Determinants of transactional internet banking.
Description
This paper studies why U.S. credit unions adopt transactional internet banking services. The evidence is consistent with profit-maximizing adoption, with transactional services more likely when credit unions have more consumer lending, face stronger competition, and can use online delivery to attract customers.
The probability of adoption is higher for larger and more efficient credit unions and lower when loan delinquencies are higher. Local demographics also matter, with adoption more likely in counties with a larger share of younger residents.
What this paper contributes.
Focuses on credit unions.
The paper studies online banking adoption in member-owned financial institutions rather than only commercial banks.
Treats adoption as a competitive decision.
Transactional internet banking is modeled as a way to attract customers and respond to market pressure.
Identifies operational and market drivers.
Size, efficiency, consumer-loan orientation, competition, delinquencies, and local age composition all help explain adoption.
Links technology adoption to service delivery.
The results show how digital channels can become part of a credit union's growth and retention strategy.