Digital Financial Inclusion or Digital Divide? Determinants of Internet Banking Adoption Among Commercial Bank Customers in Sri Lanka: Evidence from the Batticaloa District

Abstract

The adoption of online banking by customers in Sri Lanka – notably in the outlying districts – is disproportionately low even as there is exponential development in digital banking globally. This paper examines the factors influencing the adoption of internet banking by commercial bank clients in the Batticaloa district of Sri Lanka, with wider implications for the country’s digital financial inclusion strategy. The study is a quantitative cross-sectional survey on 298 validated replies of active internet banking users. The Technology Acceptance Model (TAM) and Unified Theory of Acceptance and Use of Technology (UTAUT) guided five distinct constructs: convenience, reliability, accessibility, security and awareness. Data was examined using Pearson correlation and multivariate linear regression with IBM SPSS Statistics 26. Convenience was the strongest predictor of consumer adoption (β = 0.291, p < 0.001), followed by accessibility to the internet (β = 0.182, p < 0.01), reliability (β = 0.178, p < 0.01) and awareness (β = 0.158, p < 0.01). Security perceptions were positively linked with adoption but were not a predictor of adoption behavior in the regression model (p = 0.317) suggesting a mediated or contextual influence. The model explained a large amount of variance (R2 0.67, F 119.27, p < 0.001). The study adds crucial post-pandemic empirical evidence from an under-represented ethno-linguistic minority district of Sri Lanka and contributes to the conversation on digital justice in developing countries. The implications of the findings are for bank strategy, policy formulation for the national digital transformation and TAM/UTAUT literature in non-metropolitan Sri Lankan contexts.