must be perceived to be useful by the consumer. 

A useful technology is likely to be adopted by potential consumers if it is perceived to 

be useful by the end-users. Researchers such as Venkatesh & Morris (2000) have 

found that perceived greater usefulness of an innovation was a significant determining 

factor for acceptance among women, but not among men. Together with ease of use, 

perceived usefulness form the key constructs of TAM, and lead to higher response 

efficacy. 

2.4.3. Facilitating Conditions 

Facilitating conditions refers to the extent to which an individual believes that there is 

technical infrastructure to support the use of a new technology (Venkatesh, et al, 

2003).  The construct for facilitating conditions emanate from conditions drawn from 

earlier models, such as TBP and IDT. According to the theory, facilitating conditions 

have a significant effect on intention to use. However, this effect becomes 

nonsignificant after initial use. Facilitating conditions are affected by interactions 

among the variables involved, such as age, gender, experience and voluntariness of 

use. 

2.4.4 Hedonic Motivation (Perceived Enjoyment) 

Traditional measures of consumer attitudes have often been criticized for not 

adequately reflecting symbolic, hedonic, and aesthetic aspects of consumption in the 

conceptualisations, and in the resulting operalisation. Some of these critics are 

Holbrook & Hirchman, 1982).  

According to Batra  & Ahtola (1991) hedonic perspective does not limit its scope to 

cover just attitudes but includes other aspects of consumer behaviour. In other words 

it includes both affective and cognitive factors in explaining consumer behaviour.  

2.4.5 Convenience  

According to Agapitos, et al, two of the factors which influence consumer behaviour in 

online banking are digital advertising and the convenience of paying for goods and 

services in the digital environment. Online or e-Banking offers consumers the 

convenience of a 24-hour service bank availability. In addition, consumers can access 

all the banking services of their sofas, with just a smartphone or a laptop computer to 

make all banking services. e-Banking also helps consumer do away with having to 



35 
 

carry large amounts of money or standing in long queues because cash transfers and 

most of the normal bank transaction can be completed without leaving one’s chair. 

2.4.6 Security 

Security is one of the major determining factors regarding prospective clients’ 

eagerness to switch to electronic banking. Indeed several studies have shown that 

perceived security of a banking application was found by researchers such as 

Johnston, et al (2003) to influence consumers to switch electronic transactions. The 

proliferation of cybersecurity lapses has not made switching to e-banking easier for 

potential clients. We hear of cybercriminals trying to be a step ahead of banking 

security, resulting in loss of clients’ cash. In South Africa, for example, skimming used 

to be a popular method used by fraudsters to steal bank users’ cash a few years ago 

(Dagada, 2013). Skimming involves stealing the bank card details, notably the PIN, 

when the card owner swipes the card, to make a payment (for example, at a fast-food 

outlet). The advent of tapping (cards) when making payments helped to decrease this 

type of fraud. Positive perceived security of a banking application will therefore 

enhance prospective e-banking clients’ intention to switch to e-banking. A breach in a 

banks online security system results in a general lack of trust from customers and loss 

in confidence from all key stakeholders resulting in  reputational damage for the bank 

and a general loss in confidence and trust from all stakeholders.Trust, according to Al-

Fahin (2013), has to do with the dependability of the product, meaning the consumer 

has to feel that there will be no negative outcomes from using the new product. The 

consumer has to maintain the trust throughout the whole customer journey from point 

of contact, service levels and post service interactions. If an institution can see to it 

that a customer’s experience with their product or service is a pleasant one, then that 

institution is most likely to achieve positive results when it comes to acquisitions and 

retention of customers. 

2.4.9 Continuous Intention 

 Internet banking/digital banking is increasingly important as it provides customers with 

an alternative channel to banking services which are convenient, efficient, timeously 

and low in cost (Yuan, Lai & Chu, 2018). Despite the perks which internet banking has 

to offer, resistance from customers has been evident in their continuous usage of this 

alternative channel and in may cases, the usage of internet banking has fallen short 

of expectations (Alwan & Al-Zubi, 2016). According to the eMarketer (2014), the 



36 
 

expansion of internet banking usage was forecasted to be moderate until the year 

2018. With this study focusing on digital banking adoption, it was prudent for the 

researcher to take continuous usage of internet banking into consideration as not 

much studies have been done on continuous intention and in essence, as a digital 

service provider, all banks would not only want their customer base to adopt to digital 

banking but to also ensure that their customers continuously use digital banking 

platforms in the near future as a way of reducing the foot traffic in the banks. It is 

therefore important for banks to understand the resistance from clients to continuously 

use internet banking. 

