Internet banking adoption among mature customers

Internet banking adoptionamong mature customers earlymajority or laggardsMinna MattilaProfessor of Marketing University of JyvaEgraveskylaEgraveSchool of Business and Economics Marketing JyvaEgraveskylaEgrave Finland

Heikki KarjaluotoSenior Teaching Assistant University of Oulu Finland

Tapio PentoProfessor of Marketing University of JyvaEgraveskylaEgraveSchool of Business and Economics Marketing JyvaEgraveskylaEgrave Finland

Keywords Services marketing Internet Banking Consumer behaviour Finland

Abstract Finland is a world leader in electronic banking and over 398 percent of allretail banking transactions were made over the Internet in August 2000 Using the data ofa large survey we analyzed mature customersrsquo Internet banking behavior Internetbanking was the third popular mode of payment among mature customers Householdincome and education were found to have a significant effect on the adoption of theInternet as a banking channel so that over 30 percent of wealthy and well-educatedmature males make e-banking their primary mode of making payments Perceiveddifficulty in using computers combined with the lack of personal service in e-bankingwere found to be the main barriers of Internet banking adoption among maturecustomers Internet banking was also found to be more unsecured among maturecustomers than bank customers in general

IntroductionBiophysical aging includes ``changes in sensory and intellectual functioning

if the organism diminished mobility and physical strength changes in outer

appearance aging and death of cellsrsquorsquo (Moschis 1992 p 115) Biophysical

aging can be taken into account by many marketing strategies Lumpkin

et al (1985) argue that mature customers appreciate helpful sales staff that

understand and are sensitive to the mature customersrsquo needs They continue

that readability of labels and tags is often a determinant attribute when

mature customers choose a store

Psychosocial aging implies that ` individuals undergo a gradual

transformation mentally as well as in the eyes of others and their ownrsquorsquo

(Moschis 1992 p 116) Psychological changes embrace mainly cognitive

changes in beliefs attitudes personality and needs (Kennett et al 1995) It

has been argued that the mature customer does not see herself as old as she

actually is in years Marketing strategies should take psychological aging

into account sensitively For example Moschis (1991) argues that financial

services providers should consider using older spokespeople in advertising

The perceived similarity with the spokesperson on factors such as attitudes

personality and lifestyle is more important than the age

The definition of a mature customer which is used in this study is based on

studies by Sherman and Brittan (1977) Mason and Beardon (1978) and

Oumli and Williams (2000) The mature consumer market ie individuals

The Emerald Research Register for this journal is available at

httpwwwemeraldinsightcomresearchregister

The current issue and full text archive of this journal is available at

httpwwwemeraldinsightcom0887-6045htm

Psychosocial aging

5 1 4 JO U R N A L O F S E R V IC E S M A R K E T IN G V O L 1 7 N O 5 2 0 0 3 p p 5 1 4 -5 2 8 M C B U P L IM IT E D 0 8 8 7 -6 0 4 5 D O I 1 0 1 1 0 8 0 8 8 7 6 0 4 0 3 1 0 4 8 6 2 9 4

An executive sum m ary form anagers and executivereaders can be found at theend of this artic le

over 65 years of age has been recognized as a major target segment in

various businesses In Finland for example every fourth person will be over

65 years of age within the next 20 years The trend of population aging is

similar in all developed countries For instance Henderson (1998) predicts

that by the year 2030 the number of Americans over 65 years of age will

triple so that one-fifth of the total population will belong in this mature

consumer segment

This development is rapidly transforming societies toward a marketplace of

increasingly mature customers It is thus of interest to define and understand

the needs of mature customers Traditional interactive services marketing

models must be taken under reconstruction as the demographic profile of

population is changing rapidly The mature bank customers have plenty of

purchasing power today and in the future they are expected to spend large

sums on the financial services Some studies suggest that in just a few yearsrsquo

time mature customers will control a considerable amount of the whole

populationrsquos funds (see eg Swartz 1999)

This paper studies the needs of mature Finnish bank customers and their

reasons for the adoption and non-adoption of Internet banking The study is

founded on some recently published postulates concerning the impact of

ageing population their changing needs and information technology on

services marketing

Marketing to maturityOne common mistake marketers often make in developing strategy is

believed to be the use of stereotypical profiles of older persons The mature

consumer market consists of older people who exhibit a great deal of

variability with respect to the way they look think and act (Moschis et al

1997 Shortt and Ruys 1994 Caballero and Hart 1996 Dychtwald 1997)

Because the effectiveness of marketing strategies and programs varies by

type of segment and type of product decision makers should rely primarily

on information about older consumersrsquo responses to marketing offerings

which are specific to the product or service being marketed as well as to the

segment of interest (Moschis et al 1997)

