Investigating the factors influencing banks’ adoption and development of e-banking, the case of Algeria

Abstract

The creation of electronic banking (e-banking) has revolutionised traditional banking practices and enabled banks to provide various services, which are accessible to their clients anywhere and anytime. E-banking services have known noticeable development and seen widespread acceptance across the world for the benefits they offer to both banks and clients. However, the case is different in developing countries such as Algeria where its adoption and development remain in their infancy stage. Many studies have been undertaken to identify and explain the benefits and barriers related to e-banking adoption by customers in general and to identify the socio-demographic characteristics of customers in particular. However, a limited amount of work explaining banks’ adoption of e-banking solutions has been provided in the literature as banks’ adoption of e-banking is claimed to be a more complex and difficult phenomenon to investigate due the internal and external environments’ effects on banks’ innovation. Hence this study aims to address the gap in the literature and to investigate the interactions between political and financial interests and their impact on banks’ innovation by uncovering the contextual and institutional factors and actors affecting banks’ adoption and development of e-banking with a greater focus on the external environment. To do so, a conceptual framework was built on a combination of Technology, Organisation, and Environment (TOE) framework and Institutional Theory, in which a set of variables were added to each context of the TOE framework for their potential effect on banks’ innovation. In order to answer the research questions and to achieve its objectives, this study adopts the pragmatic paradigm and uses a qualitative case study strategy to collect and analyse data in order to develop a better understanding of the studied phenomenon. Five case studies including four banks (public Algerian, private French, private Arab and a private Anglo-Saxon) and two regulatory organisations were used in this research and counted as one. Ten interviews were conducted in total with two bank representatives (namely an e-banking department manager and a senior relationship manager) interviewed in each of the four banks, in addition to one director from each of the two regulatory organisations. The findings of this study confirm that banks’ adoption and development of e-banking is affected by contextual factors, namely the technological, organisational and environmental, and also by institutional factors and actors. These contextual and institutional factors and actors result from the interaction between the political and financial interests in electronic banking solutions, which have an important impact on banks’ innovation. A model was developed and validated to provide an insight into the adoption and development of e-banking by banks and can be used for studies in other countries with similar features. Finally this study makes a number of recommendations and actions for researchers to extend this model and also for banks to increase the diffusion of e-banking within the Algerian banking sector.