 

2.5 Conceptual Model and Hypothesis Development 

A model is defined by Schindler (2022) as “a representation of a theory or system that 

is constructed to study some aspect of that system or the system as a whole.” 

According to her, models are used to “increase our understanding, prediction and 

control of the complexities of the environment.” This ability, according to her, helps in 

advancing theories and decision-making.   

In the adoption of digital banking by bank customers, theories and models are applied 

to try and understand how consumers behave (Schindler, 2022). Next, the researcher 

discusses a conceptual framework through a critical analysis of the literature. An 

outline illustrating the hypotheses will now follow. 



37 
 

2.5.1 Conceptual Framework 

 

Figure 2.1: Conceptual framework of the study 

Source: Author’s own construction (2023) 

 

2.5.2 Hypotheses Development 

2.5.2.1 Perceived Ease of Use and Continuous Intention 

Ease of use refers to the difficulty of using the new banking application by the 

prospective client. An application which is perceived to be difficult to use will be unlikely 

to be adopted by prospective clients. Along with enhanced performance, Davis (1986) 

found that perceived ease of use positively associated with clients’ adoption of that 

banking application. However, other studies by Chong et al (2010) and Wu, et al, 2010) 

did not find such relationship. Based on this, it is hypothesized that: 

H1: There is a positive relationship between perceived ease of use and continuous 

intention 

2.5.2.2 Perceived Usefulness and Continuous Intention   

Perceived usefulness has to do with whether the new application will enhance 

performance. When prospective clients believe the new application will lead to 

improved banking performance, they will be likely to adopt it. Indeed, a study by Davis 



38 
 

(1989) found that perceived usefulness was positively related with e-banking and 

intention to switch to such banking application. Based on this, it is hypothesized that: 

H2: There is a positive relationship between perceived usefulness and continuous 

intention 

2.5.2.3 Facilitating Conditions and Continuous Intention  

A new banking application will be easier for prospective clients to adopt if these clients 

believe the new technology positively impacted their satisfaction. Satisfaction is 

defined in terms of the number of functions the new banking application will perform. 

If the application significantly adds several new functions, it is likely to be adopted by 

prospective clients. Indeed Hossain, et al, (2019) found that when facilitating 

conditions of an application are plentiful, prospective clients are likely to take up such 

an application. Based on this, it is hypothesized that: 

H3: There is a positive relationship between facilitating conditions and continuous 

intention 

2.5.2.4 Hedonic Motivation and Continuous Intention  

Another crucial determinant of e-banking adoption was found to be motivation and 

intention to adopt new technology. Prospective clients who had the motivation and 

intention to adopt new technology would therefore find it easier to adopt e-banking, as 

opposed to those who were reluctant to embrace new technology. Previous literature 

has indicated that, if consumers are of the perception that they receive high levels of 

utilitarian and hedonic value from their experiences, then they tend to develop positive 

behavioral intentions, such as repeat purchase and continued use (Akdim, Casalo & 

Flavian, 2022). Based on this, it is hypothesized that: 

H4:  There is a positive relationship between hedonic motivation and continuous 

intention 

2.5.2.5 Convenience and Continuous Intention  

Convenience in banking is a significant determiner of whether or not a new application 

will be adopted or not. According to Black et al (2003), convenience is measured in 

terms of time and effort required by the client. In the banking context convenience 

would entail a comparison of, for example, a comparison of internet banking and 



39 
 

telephone banking. A better service would be one that can be completed quicker. 