Marketing banking services to mature consumer markets should take into

account at least three factors First mature customers are not a homogeneous

segment of the retail banking market Bone (1991) and Kennett et al (1995)

have demonstrated empirically the fragmentation of the mature consumer

segment in the financial services industry This non-homogeneity implies

that any segmentation of mature customer markets will be by necessity based

on more variables than just one Possible segmentation criteria include

demographics attitudes and customer perceived benefits Second as

Mattilarsquos (2001 pp 86-92) empirical study points out mature customers

appreciate and also demand face-to-face banking services The provision of

personal services is expensive and the differentiation of services by

segments becomes important and the need for tailored services discounts

and special offers will grow Third mature customers tend to be more

conservative toward and have more difficulties in learning to use new types

of financial services and technologies than young consumers (Kennett et al

1995) This brings out the questions of segment-differentiated consumer

education programs and entails calculations of cost-benefit ratios of the

services which are offered to various segments It should be ensured that the

service encounters favourably affect mature customers (Johnson-Hillery

et al 1997)

Mature custom er needs

Factors to take into account

JO U R N A L O F S E R V IC E S M A R K E T IN G V O L 1 7 N O 5 2 0 0 3 5 1 5

Leventhal (1997) argues that the mature markets respond to marketing

efforts that reflect five key concepts of autonomy connectedness altruism

personal growth and revitalization Marketing communications that

incorporate all of these five key concepts will be for the most part very well

received by this market (see also Lavery 2001) Leventhal (1997) suggests

that one of the strongest things a marketer can do with the aging consumer is

to create a positive relationship with himher because of this segmentrsquos

natural willingness to interact

Definite psychographic groups have been found to exist within the mature

market segment At least eight lifestyle groups among mature customers

have been found (Burt and Gabbott 1995) What is not clear however is to

what extent those psychographic groups affect buyer perceptions and

behavior (Oates et al 1996) It has been found that the segmentation of the

mature market is based essentially on five variables of discretionary income

health activity level discretionary time and response to other people From

these five variables 32 potential segments can be generated (Burt and

Gabbott 1995)

Kesner (1998) and Corlett (1999) have outlined some guidelines on how to

market to the mature segment They suggest the use of discounts and award

programs to senior citizens as well as special personal services relationship

marketing and customer education In this marketing effort it is seen as

essential that marketers approach the mature customer in a sensitive way

treating them as grandparents not as seniors oldies or retirees (Direct

Marketing 2000)

Consumer education programs among mature customers are geared to

improving the efficiency of their buying behavior (Fast et al 1989 Oumlil

and Williams 2000) One of the main aims of mature customer education

programs is to prepare them ``to confront more adroitly the vagaries of the

marketplacersquorsquo (Oumlil and Williams 2000) Education programs may

become a win-win service Mature consumers may increase their

purchasing power because of more efficient buyer behavior a higher level

of personal satisfaction resulting from improved decision making and an

enhanced control over personal budgeting Independent living and

habitation in their own homes is what most mature customers in Finland

want (HeikkilaEgrave et al 1999) The marketers also may benefit from such

programs because they will enjoy heightened customer loyalty improved

marketing effectiveness and higher levels of customer satisfaction (Oumlil

and Williams 2000)

In fact Nielson and Curry (1997) claim that mature individuals are avid

readers of financial materials and have time to absorb the information they

request They go on arguing that the actual process of learning and discovery

brings mature personalities enjoyment in and of itself Leventhal (1997)

refers to mature customers as ``they listen they read they rememberrsquorsquo

pointing out at the same time that the mature consumer segment is sceptical

above all else

Adoption of new delivery channels in bankingMature customers are usually not seen as innovators or early adopters of new

technologies but rather belong to the late majority or even laggards in terms of

adoption rates of new services (Oumlil and Williams 2000) Elder et al

(1987) found that older workers in government finance organizations are more

likely to experience technostress compared to younger workers Similarly

Zeffane and Cheekrsquos (1993) study of computer usage in an Australian

Five key concepts

Consum er education

5 1 6 JO U R N A L O F S E R V IC E S M A R K E T IN G V O L 1 7 N O 5 2 0 0 3

telecommunications organization found that age is negatively correlated with

computer usage However Teo (2001) has found that individuals across a wide

range of ages engage in browsing and purchasing activities over the Internet

Also Karjaluoto et al (2002) have found that investment services in particular

have steady demand among mature consumers

It is proposed here that the majority of the mature customers in the financial

services sector belong to the late adopters or majority on the innovation

diffusion curve rather than to the early adopters (see Figure 1) This proposal

is verified with empirical data below and the factors which create it are

studied in more detail

However even though over half of the mature banking customers seem to

belong in the innovation adopter category of late adopters we well

demonstrate in this paper that mature customers do also use Internet banking

and other financial services delivery channels as their primary modes of bill

payment This diversity is supported by the general idea of heterogeneity in

the mature customer market

In general the diffusion curve shown in Figure 1 depicts the cumulative

adoption of a new technological innovation (Robertson 1967 Moore and

Benbasat 1991 Rogers 1995 Plouffe et al 2000) Traditionally the

adoption continuum recognizes five categories of consumers that differ in

terms of adoption rate

(1) innovators who are the first adopters interested in technology itself with

positive technology attitudes

(2) early adopters who are also interested in technology and are willing to

take risks

(3) early majority who can be considered pragmatists and process oriented

(4) late majority who are more or less skeptical about technology with

negative technology attitudes and

(5) laggards who have extremely negative technology attitudes and therefore

never adopt technology among the mainstream (eg Moore 1991

Rogers 1995)

