Internet adoption in Italian banks: an empirical investigation

This paper examines the determinants of adoption of Internet banking among Italian retail banks. In particular it aims at investigating the nature of Internet banking in relation to traditional banking activity. In doing so, the paper analyses the role of firm-specific and market-specific characteristics in affecting the decision to provide financial services via the Internet. The empirical analysis indicates that the adoption of Internet banking depends upon the characteristics of traditional banking activities, particularly in terms of existing networks of distribution and existing customers. First, banks with high branching intensity adopt more slowly than banks with a few branches in place. Second, adoption is negatively affected by the existence of a large customer base, once we control for assets. An important consequence of this is that the provision of financial services over the Internet is a strategy directed more at attracting new customers than at strengthening the relationship with existing ones.