There has been limited study specifically investigating the factors that affect the adoption of e-banking by SMEs in developing African economies, and to date, little is known about SMEs’ uptake of e-banking in the CMA. This is problematic for banks that wish to provide support to SMEs for the transition to e-banking, given the current move by banks towards embracing digital strategies. Furthermore, there is a need to understand these factors, as the diminishing number of physical bank branches has a potential impact on those SMEs that are not adopting e-banking.

This study’s primary objective was to evaluate the adoption of e-banking services by SMEs in the CMA. This research set out to assess the extent to which Bank X, as a key financial partner to a diverse range of SMEs within the CMA, demonstrates both awareness and technical readiness in facilitating its SME customers’ engagement with e-banking technologies. Notably, Bank X implements a uniform e-banking platform across all CMA member states. The institution views the adoption of e-banking by SMEs as a critical component, reflecting broader trends towards digitalisation within the global banking sector.

Before embarking on this study, it was important first to find out what had already been explored in the intended field of study. Babbie and Mouton (2001) stated that the researcher should start with a review of the existing body of knowledge to ascertain the way in which other scholars have investigated the research problem of interest, including how they theorised and conceptualised the issues, what was found was empirical, and the effect of the instruments used. Secondary data to underpin the study was sourced from existing academic empirical studies conducted by other researchers in the domain of e-banking in developing countries. The researcher gained ethical permission to proceed with this study from the University of Johannesburg, College of Business and Economics ethics committee numbered 20SOM20. Potential respondents were given a document explaining the study (informed consent approved by the ethics committee) and opted in to the study voluntarily. Their responses are reported anonymously.

The quantitative survey of SMEs of Bank X was undertaken within each of the four CMA countries. To achieve the purposes of this study, a UTAUT model was modified by exploring the influences of trust and technology disruption on the behavioural intention to adopt technology by integrating them into the model, as shown in Figure 1.

According to the UTAUT, the method of adopting a new technology can be separated into four factors: performance expectancy, effort expectancy, social influence and facilitating conditions. Performance expectancy is the belief that using the technology will improve a current personal process. Effort expectancy focuses on the simplicity or complexity of applying the technology. Social influence focuses on the influence of other people on a choice to use the technology. Facilitating conditions are the external factors that allow the use of a technology.

This model intends to describe user intentions to adopt technology and was proposed during the Web 1.0 era (Venkatesh et al. 2003; Venkatesh, Thong & Xu 2012, Venkatesh, Thong& Xu 2016).

By adapting the hypotheses proposed by the UTAUT model of Venkatesh et al. (2003), the following hypotheses were proposed for this study:

For the quantitative survey data collection, self-completion questionnaires were utilised.

According to Saunders, Thornhill and Lewis (2019), the choice of survey utilised is determined by a variety of aspects such as the features of the respondents, the desire to reach a particular type of person, the responses not being corrupted, sample size considering the response rate, types and number of questions. The questions were adapted from the research of Kabra et al. (2017), as these items have been previously tested to understand behavioural intention to use information technology.

A pilot study was conducted among 25 respondents. These individuals were not included in the final respondent sample. The participants were asked to provide feedback to the researcher on the ease of use of the questionnaire and their understanding of the questions. The feedback from the pilot study indicated that none of the respondents had problems answering the questionnaire and considered its items appropriate to the research objectives.

Reliability analysis was completed to determine the reliability of the survey pilot. The internal consistency of the items was measured by using Cronbach’s alpha reliability coefficient.

Cronbach’s alpha ranges from 0 to 1. Pallant (2020) provides the following rule of thumb for interpreting alpha values: greater than 0.9 are excellent, greater than 0.8 are good, greater than 0.7 are acceptable; anything lower is questionable (> 0.6), poor (> 0.5), or unacceptable (< 0.5). The Cronbach’s alphas for the constructs in the pilot study are listed in Table 2.

Once the pilot survey was completed, it was identified that 11 of the survey questions had a Cronbach’s alpha value of less than 0.7; therefore, these questions needed to be updated accordingly. Once these questions were updated, the final survey was reviewed by the statistics department of the University of Johannesburg, which confirmed that the changes to the 11 survey questions were relevant. In addition, the statistics department recommended that a minimum of five questions per construct be applied to improve the reliability and validity of the results; therefore, additional questions were added to the full survey prior to its being released to respondents. Table 3 provides a view of the modifications to the questionnaire between the pilot and full survey being run.