As the Internet banking adoption research has concentrated more or less on

studying innovators and early adopters of the new technology there is a

limited amount of research available of mature customersrsquo perceptions about

Internet banking

Figure 1 Mature banking customers on technology adoption curve

Late adopters

Internet banking


Data collectionConsumersrsquo usage of online banking services in Finland is the highest in the

world The leading bank Nordea has 14 million online customers and

32 million log-ons monthly in a country of five million people Osuuspankki

Group is the second largest with over 500000 online customers The amount

of online customers in different banks is proportionate to their market shares

All banks offer a full line of Internet services plusmn basic banking services stock

and bond trading loan applications consumption and student loan decisions

electronic bill presentment international payments and electronic salary

presentment

The data of this research were collected by means of a questionnaire sent by

mail to 3000 individual bank customers in Finland The survey sample

consisted of three consumer segments (non-users new users old users) that

differed in terms of Internet banking experience Three questionnaires were

partly tailored to these groups After a follow-up round a total of 1201

questionnaires were received of which 1167 were used in the data analysis

The response rate was 389 percent We enhanced the survey data further with

30 in-depth interviews which are also used to verify the results of the survey

The results of this study are derived from a sub-survey of 220 individuals

which was the amount of respondents over 65 years of age in the larger survey

and the interviews of 16 individuals The mature customer segment was very

well represented in our sample because 189 percent of the sample was

comprised of individuals over 65 years of age Of the total population in

Finland only 58 percent belong in the group of mature customers

ResultsThe proposition of Figure 1 that mature customers are late adopters of e-

banking is supported by the data Table I shows clearly that over half of

mature customers belong in the group of late adopters in terms of their

Internet banking adoption

Table II shows that 519 percent of the respondents are male and most (472

percent) belong to the group whose household income is less than 16819

per year The national average annual income was 25380 in year 2000

Only about half of the mature customers (562 percent) were married and the

amount of widowers was high as is expected in this age group Education

varied from elementary school (474 percent) up to a university degree (172

percent) Table II also depicts the most common modes of payment for each

demographic variable (see also Figure 2)

It can be seen from Table II that the mature customer segment is quite

heterogeneous in terms of modes of payment The heterogeneous nature of

the mature customer segment has been supported by Nielson and Curry

(1997) who found the mature market to be the most diverse of all The

mature customer will definitely try new products but they will try them for

different reasons than the younger market They are going to try something if

it can meet a personal specific need that they have (see also Leventhal

1997)

Early adopters

()

Majority

()

Late adopters

()

Mature customers 218 237 545

Other customers 407 296 297

Table I Mature customers as late adopters of Internet banking in Finland

Data collection

Respondent characteristics


The mature consumer segment over 65s may be called old in terms of age

but they do not see themselves as old It is a generally held belief that we are

attracted to others whom we perceive to be similar to ourselves (see eg

Johnson-Hillary et al 1997) Therefore we mapped the respondentsrsquo

Demographic

characteristics Frequency

Valid

percent

Most used mode

of payment Frequency Percentage

Gender

Male 109 519 Over-the-counter 33109 303

Female 101 481 Pay service 47101 465

Missing 10

Total 220

Household income

Less than 8409 36 183 Pay service 2036 556

8410-16819 57 289 Pay service 2257 389

16820-25228 50 254 Over-the-counter 1750 342

25229-37842 22 112 Over-the-counter 822 322

More than 37843 32 162 Internet 1132 343

Missing 23

Total 220

Marital status

Married 117 562 Pay service 35117 299

Cohabiting 7 34 Direct debit 27 286

Single 14 67 Pay service 714 500

Widowed 43 207 Pay service 2543 581

Divorced 27 130 Over-the-counter 1127 407

Missing 12

Total 220

Education

Elementary school 99 474 Pay service 4099 404

Technical school 16 77 Internet 516 311

Business school 21 100 Over-the-counter 921 429

University degree 37 177 Internet 1137 297

Other 36 172 Pay service 1436 387

Missing 11

Total 220

Table II Demographic profile of the mature bank customers

Figure 2 Distribution of primary modes of payment among the mature

respondent


self-perception and almost half of them characterized themselves as young

(481 percent) and modern (462 percent) This finding is supported in

Mathur et al (1998) who also found that new-age elderly perceive

themselves as younger in age and outlook more in control of their lives and

more self-confident This fact might be indicating that mature customers are

young at heart and willing to try out new forms of services such as Internet

banking if we as a society just let them

However there were also mature customers who perceived themselves as

dull-witted (366 percent) and only very few describe themselves as quick to

learn (09 percent) new things Such perceptions compared to the stereotype

which mature customers had about a typical Internet banking user (eg

computer genius and intelligent) might hinder the adoption of Internet

banking among the mature customers

I donrsquot have anything against the Internet banking Itrsquos just that Irsquom too old to pay

my bills through the Internet (Male 73 years)