Gerrard and Cunningham (2003) add the convenience of 24-hour availability of a 

service and time savings as further considerations.  Based on this, it is hypothesized 

that: 

H5: There is a positive relationship between convenience and continuous intention 

2.5.2.6 Security and Continuous Intention 

Banking clients prefer a banking service that will be safe to conduct, to ensure that 

their money is also safe from cybercriminals. A banking system that will be adopted 

by clients will be thus one which will ensure the highest levels of security for the client 

to conduct their banking, as well as the security of the money. Indeed, several studies 

have found this relationship. Examples of such studies are Al-Sajjan & Dennis (2009) 

and Sathye (1999). In addition, security is closely associated with trust because 

consumers need to have a great level of trust in their banks and online security 

measures in place. Trust has been found to play a crucial role in clients’ adoption of 

digital banking. This is because prospective clients are likely to adopt an application 

they trust. This is evident of rural areas, where technology takes a while to take root. 

Studies by Boateng, et al., (2016) and Al-Khalaf & Choe (2020) have found a direct 

relationship between trust and clients’ likelihood to adopt new technology.   Based on 

this, it is hypothesized that: 

H6:  There is a positive relationship between security and continuous intention 

2.5.2.7 Continuous Intention to adopt to Digital Banking 

With the majority banks constantly keeping abreast with technological trends and 

innovations, one of the key focus areas in their digital offering should be simplicity. 

Customers are resistant to complex or ambiguous technology. Therefore if banks 

make their digital offering simple and seamless then their customers will not hesitate 

to continue using their digital platforms as they will be satisfied with the service offered. 

Customers overall happiness and satisfaction with a product or service definitely 

influences their intention to continue using that particular product in the not too distant 

future. 

 



40 
 

2.6 Chapter Summary 

The second chapter presents the literature reviewed on the factors which influence the 

adoption of digital banking by banking customers in South Africa and globally. The 

various findings showed that several factors, such as perceived product quality, 

perceived usefulness, ease of use, social image, age group and psychological factors, 

have been found to influence banking customers’ decision-making regarding the 

adoption of digital banking. The chapter concluded by presenting the model on which 

the study is based; namely, Technology Acceptance Model, or TAM. In the following 

chapter, the research methodology is discussed. 

 

 

 
 

  



41 
 

CHAPTER 3: RESEARCH METHODOLOGY 

 

3.1 Introduction 

A researcher is not an island: he/she is surrounded by various factors, which influence 

many aspects of his/her study. The current study was mindful of this. 

In this chapter the researcher presents the research approach that was adopted for 

the present study. According to Schindler (2022), “one expects good research to be 

purposeful with a clearly defined focus and plausible goals; with defensible, ethical, 

and repeatable procedures, and with evidence of objectivity.” Research methodology 

outlines how researchers formulate a particular problem and how they state the 

objectives of the research .Once that is accomplished, the results will be tabulated 

and presented from the information obtained during the course of the study 

 

3.2 Research Philosophy 

Scientific research philosophy can be defined as a system of the researcher’s thought, 

following which new, reliable knowledge about the research object is obtained. 

Basically, it is therefore seen as the basis of research, which consists of the choice of 

research strategy, formulation of the problem, data collection, processing, and 

analysis.  The paradigm of scientific research, in turn, consists of ontology, 

epistemology methodology, and methods (Zukauskas, Vveinhardt & Andriukaitiene, 

2018). According to Holden and Lynch (2004), methodological choices should be 

related to the philosophical position of the researcher and the phenomena of analyzed 

social science. Zukauskas et.al further state that research philosophies consists of 

four main trends which are the following: positivist research philosophy; interpretivist 

research philosophy, pragmatist research philosophy, and realistic research 

philosophy. 

Positivists claim that the social world can be understood in an objective manner. 

According to this philosophy, the scientist is an objective analyst and, on that basis, 

dissociates himself from personal values and works independently. On the other hand 

interpretivists state that it is not easy to understand the social world on the basis of 

principle (Zukauskas, et al., 2018). Furthermore, interpretivists view the social world 

in a more subjective manner. Based on this, a quantitative research approach may be 



42 
 

directly related to positivism as it is based on only the facts and a qualitative research 

approach may be directly related to interpretivism which is more subjective in nature. 