A minimum of 255 responses were required across each of the four CMA countries and various industries in which technology plays a significant role to obtain a valid spread of data. Analysis was conducted in IBM SPSS Statistics (Version 29) (IBM Corp. 2022) to calculate descriptive and inferential statistics (Blunch 2013). Phase 2 comprised an analysis that included descriptive statistics (that summarise the data as a representation of the entire population of CMA SMEs, such as measures of central tendency and measures of variability). An inferential statistical analysis was undertaken to infer properties from the sample to the CMA SME population. By applying exploratory factor analysis (EFA), the underlying factor or latent variable structures were identified. An EFA and multiple regression analysis were used to analyse the structural relationship between measured variables and latent constructs (Blunch 2013; Kaplan 2009; Osborne 2014).

Ethical clearance to conduct this study was obtained from the College of Business and Economics Research Ethics Committee, University of Johannesburg (No. 20SOM20).

The adoption of technology can be affected by convenience expectancy, social influence, facilitating conditions and uncertainty assurance. These factors drive a user’s behavioural intention to adopt technology or not. Each of these is discussed, in turn, in the subsections that follow.

In the CMA, the collectivist approach of Ubuntu is a contributing factor to e-banking adoption. This research contributes to the body of work on banking by submitting a different perspective on what drives adoption of e-banking. Financial technology firms and other financial providers are disrupting the current banking model. This study aids banking stakeholders in creating value and could enable the review of the relevant regulatory frameworks to support innovation in the banking sector.

The original conceptual model (see Figure 1) has been modified based on the results of the EFA. The new model (presented in Figure 2) includes the two new variable constructs that led to two new supported hypotheses.

The e-banking adoption model was designed to measure the behavioural intention of SMEs in the CMA to adopt e-banking. This comes at a time when banks in the CMA have adopted digital strategies and are investigating ways to improve the adoption rates of e-banking not just among SMEs but for all of their clients.

The new model could be used by other banks within the CMA or in other collectivist societies outside of the CMA to support their approach to the adoption of e-banking by SMEs. This model may not be adequate in other CMAs, such as the European Union or other economic communities that do not share a pegged currency (e.g. the Economic Community of West African States, ECOWAS), as the context is different from the CMA.

The results reveal that a variety of aspects effect SMEs (in the CMA) in their adoption of e-banking platforms. Social influence was found to have the most predictive power among the high-level variables. Small and medium enterprises’ intentions to adopt e-banking are also predicted by aspects such as performance and effort expectancy, facilitating conditions and trust and disruption. The implications for banks in the CMA region are as follows.

Banks offer a variety of products, some of which are available in branches only, others available online only, and some in combination. Many SMEs in the CMA region prefer the ‘instant money’ product to other banking products offered. Instant money was preferred, as this is the main product that allows the population of banked customers to transact with the unbanked population, effectively enabling the two groups to interact financially and transfer wealth. Nidugondi and Bhargava (2019) observed a significant trend taking shape with the introduction of mobile wallets and payments such as M-PESA and EcoCash in the CMA, which require only a mobile phone to initiate transactions.

This study revealed insights into the fact that some products are still not available online, such as cash withdrawals, which can be performed only in a branch or at an ATM. However, instant money is a solution that e-banking provides so that clients do not have to go into a branch.

Digital solutions such as this will continue to drive the adoption of e-banking channels by SMEs.

There are, however, services that SMEs still utilise, which are available only in branches, such as using cheques for payment. Many of these traditional services, however, already have a digital equivalent available via e-banking channels. E-banking adoption may be improved through the use of digital branches – physical branches at which clients use e-banking channels to perform transactions, with the assistance of a consultant, if required.

Ataya and Ali (2019) discovered that concerns regarding trust and confidentiality have a large influence on user behaviour towards e-banking acceptance. For instance, any security concerns reduce trust, which, in turn, reduces e-banking utilisation. Concerns about security are one of the leading factors of the slower uptake of e-banking technology in Africa. Therefore, banks should find ways of improving users’ trust by advertising the latest e-banking security technologies in use to protect users against unauthorised access to their accounts. This study encourages banks to ensure the availability of reliable and secure e-banking platforms and services that can meet the specific needs and expectations of SMEs. Also, banks should strive to enhance customer service and satisfaction by offering online access, faster processing and personalised products and services.

Disruption in the financial sector is facilitating several changes to the conventional banking model. Coupled with the surge in availability of online devices supported by the ever-increasing levels of internet availability and penetration, this is facilitating the adoption of e-banking technology. Digital-only banks have no branch presence but offer most banking products via various e-banking channels. This business model shows that, in fact, branches are not required to fulfil the mandate of providing banking services.