Demographic variables may or may not be a useful tool for banks in their

marketing planning (Stafford 1996) In the case of Internet adoption some

demographics are good predictors of adoption rates Mattila et al (2002a)

find that technical education university degree and household income

impact the use of Internet banking also in the case of mature customers The

use of bill payment service is the most popular mode of payment among the

mature customers at 37 percent (see Figure 2)

I used to take my bills to a branch office because I like talking to the bank

personnel and because Irsquom terrified about using any machines But then I noticed

how convenient it is to pay bills via ATM I can pay my bills at the supermarket

where I do my grocery shopping (Female 68 years)

The second popular mode of payment is to pay bills over-the-counter at a

branch office at 29 percent and in the third place is paying bills over the

Internet with 12 percent The latter is competing closely with ATMs

Some demographic variables attitude toward computers prior banking

experience prior technology experience and reference group have been

identified as determinants of Internet banking adoption (Sathye 1999

Jayawardhena and Folex 2000 Mattila and Pento 2002b) On a scale from

three (minor barrier) to three (major barrier) we tested nine variables we

believed to affect the Internet banking adoption in the case of mature

customers (see Figure 3) The variables were chosen as having potential on

Figure 3 Internet banking adoption barriers

Self-perceptions

Derterm inants of Internetbanking adoption


the basis of earlier studies and the in-depth interviews Notice now that not

all the mature customers are non-users and vice versa

The beliefs and perceptions of mature customers toward Internet banking seem

to be stronger than other bank customers Even though both the groups place

the presented variables in the same order the mature customers express their

perceptions more strongly than the non-users in general The lack of personal

service was found to be the biggest barrier to adoption Mature customers also

listed difficulties with computers and Internet in general as well as security

issues among the most significant barriers to adoption

To further verify the findings listed above a factor analysis was carried out

Two statistical tests were conducted in order to determine the suitability of

the factor analysis First the Kaisers-Meyer-Olkin (KMO) measure of

sampling adequacy score of 0785 was well above the recommended level of

05 Second the Bartletts test of sphericity was significant (Agrave2hellip36dagger ˆ 1604

p lt 001) indicating that there are adequate intercorrelations between the

items which allows the use of factor analysis

Principal axis factoring was used as an extraction method and Varimax

rotation was used as a rotation method These methods have been widely

accepted as reliable factor analysis methods (see eg Alexander and Colgate

2000) Based on the suggestions of Child (1970) two factors were extracted

using Kaiserrsquos criterion (see Table II) In addition gronbachrsquos alpha was

counted for each factor For factor one Alpha was 084 and for factor two

078 Both scores are well above accepted levels (070) of basic research

(Nunnally 1978) Hence the data set can be defined as reliable The two-

factor solution accounted 656 percent of the total variance

Two factors were created both of which are easy to label (see Table III) The

first factor accounts 503 percent of the total variance and is defined by five

variables with factor loadings of 05 or higher We call factor one ` Internal

problems with the use of Internet bankingrsquorsquo because its variables refer to

problems concerning computer Internet and Internet banking usage The

second factor accounts for 154 percent of the total variance and exhibits

loadings for four variables Factor two appears to be defined by a mix of items

that are reflections of security concerns price and service issues As they refer

to external items affecting the use of Internet banking from outside we label

this factor as ` External constraints on the use of Internet bankingrsquorsquo

Statement

Factor 1

loadings

Factor 2

loadings

Disappointment in using Internet banking 0942

Internet banking Web pages are confusing 0769

Use of computer orand Internet is difficult 0568

Neither friends nor relatives use Internet banking 0561

Internet banking is only for computer nerds 0528

Internet banking is unsecured 0839

Internet banking is more expensive than going to a

branch office

0753

Internet banking offers no receipt on payment 0637

Initial eigenvalues 453 138

Total variance explained 503 154

Notes Extraction method principal axis factoring Rotation method varimax withKaiser normalization

Table III Internal problems and external constraints of Internet banking as

adoption barriers among mature customers

Factor analysis

Tw o factors


Some of the mature customers have actually tried using Internet banking but

have discontinued after disappointments The majority of the usage

disappointments were due to insufficient amount of training in the use of the

Internet interface which is given to the mature customers by bank personnel

The results of factor analysis presented in Table III provide insights into the

adoption barriers of Internet banking among mature customers which are

explained in detail below

I would use Internet banking if somebody just taught me how (Male 70 years)

