Factors Affecting the Adoption of Digital Banking Services in India: Evidence from World Bank's Global Findex Survey

Background and statement of the problem: As the majority of the population in India is still using conventional banking services, it is imperative to assess the determinants of digital banking adoption. This paper analyses the factors affecting the adoption of digital banking services in India using the Technology Acceptance Model (TAM). Research methodology and data: This study is based on the World Bank's Global Findex Survey 2017 data, covering 3000 respondents from India. The chi-square test, Spearman rank correlation, and multiple hierarchal regression model have been used to analyse the data and test the research hypotheses. The association between demographic characteristics and the adoption of digital banking has been analysed using the chi-square test. Further, Spearman rank correlation has been used to assess the direction of the relationship between the adoption of digital banking services and both the components of the Technology Acceptance Model (TAM). Finally, multiple hierarchal regression has been used to estimate perceived usefulness and ease in using digital banking services. Research findings: The penetration of internet and mobile has induced the adoption of digital banking systems in India. Still, only 35 percent respondents have reported usage of digital banking services in the country. The analysis shows a significant association between demographic characteristics and adoption of digital banking services. Further, the correlation analysis indicates a positive and significant relationship between the adoption of digital banking services and components of the Technology Acceptance Model (TAM). Perceived usefulness and perceived ease in using banking services show a positive and significant impact on the adoption of digital banking services, with controlling effect of demographic characteristics of the respondents. Policy implications: Recently, the government has provided a new direction to the banking sector to establish Digital Banking Units (DEUs) for delivering holistic digital solutions to its customers. As India is rapidly and aggressively moving towards the digitization of banking services, this study provides timely feedback based on the perception of the adult population for effective targeting and positioning of digital banking efforts.