The proliferation of internet penetration and internet-enabled devices continues to facilitate the right conditions for SMEs to adopt e-banking. By using educational programmes and marketing material that feature the benefits of the services, Bank X should promote e-banking technologies. Furthermore, the bank should use local languages in both the marketing of e-banking technology and on the platforms themselves. The evidence gathered in this research indicates that limited customer trust in e-banking systems remains a considerable obstacle to their broad acceptance and utilisation within the CMA. To address this challenge, it is recommended that financial institutions prioritise the development of robust and technically reliable e-banking platforms, incorporating advanced security protocols to mitigate the risk of unauthorised account access. Furthermore, banks should employ both targeted marketing strategies and in-person engagement opportunities that encourage prospective users to connect with current e-banking customers. By leveraging the power of social influence, as previously discussed, banks can foster greater confidence and facilitate increased uptake of e-banking services throughout the CMA region.

The results demonstrate that both internet banking and mobile banking help to promote e-banking adoption across the CMA. However, mobile banking is the preferred access method, as mobile devices are becoming the most prevalent points of access to the internet. Therefore, financial institutions should streamline the functionality of their mobile applications by making mobile e-banking simpler and more intuitive to use.

Support and encouragement are required from external stakeholders, such as regulators, suppliers, customers and partners, who can facilitate or mandate the use of e-banking for SMEs. The stakeholders in the financial sector should create educational awareness programmes aimed at SMEs to advise them on the advantages of e-banking over the conventional methods of banking.

Alternative lenders will continue to disrupt the banking industry while the financial regulations applied to banks differ from the regulations applied to alternative lenders (Brown & Lee 2019; Connolly & Bank 2018; Kraemer-Eis et al. 2019). As these lenders continue to prosper and, in turn, the number of customers applying for loans from traditional banks decreases, banks operating in more than one country would need to reduce cross-border lending, as a bank’s financial performance can weaken because of an underperforming economy in which the bank is domiciled. This can be a significant issue in the CMA, given that traditional South African banks have a general presence across the region and can influence all of the economies in the region (Anand et al. 2018; Daly et al. 2019).

Disruption in the financial sector, through the presence of new, innovative lenders other than the traditional banks, has driven banks to focus more on digital transformation to drive new revenue streams (Drasch, Schweizer & Urbach 2018; Loonam et al. 2018). Traditional banks are encountering stiff competition for their SME customers from new, innovative lenders seeking to engage SME clients. Other players, such as accounting software providers or enterprise resource-planning providers, are seeking to disintermediate banks by migrating upstream and taking control of SME banking functionality by embedding it into their offerings.

Disruption in the financial sector has driven banks to focus more on digital transformation to drive new revenue streams (Drasch et al. 2018; Loonam et al. 2018). Digital banks often offer lower banking fees and more competitive lending rates because of their lower operational expenditure. However, when it comes to offering a full range of financial services all in one place, traditional banks tend to win out. Digital banks provide an innovative banking business model with branchless banking as its core; this would have been impossible without technology (Dzombo, Kilika & Maingi 2017; Mohan & Viswanathan 2018).

As digital transactions increase, customers will require better financial solutions through interactive tools, for example, a digital interface in the customer’s first language, to make the experience as simple and friendly as possible. This is in line with SCT, which posits that social influence should be centred on direct personal engagement and person-to-person learning.

As previously mentioned, e-banking security is important in influencing the adoption of e-banking in Africa. With e-banking continuing to gain momentum, the threat of fraud in financial transactions will also continue to grow. Banks will need to continue to spread awareness about the nature of threats that customers could face, as well as continue to secure their digital infrastructure as cyber security threats increase. Banks currently operate using various forms of layered security checks, allowing the transaction to be stopped at any time if there is a potential security issue. However, as cybercriminals become better at circumventing these controls, banks will need to stay ahead of these criminals to secure both the client’s and the bank’s own information. Multifactor authentication methods have demonstrated success in online fraud reduction in the banking sector (Althobaiti & Mayhew 2015; Carbone, Ranise & Sciarretta 2019; Sinigaglia et al. 2020).

The SME sector is the backbone of economic activity and employment in both developed and developing economies, with over 90% of all private companies globally classed as SMEs (Muriithi 2017; World Trade Organization 2020). The past 5–10 years have provided difficult business conditions that have challenged SMEs to continue to operate profitably.

Despite the demand from SMEs for lines of credit over this period, banks have struggled to service this market adequately, as there is not a singular approach banks can apply to SMEs, given their variety of needs. Small and medium enterprises’ banking requirements are not the same as traditional retail customers, and they often do not require the complex products that large corporate customers require either. SMEs often sit somewhere between retail and corporate banking in their requirements; therefore, SMEs are not going to benefit from retail offerings unless the management of the SMEs apply for funding in their personal capacity (Premoli 2017). Small and medium enterprises often rely on branches for credit and cash, and the reduction in banks’ branch networks and the reduction in SME lending can be detrimental to community employment, productivity and growth for the affected SMEs (Greenham & Travers-Smith 2019; Gustafsson, Manduchi & Stephan 2019).