Even the expert Internet banking users complained that in the very

beginning nobody trained them or even showed them how to use Internet

banking in practice Also the feeling of confusing Web pages might be

solved with more careful initial training of customers A large subsegment of

mature customers thought that the Internet banking Web pages are

confusing and difficult to use They felt that the pages are lacking sufficient

guidance and that advice during use was almost impossible to get Therefore

the importance of pre-education in the use of Internet banking Web pages is

even more emphasized

Mattilarsquos (2001 pp 129-33) empirical study points out that Finnish Internet

banking customers in general consider Internet banking safe This is not the

case with mature customers who find Internet banking more unsecured than

bank customers in general Only 06 percent of the under 65 segment

responded that they have serious concerns of the security of Internet banking

against 264 percent of the mature customers

If the hackers can get to Pentagon imagine what they would do with my account

(Female 65 years)

Mature customers also thought that Internet banking costs them more than

paying bills over-the-counter Calculated on a transaction base this is a

misconception because all Finnish banks charge less for their Internet

services than their services over other channels The reason for the higher

cost is that mature consumers have less access to a Net-connected computer

and they thus add the cost of a computer and service provider fees to the

transaction fees

A much higher proportion of the mature customers than the younger ones

want personal service and a printed receipt of their transactions Figure 4

shows the perceptions on a scale of plusmn3 plusmn +3 toward different services by the

Figure 4 Perceptions about technology-based services in relation to

personal service

Lack of training

Cost of services


mature segment and all age groups Senior citizens have positive

perceptions of the long-established services personal contact teletext and

credit and debit cards and dislike practically all of the new services

especially e-mail and the Internet Younger respondents have positive

perceptions of personal service and the cards but they also like the new

services especially mobile and Internet services

A mature customerrsquos perception toward electronic banking and toward

computer use were discussed above as potential determinants of her adoption

of Internet banking Their object is to gauge the factors underlying the

attitude formulation in Internet banking In a conducted Chi-square test a

positive computer perception was found to be strongly associated with

mature customersrsquo use of Internet banking (r = 0665 p lt 001) (see

Table IV)

Of the mature customers 763 percent never use Internet banking and 415

percent of them indicated very negative computer perceptions Conversely

727 percent of mature customers with highly positive computer perceptions

used Internet banking often or always

Married mature customers are more likely to use Internet banking than

unmarried or widowed ones A total of 194 percent of married mature

customers use Internet banking often while only 36 percent of unmarried

customers used Internet banking often The correlation between usage and

marital status is low but significant (Spearmanrsquos rho = plusmn0204 p lt 001)

Mature men bank more over Internet than women as is shown by a negative

correlation coefficient (r = plusmn0239 p lt 001) and 220 percent of all mature

male customers bank over the Internet but only 30 percent of females do the

same

The level of education increases the likelihood of using Internet banking

(r = 0223 p lt 001) Of mature Internet users 30 percent hold a university

degree while e-banking is much less common among the less educated

Household income also correlates positively with usage (r = 0398 p lt 001)

A total of 400 percent of mature customers with an annual household

income more than 37843 use Internet banking while only 56 percent of

mature customers with an annual household income less than 25228 use

Internet banking

Profession correlates positively with the mature customersrsquo use of Internet

banking (r = 0221 p lt 001) Mature customers with higher positions in

working life tend to use Internet banking 400 percent of the mature

customers in leading positions use Internet banking whereas over 90 percent

of mature customers out of work have never used Internet banking

Household size is also positively correlated with usage (r = 0168 p lt 005)

Pearson

chi-square value df

AsympSig

(two-sided) p-value

Computer attitude 64315 6 0000

Marital status 11652 2 0003

Gender 19613 2 0000

Education 22750 6 0001

Income 33236 4 0000

Profession 44471 4 0000

Household size 9160 2 0010

Table IV Relationship between the use of Internet banking and mature

customers

Attitude form ulation

Usage and m arital status


As the mature customersrsquo household size increases the use of Internet

banking becomes more popular

DiscussionThe results of this paper are especially valuable now when the populations