A Pragmatic research philosophy also deal with facts and is of the view that the choice 

of research philosophy is mostly determined by the research problem. Alghamdi and 

Li (2013) further state that that pragmatism does not belong to any philosophical 

system and reality. For this type of research philosophy, practical results are deemed 

important which also makes objective in nature therefore linking it to quantitative 

research. A realistic research philosophy is based on a combination of both positivism 

and interpretivism research philosophies. This philosophy uses assumptions which 

are required for the perception of subjective nature of the human (Zukauskas, et al., 

2018). Therefore the realistic approach may be deemed as being linked to a mixed 

method research approach which is discussed in-depth detail in the next section 

 

3.3 Research Design 

Research design, on the other hand, is defined by Schindler (2022) as the blueprint 

for fulfilling research objectives and answering questions. In other words, a research 

design is like a house plan which a builder uses to construct a house. Schindler further 

states that a design is based on the following features: 

 It is a time-based, procedural plan for every research activity. 

 It is always focused on the research question 

 It guides selection of sources of information 

 Lastly it provides the framework for specifying the relationships which exist 

amongst the study variables 

The framework is vital, as it determines the integrity and relevance of the data and 

information gathered from the research. As depicted from the research philosophy 

section, the three commonly used research approaches are quantitative research, 

qualitative research and mixed method research. Qualitative research uses 

interpretive techniques to describe, decide, translate and come to terms with the 

meaning of a certain phenomenon (Schindler, 2022) it is often used during exploration, 

but it may follow a statistical approach, too, to further understand what is being 

measured. Quantitative research focuses on the quantity, frequency or magnitude of 

a phenomenon and is based on a statistical study (Schindler, 2022). Quantitative 



43 
 

research places heavy reliance on the quality of measurement instruments used for 

surveys, experimental tests and observations. The mixed method approach utilizes 

multiple ways of exploring a research question (Creswell & Clarke, 2011). Some 

researches deem this approach to be more stringent than the other two mentioned 

approaches. This is due to the former requiring more analysis, more resource 

consumption and being more time-bound, compared to a single approach. 

For the purpose of this study the researcher used a quantitative research approach, 

based on aspects of both exploratory and statistical studies. Schindler (2022) defines 

exploration as “the process of collecting information to formulate or refine 

management, research, investigative, or measurement questions; loosely structured 

studies that discover future research tasks, including developing concepts, 

establishing priorities, developing operational definitions and improving research 

design.” Although exploratory studies are often associated with studies which are 

relatively new and being qualitative in nature, a study consisting of a large samples 

conducted in an exploratory manner can be quantitative aswell (Gonzales, 2016). 

Statistical studies attempt to capture a populations characteristics by making 

inferences from a samples characteristics by testing the hypothesis quantitatively 

(Schindler, 2022). Generalisations about the findings are based validity of the design 

and representativeness of the sample.   The quantitative study will provide the 

researcher an in-depth and wider understanding of the context of digital banking and 

consumer behaviour. Therefore making it more effective in explaining how banking 

consumers adopt new products.  

 

3.4. Population and Sampling 

3.4.1 Target Population 

According to The World Bank, more than 40 million South Africans have a bank 

account. This is approximately 84.11% of the total South African population. 

Furthermore, there has been a spike in the percentage of South Africans, aged 15 

years and above, with bank accounts and this has risen from 54% in 2011 to 84% in 

2021 (Wilcox, 2021). Based on White’s studies in 2021, where it was found that the 

highest users of mobile banking applications are millennials and Generation Z 

https://www.scribbr.com/methodology/quantitative-research/


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customers. As a result of this the target population was focused on a much older age 

segment of ranging between 45 - 65 years of age.  

The definition of the target population may be apparent from the management problem 

or research question but it is not always the case (Schindler, 2022). The target 

population can consist of the following: People (individuals or groups; that is, 

employees, students and customers); Organisations or institutions (companies, trade 

associations, professional online communities, unions); Events and happenings; 

objects and artifacts; settings and environments; texts (annual reports, social media 

posts, e-mails). With the study being on digital banking adoption, the target population 

was initially rural clients. However, this focus changed just before the commencement 

of the study, to include any banking client, in order to be inclusive of bank clients in 

South Africa. 

The target population had the following characteristics: 

 Any bank user who was using digital banking 

 Participants born between 1965 to 1980 (Generation X) 

3.4.2 Sampling Frame 

The sampling frame can be defined as the list of cases in the target population from 

which the sample is actually drawn (Schindler, 2022). The sample frame can often be 

different from the desired population. For this study the respondents consisted of 

general digital bank users. The population of this study was unknown in terms of 

numbers because it can vary.  