The benefits and popularity of e-banking became more visible during the COVID-19 pandemic when physical branches could not be approached owing to social-distancing requirements. The pandemic forced banks to speed up their digital transition to make banking more accessible online, which has, in turn, increased customer appetite for better technology (Sonea, Guo & Jarvis 2019). The increased adoption of e-banking by SMEs within the CMA will allow banks to improve their support of SMEs by offering additional products via e-banking channels that will enable SMEs to grow their business. The timing is opportune for banks because many of the challenges in providing a relevant service to SMEs can now be overcome through e-banking.

This is the result of not only systems and internet connectivity having improved, but also many SME leaders are more comfortable using technology. The introduction of new digital innovators in this industry may ensure that e-banking development will continue to improve (Balakrishnan 2017; Yanagawa 2018).

Small and medium enterprises will continue to look for innovative online products and services that can support their business needs. Legacy banking technologies need to be revamped by a younger, agile workforce. Traditionally, banks have fulfilled these needs with a physical relationship-managed service proposition. Advances in banking systems, data analytics and customer-relationship management capabilities mean that a digitally led service proposition can be significantly more personal and engaging than a physical approach. Traditional banks can remain a step ahead of digital-only entrants into the market by ensuring a customer experience that is unique across all channels, including physical branches (Coetzee 2018; Degl’Innocenti, Mishra & Wolfe 2017; Ortakoy 2017). Importantly, while there are still business decision-makers who do not keep pace with the latest consumer trends, even digital laggards are now seeing the benefits of new ways of working. Generational shifts mean that the younger, digitally native generation is taking the lead.

One of the key tenets of Ubuntu, a concept of collectivism in African culture, is that the group is more important than the individual; therefore, the success of the group is of greater value than the success of the individual (Molose, Goldman & Thomas 2018). The cultural dimension of collectivism in the African context can assist with e-banking adoption: social influencers who have already adopted e-banking may well influence others in their community to adopt e-banking.

Customer self-service is one of the fastest-growing banking customer-experience trends because the number of face-to-face relationships with customers will continue to decrease (Tarrant 2019). Customers who have adopted e-banking can now access their bank’s resources online, which allows them to perform many functions that historically the bank would need to perform for them, for example, banking-profile password-lockout resets. Web 3.0 uses artificial intelligence (AI) tools such as Apple’s Siri (Aghaei 2012; Allen 2013; Fuchs et al. 2010; Hendler 2009), which allows innovative solutions for improving the customer experience in banking, for example, the option to consult AI-enabled chatbots when facing an issue. Should a particular request exceed the chatbot’s capabilities, it is automatically escalated to a live service representative who can help the customer work towards a resolution. Banks and their customers both stand to gain from AI innovation: customers no longer have to waste valuable time waiting to talk to a representative, while banks stand to save substantial resources that would be otherwise funnelled to their call centres.

Most banking customers want to process banking transactions seamlessly and grow their asset value, but they are not always sure where to begin. SMEs in the CMA that have adopted e-banking will require more digital tools to run their business and advanced data analytics applied to their financial accounts (Coetzee 2018; Degl’Innocenti et al. 2017; Ortakoy 2017).

This presents an opportunity for banks to provide advice and products to enable this behaviour by using customer data to provide tailored guidance to each customer’s needs. This level of insight is incredibly valuable because it enables banks to offer personalised advice to customers at every stage of their financial journey, build stronger customer relationships and ensure customer loyalty. Data-analytics platforms and machine-learning algorithms can help banks extract valuable information from this customer data, which can be used to develop new products, optimise existing processes, better empower customers and improve the overall customer experience.

The number of clients using physical branches continues to decline annually as the number of digital transactions surpasses cash transactions (De Almeida, Fazendeiro & Inácio 2018; Rofiat 2017). Physical customer service has historically been the key avenue through which banks gain new clients and retain their existing client base. With technology being the first face in digital banking, online support is gradually replacing the personalised service that customers are used to. Customers might not visit physical branches as frequently as they once did, but that does not mean that banks can afford to decommission all physical branches. The opportunity to engage with a person face-to-face will remain a requirement for many clients, not least SMEs, who often have very individualised problems that require assistance from their banking partners. Digital branches are increasingly a viable option to bring e-banking channels to rural areas, by allowing customers to utilise e-banking channels to perform transactions in the branch, with a consultant available to assist if required.