nationwide are aging fast It has been estimated that in the near future the

mature customers will become the most important segment of all the

customer groups For example it is expected that in Finland one-quarter of

the population will be over 65 years of age by the year 2020 and in the USA

one-fifth of the population will reach maturity in terms of age by the year

2030 Therefore it is of utmost importance to better understand the behavior

of this quite fragmented segment in the wireless environment This paper

created new knowledge about this behavior and tried to understand the

factors that drive the mature customer segmentrsquos online decisions

The results of this paper confirm that mature customers are late adopters of

Internet banking The performed factor analysis indicates four main reasons

for this practical problems in using e-banking concerns about the expensive

start-up security and lack of personal service These hindrances may be

alleviated for example with education of mature customers to use

e-banking and by integrating personal services within the Internet bank

interface One alternative for incorporating personal service with e-banking

would be the development of three-dimensional Web pages with voice

recognition and the ability to call a personal bank employee via a video

connection As the mature customers preferred teletext to current Internet

banking delivery platforms banks need to develop new electronic delivery

channels for their products and services if they wish to reach the mature

consumer segment This means at least the extension of the current Internet

banking from the PC and the mobile phone to digital television

The results of this study raise several questions for future research While

demographic factors and computer attitude had a significant influence on the

use of Internet banking future work should diversify the discussion into

attitude development and research Another implication for future research is

to widen the scope of the study outside of Finland One does assume that the

mature consumer segments are not alike in different countries

As this study concentrated on segmentation criteria such as computer attitude

and demographics implications of the segmentation should be carried out by

a statistical method such as cluster analysis One limitation of this study is

also the fact that it comprised only of Finnish mature customers Therefore

broadening the scope of this study abroad would provide banks with valuable

cultural aspects when planning their international operations

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of adopting an information technology innovationrsquorsquo Information Systems Research Vol 2

No 3 pp 192-222

Moore G (1991) Crossing the Chasm Marketing and Selling Technology Products to

Mainstream Customers Harper Business New York NY

Moschis G (1991) ` Marketing to older adults an overview and assessment of present

knowledge and practicersquorsquo Journal of Services Marketing Vol 5 No 2 pp 33-41

Moschis G (1992) Marketing to Older Consumers Quorum Books Westport CT

Moschis G Lee E and Mathur A (1997) ` Targeting the mature market opportunities and

challengesrsquorsquo Journal of Consumer Marketing Vol 14 No 4 pp 282-93

Nielson J and Curry K (1997) ` Creative strategies for connecting with mature individualsrsquorsquo

Journal of Consumer Marketing Vol 14 No 4 pp 310-22

Nunnally J (1978) Psychometric Theory 2 McGraw-Hill New York NY

Oates B Shufeldt L and Vaught B (1996) ` A psychographic study of the elderly and retail

store attributesrsquorsquo Journal of Consumer Marketing Vol 13 No 6 pp 14-27


Oumlil A and Williams A (2000) ` Consumer education programs for mature customersrsquorsquo

Journal of Services Marketing Vol 14 No 3 pp 232-43

Plouffe C Vandenbosch M and Hulland J (2000) ` Why smart cards have failed looking to

consumer and merchant reactions to a new payment technologyrsquorsquo International Journal of

Bank Marketing Vol 18 No 3 pp 112-23

Robertson T (1967) ` The process of innovation and the diffusion of innovationrsquorsquo Journal of

Marketing Vol 31 No 1 pp 14-19

Rogers E (1995) Diffusion of Innovations 4th ed The Free Press New York NY

Sathye M (1999) ` Adoption of Internet banking by Australian consumers an empirical

investigationrsquorsquo International Journal of Bank Marketing Vol 17 No 7 pp 324-34

Sherman E and Brittan M (1977) ` Contemporary food gatherers a study of food shopping

habits of elderly urban populationsrsquorsquo The Gerontologist Vol 13 Autumn pp 358-63

Shortt G and Ruys H (1994) ` Hotel security the needs of the mature age marketrsquorsquo

International Journal of Contemporary Hospitality Management Vol 6 No 5 pp 14-19

Stafford M (1996) ` Demographic discriminators of service quality in the banking industryrsquorsquo

The Journal of Services Marketing Vol 10 No 4 pp 6-22

Swartz L (1999) ` Marketing to maturityrsquorsquo Franchising World Vol 31 No 6 pp 47-50

Teo T (2001) ` Demographic and motivation variables associated with Internet usage

activitiesrsquorsquo Internet Research Electronic Networking Applications and Policy Vol 11

No 2 pp 125-37

Zeffane R and Cheek B (1993) ` Profiles and correlates of computer usage a study of the

Australian telecommunications industryrsquorsquo Computers in Industry Vol 22 pp 53-69

Further reading

Davis F Bagozzi R and Warshaw P (1989) ` User acceptance of computer technology a

comparison of two theoretical modelsrsquorsquo Management Science Vol 35 No 8

pp 982-1003

Gardner D Johnson F Lee M and Wilkinson I (2000) ` A contingency approach to

marketing high technology productsrsquorsquo European Journal of Marketing Vol 34 No 910

pp 1053-77

Gatignon H and Robertson T (1989) ` Technology diffusion an empirical test of

competitive effectsrsquorsquo Journal of Marketing Vol 53 No 1 pp 35-49

Moriarty R and Kosnik T (1989) ` High-tech marketing concepts continuity and changersquorsquo

Sloan Management Review Vol 30 Summer pp 7-17

amp


Executive summary and implications for managers andexecutives

Internet banking is well developed in FinlandThe proportion of people in Finland who have adopted online banking is

higher than anywhere else in the world All Finnish banks offer a full range

of Internet banking services As early as 2000 almost 40 per cent of all retail

banking transactions in Finland were made over the Internet Mattila et alexamine how Finns aged over 65 perceive Internet banking