3.4.3 Sampling Method 

Sampling consists of non-probability and probability sampling. Schindler (2022) 

defines non-probability sampling as an arbitrary and subjective procedure in which 

each population element does not have a known non-zero chance of being included. 

In other words, the population elements do not have an equal chance of being included 

in the sample. Non-probability sampling consists of convenience, purposive, quota, 

snowball, and self-selection.  Probability sampling, on the other hand, is based on the 

concept of random selection, and is defined as a controlled procedure which assures 

that each case is given a known non-zero chance of selection (Schindler, 2022). 

Probability sampling techniques consist of simple random sampling, stratified 

sampling, systematic and cluster sampling 



45 
 

 The study was based initially on purposive sampling, consisting of rural clients in 

Limpopo, but later expanded, through the use of online completion of the research 

instrument, to expand the reach of the research study to all consumers across the 

regions in South Africa. The research was quantitative. Data was collected physically 

and online using google forms. Respondents accessed the questionnaire via a link 

which was sent via e-mail, as well as via WhatsApp. With the participants conforming 

to some sort of similar criterion (which is digital banking adoption in this case), the 

form of purposive sampling to be used was judgement sampling. During the early 

stages of an exploratory study, the judgement sampling method is appropriate to use. 

Another type of purposive sampling is quota sampling, which used mostly to improve 

representativeness. The logic behind quota sampling is that certain relevant 

characteristics describe dimensions of the population (Schindler, 2022). 

3.4.4 Sampling Size 

A total of 250 questionnaires was envisaged. Participants who did not have access to 

the internet were the ideal target population, as this further illustrated that these 

customers do not need only to adopt to digital banking, but also basic technology itself, 

as the internet can be deemed as something basic in some spheres of the world. 

However, in many parts of South Africa, the phrase “it is not always as it seems” would 

be applicable. The desired sample ultimately achieved was 256 participants. 

 

3.5 Measures 

The researcher used an online questionnaire, were provided to the prospective 

participants, with an intended target of 250 responses. Those completing at branches 

used the researcher’s tablet. The researcher ensured that the questionnaire designed 

was clear and concise, valid, reliable and not ambiguous, to ensure that the data 

collected could be validated in the research conducted. Likert scales were used for 

questions focusing on respondent’s beliefs and opinions towards the adoption of digital 

banking. The independent variables were measured by using a multi-item five point 

Likert scale where “1” denoted a Strongly Disagree (SD), “2” denoted as Disagree (D), 

“3” denoted as Neither Agree or Disagree (N), 4 denoted as Agree (A) and “5” denoted 

as Strongly Agree (SA), respectively. 



46 
 

3.5.1 Perceived Ease of Use (PEU) 

Perceived Ease of Use was measured on a five-point scale with 1 = strongly disagree 

and 5 = strongly agree. It consisted of seven items adapted from Davis (1989), 

Venkatesh et. al (2003), Pikkarainen et al., (2004) and Wang et al., (2019) as follows: 

PEU1. I find it easy to use the banking app. 

PEU2. I can use digital banking for all my banking needs. 

PEU3. I require little assistance to perform certain functions on my banking app. 

PEU4. I feel confident using internet banking. 

PEU5. Digital banking provides a practical banking experience. 

PEU6. Digital banking is user-friendly. 

PEU7. Digital Banking requires easy-to-use steps. 

3.5.2 Perceived Usefulness (PU) 

Perceived Usefulness was measured on a five-point scale with 1 = strongly disagree 

and 5 = strongly agree. It consisted of three items adapted from Davis (1989), 

Venkatesh et. al (2003), Pikkarainen et al., (2004) and Wang et al., (2019) as follows: 

PU1. Internet banking is a useful application. 

PU2. I can conduct all my banking activities through digital banking. 

PU3. Digital banking streamlines all my banking facilities (overdraft, credit card, 

investments, personal accounts, vehicle account, bond account). 

3.5.3 Facilitating Conditions (FC) 

Facilitating Conditions was measured on a five-point scale with 1 = strongly disagree 

and 5 = strongly agree. It consisted of three items adapted from  Hossain, et al., 

(2019) and Venkatesh, et al., (2003) as follows: 

FC1. Computer literacy is required to conduct digital