Mature customers tend to be late adoptersDifferent people have different attitudes towards new technology

Innovators who are interested in new technology and positive towards it

tend to be the first people to adopt a new technology Early adopters are also

interested in technology and willing to take risks The early majority can be

considered pragmatists and process-orientated while the late majority are

more or less sceptical about technology and have negative attitudes towards

it Finally the laggards have extremely negative attitudes towards

technology and are not among the mainstream in adopting it People aged

over 65 although not of course an homogeneous group tend generally to

be among the late adopters of new technology Over half the mature

customers in the authorsrsquo survey were among the late adopters of Internet

banking

The results in detailMore than three-quarters of mature customers in the survey never used

Internet banking and more than 40 per cent of them had very negative

views of computers Married mature customers were more likely to use

Internet banking than non-married or widowed ones Mature men banked

more often over the Internet than mature women More-educated mature

consumers were more likely to use Internet banking than less-educated

mature consumers And Internet banking was more common among

higher-income mature customers than among lower-income

over-65-year-olds Mature customers who had held more responsible

positions in working life were more likely to use Internet banking that

those who had held less responsible positions And Internet banking was

more popular among mature customers from larger households than

among those from smaller households More than 30 per cent of wealthy

and well educated mature males in Finland used e-banking as their main

method of making payments

Among non-users of Internet banking mature and younger groups shared

similar perceptions and beliefs but the mature customers expressed them

more strongly The lack of personal service was found to be the biggest

barrier to adoption followed by difficulties with computers and the Internet

in general and security issues Some mature customers expressed concern

about high start-up costs of using Internet banking A number of mature

customers wrongly believed that Internet banking cost more per transaction

than conventional methods

Among mature customers who had discontinued using Internet banking after

trying it out most blamed insufficient or non-existent training in how to use

the new technology Many found the web pages confusing and difficult to

use


This summ ary has beenprovided to allow managersand executives a rapidappreciation of the contentof this article Those with aparticular interest in thetopic covered m ay then readthe article in toto to takeadvantage of the morecomprehensive descriptionof the research undertakenand its results to get the fullbenefit of the materialpresent

How banks should reactThe survey results assume significant importance since a quarter of the

Finnish population is expected to be aged over 65 by 2020 Banks need to

pay more attention to educating mature customers on how to use Internet

banking and integrating personal services with the Internet bank interface

Possibilities include developing three-dimensional Web pages with voice

recognition using video technology to give access to a bank employee and

extending Internet banking from personal computers and mobile telephones

to digital television

(A preAcirccis of the article ``Internet banking adoption among mature customersearly majority or laggardsrsquorsquo Supplied by Marketing Consultants for

Emerald)


over 65 years of age has been recognized as a major target segment in

various businesses In Finland for example every fourth person will be over

65 years of age within the next 20 years The trend of population aging is

similar in all developed countries For instance Henderson (1998) predicts

that by the year 2030 the number of Americans over 65 years of age will

triple so that one-fifth of the total population will belong in this mature

consumer segment

This development is rapidly transforming societies toward a marketplace of

increasingly mature customers It is thus of interest to define and understand

the needs of mature customers Traditional interactive services marketing

models must be taken under reconstruction as the demographic profile of

population is changing rapidly The mature bank customers have plenty of

purchasing power today and in the future they are expected to spend large

sums on the financial services Some studies suggest that in just a few yearsrsquo

time mature customers will control a considerable amount of the whole

populationrsquos funds (see eg Swartz 1999)

This paper studies the needs of mature Finnish bank customers and their

reasons for the adoption and non-adoption of Internet banking The study is

founded on some recently published postulates concerning the impact of

ageing population their changing needs and information technology on

services marketing

Marketing to maturityOne common mistake marketers often make in developing strategy is

believed to be the use of stereotypical profiles of older persons The mature

consumer market consists of older people who exhibit a great deal of

variability with respect to the way they look think and act (Moschis et al

1997 Shortt and Ruys 1994 Caballero and Hart 1996 Dychtwald 1997)

Because the effectiveness of marketing strategies and programs varies by

type of segment and type of product decision makers should rely primarily

on information about older consumersrsquo responses to marketing offerings

which are specific to the product or service being marketed as well as to the

segment of interest (Moschis et al 1997)

Marketing banking services to mature consumer markets should take into

account at least three factors First mature customers are not a homogeneous

segment of the retail banking market Bone (1991) and Kennett et al (1995)

have demonstrated empirically the fragmentation of the mature consumer

segment in the financial services industry This non-homogeneity implies

that any segmentation of mature customer markets will be by necessity based

on more variables than just one Possible segmentation criteria include

demographics attitudes and customer perceived benefits Second as

Mattilarsquos (2001 pp 86-92) empirical study points out mature customers

appreciate and also demand face-to-face banking services The provision of

personal services is expensive and the differentiation of services by

segments becomes important and the need for tailored services discounts

and special offers will grow Third mature customers tend to be more

conservative toward and have more difficulties in learning to use new types

of financial services and technologies than young consumers (Kennett et al

1995) This brings out the questions of segment-differentiated consumer

education programs and entails calculations of cost-benefit ratios of the

services which are offered to various segments It should be ensured that the

service encounters favourably affect mature customers (Johnson-Hillery

et al 1997)

Mature custom er needs

Factors to take into account


















Gabbott 1995)







Marketing 2000)














and Williams 2000)







above all else







Five key concepts

Consum er education


























take risks






Rogers 1995)




Internet banking


Late adopters

Internet banking










presentment


































1997)

Early adopters

()

Majority

()

Late adopters

()




Data collection







Demographic


Valid

percent

Most used mode


Gender



Missing 10

Total 220

Household income


8410-16819 57 289 Pay service 2257 389

16820-25228 50 254 Over-the-counter 1750 342

25229-37842 22 112 Over-the-counter 822 322


Missing 23

Total 220

Marital status






Missing 12

Total 220

Education






Missing 11

Total 220



respondent







































Self-perceptions






































Statement

Factor 1

loadings

Factor 2

loadings








branch office

0753







Factor analysis

Tw o factors


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)


















Gabbott 1995)







Marketing 2000)














and Williams 2000)







above all else







Five key concepts

Consum er education


























take risks






Rogers 1995)




Internet banking


Late adopters

Internet banking










presentment


































1997)

Early adopters

()

Majority

()

Late adopters

()




Data collection







Demographic


Valid

percent

Most used mode


Gender



Missing 10

Total 220

Household income


8410-16819 57 289 Pay service 2257 389

16820-25228 50 254 Over-the-counter 1750 342

25229-37842 22 112 Over-the-counter 822 322


Missing 23

Total 220

Marital status






Missing 12

Total 220

Education






Missing 11

Total 220



respondent







































Self-perceptions






































Statement

Factor 1

loadings

Factor 2

loadings








branch office

0753







Factor analysis

Tw o factors


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)


























take risks






Rogers 1995)




Internet banking


Late adopters

Internet banking










presentment


































1997)

Early adopters

()

Majority

()

Late adopters

()




Data collection







Demographic


Valid

percent

Most used mode


Gender



Missing 10

Total 220

Household income


8410-16819 57 289 Pay service 2257 389

16820-25228 50 254 Over-the-counter 1750 342

25229-37842 22 112 Over-the-counter 822 322


Missing 23

Total 220

Marital status






Missing 12

Total 220

Education






Missing 11

Total 220



respondent







































Self-perceptions






































Statement

Factor 1

loadings

Factor 2

loadings








branch office

0753







Factor analysis

Tw o factors


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)










presentment


































1997)

Early adopters

()

Majority

()

Late adopters

()




Data collection







Demographic


Valid

percent

Most used mode


Gender



Missing 10

Total 220

Household income


8410-16819 57 289 Pay service 2257 389

16820-25228 50 254 Over-the-counter 1750 342

25229-37842 22 112 Over-the-counter 822 322


Missing 23

Total 220

Marital status






Missing 12

Total 220

Education






Missing 11

Total 220



respondent







































Self-perceptions






































Statement

Factor 1

loadings

Factor 2

loadings








branch office

0753







Factor analysis

Tw o factors


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)






Demographic


Valid

percent

Most used mode


Gender



Missing 10

Total 220

Household income


8410-16819 57 289 Pay service 2257 389

16820-25228 50 254 Over-the-counter 1750 342

25229-37842 22 112 Over-the-counter 822 322


Missing 23

Total 220

Marital status






Missing 12

Total 220

Education






Missing 11

Total 220



respondent







































Self-perceptions






































Statement

Factor 1

loadings

Factor 2

loadings








branch office

0753







Factor analysis

Tw o factors


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)







































Self-perceptions






































Statement

Factor 1

loadings

Factor 2

loadings








branch office

0753







Factor analysis

Tw o factors


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)





































Statement

Factor 1

loadings

Factor 2

loadings








branch office

0753







Factor analysis

Tw o factors


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)


























(Female 65 years)







transaction fees





personal service

Lack of training

Cost of services














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)














Table IV)













same








Internet banking







Pearson

chi-square value df

AsympSig

(two-sided) p-value



Gender 19613 2 0000


Income 33236 4 0000




customers










































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)








































References




pp 47-60





No 2 pp 10-13



Vol 66 No 1 pp 24-7




p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)



p 41










Vol 32 No 8 pp 19-23



Vol 10 No 1 pp 19-30









No 11 pp 52-3



pp 5-9

















No 3 pp 192-222

































No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)





















No 2 pp 125-37



Further reading



pp 982-1003



pp 1053-77





amp


















banking



























use












Emerald)


















banking



























use












Emerald)











Emerald)


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Internet banking adoption among mature customers

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