A study of information and communication technology (ICT) adoption by SHG’s in banking activities - Dharwad district

This article aims to understand the role of technology that can be introduced by banks to ease the lives of many members of the SHG’s in their banking activities. UTAUT Model developed by Venkatesh et.al (2003) has been considered and used to ascertain the users acceptance and adoption of technology in the region of study.

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A STUDY OF INFORMATION AND COMMUNICATION

TECHNOLOGY (ICT) ADOPTION BY SHG’S IN

BANKING ACTIVITIES - DHARWAD DISTRICT

Dr Vinod N Sambrani Associate Professor, Kousali Institute of Management Studies,

Karnatak University, Dharwad, India

ABSTRACT

We all understand that, technology has been playing a major part in our daily lives And ICT has established a vast platform for drastic development Information exchange and information update

is the need of the hour People need up-to-date information, either for themselves or for their organization, and this need can only be meet with utilizing ICT platform On the other hand SHG’s have been playing a significant role in micro-finance, especially in rural areas empowering the rural women resulting in better livelihood and lifestyle, where most of the people are illiterates or are with just primary education These SHG’s are linked with many banking institution for all their savings This article aims to understand the role of technology that can be introduced by banks to ease the lives of many members of the SHG’s in their banking activities UTAUT Model developed by Venkatesh et.al (2003) has been considered and used to ascertain the users acceptance and adoption

of technology in the region of study

Key words: Information and Communication Technology, UTAUT Model, Self Help groups,

Technology Adoption, Technology Acceptance, Rural Banking, Micro-financial Institutions

Cite this Article: Dr Vinod N Sambrani, A Study of Information and Communication Technology

(ICT) Adoption by SHG’s in Banking Activities - Dharwad District International Journal of

Management, 7(6), 2016, pp 145–155

http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=6

1 INTRODUCTION

Information Technology (IT) plays a significant role in todays’ world, and financial institutions are the backbone of the any economy The IT revolution has opened many avenues for Indian Banking sector at present Almost all the nationalized banks in India are using technology based solutions to overcome the competition and address the needs of the customer in a more befitting manner The manual operations in traditional banking have drastically been reduced with the use of IT applications, thus creating a centralized environment from distributed environment This impact of IT in banking sector has revolutionized the process being done with a faster, effective and efficient pace Bankers are offering customized products and services to their customers using new tools and techniques, which help in understanding the consumer needs

IT impact in this sector is very difficult to be measured

On the other hand, the Indian rural consumption pattern has changed drastically and is growing at a faster rate, compared to towns and cities, according to a report by credit rating agency CRISIL Ltd The non-agricultural job opportunities and government initiatives of employment generation schemes have contributed in large for such a growth in terms of raise in house hold incomes However, technologies for rural communities are being developed by many voluntary organizations But, the fact remains that these technologies have barely touched the rural population Rural development is in place and happening in terms

of improvement in infrastructures, access to better resources, education, health and hygiene It is most common to have access to at least one mobile phone in every rural households

A sustaining livelihood in these fast growing villages and cities can only be achieved through a most important driver “Information Exchange” ICT has been playing a vital role in the development of rural India, increasing its growth in a drastic manner Technology has largely been playing a dynamic role in our day to day life, need it be a community radio or mobile phone based farmer information services or health related technological solutions It is clearly evident that, most of this current fast growth is only because of the technology dissemination in small to medium and large scales across India

Opportunities are still abundant to scale and integrate these technologies amongst the rural population, with consistent effort to simplify the processes and finding better ways to make them affordable to improve the lives of people in India

People with common mindsets have all the time come together to either to overcome their difficulties or for betterment of their lives When compared to such groups, Self-Help Groups (SHGs) have unique characteristics, and different working patterns In late 1980’s community development discipline was established sharing the concepts of empowerment In a couple of decades the concept of SHGs have deep rooted drastically in India

In most cases, the people in SHGs are the ones who are most affected by a specific issue, who come together and support each other to overcome such issues affecting their lives Activities that groups do include community education, information sharing, mutual support etc

Definition: Self-Help Group

“Self Help group (SHG) is a self-governed, peer-controlled small and informal association of the poor, usually from socio-economically homogeneous families who are organized around savings and credit activities.”

Most of the funding for such activities comes from the group members regular saving deposited on weekly basis During their interactions/ meetings they discuss on common issues and plan to overcome them with solutions through consultation They also share vital information across the group and make diligent efforts to improve their literacy as well as health SHG’s are not charity or simply community based groups Although the work is usually unpaid, members work to change their own economic and financial conditions and the support is mutual The knowledge base of self-help mutual support groups is experiential, indigenous, and rooted in the wisdom that comes from struggling with problems in concrete, shared ways

2 LITERATURE REVIEW

Most of the SHGs are linked with NGO’s active in their respective areas for assistance of any kind or dependent on the co-operative banks or societies or micro-financial institutions for their financial aids SHGs have another very important role to play particularly in the transfer of technology to user group population Until mid-1960’s, the Co-operative banking sector was entrusted the responsibility of fulfilling the credit needs of the rural people in India With the advancement in technology, commercial banks started to penetrate by expanding their branches and direct lending in the rural areas, especially for the agricultural sector The massive branch proliferation of nationalized banks helped the people in farthest areas to have access to financial services According to Bell, 1990 the growth and extension of rural credit banished village financiers to a substantial extent and led to modest increases in comprehensive crop output, strident increase

in the use of fertilizers/ pesticides and in investments in tangible assets like tractors, pump sets and animal

stocks Binswanger and Khandker, 1992 noted that, a substantial positive effect is seen in non-farm employment

The Information Technology (IT) saga in Indian Banking sector commenced from the mid-eighties when the Reserve Bank of India (RBI) took upon itself the task of promoting computerisation in banking to improve customer services, book keeping, Management Information System (MIS) to enhance productivity RBI has played the guiding role which helped banks in achieving various objectives such as the introduction

of MICR based cheque processing, Implementation of the electronic payment system such as RTGS (Real Time Gross Settlement), Electronic Clearing Service (ECS), Electronic Funds Transfer (NEFT), Cheque Truncation System (CTS), Mobile Banking System etc The Payment and Settlement Systems Act, 2007 (effective from August 12, 2008) designates the RBI as the authority for regulation and supervision of payment systems in India

Electronic Banking as referred by Suoranta & Mattila (2004); Laforet & Li (2005); Laukkanen (2007); Sripalawat et al (2011) are all related to the use of Internet Banking and Mobile Banking As we understand, both internet banking and mobile banking are two different aspects for banks to deliver their services Scornavacca & Hoehle (2007) also refer in their article that, customers also acquire these services for all their banking activities Riquelme & Rios (2010) state that, customers in order to use Internet Banking are required use this service through computers connected to Internet, whereas for mobile banking, they are using through wireless devices Suoranta & Mattila (2004), and Singh et.al, (2010) found that, time-critical customers preferred mobility as their first choice with the use of mobile banking Koenig-Lewis et al (2010) also found that, online banking was the only cheapest mode of delivering banking services

Despite of having many studies been carried out with respect to technology usage in banking sector And relevant developments and advancements have already taken place Still there is a lot need to study and improvise with the current scenarios

3 OBJECTIVES OF THE STUDY

• To ascertain the technology adoption by the members of SHG’s

• To know and understand the need of technology by SHG members in banking activities

• To understand the Bank roles in disseminating ICT initiatives to the SHG’s

4 RESEARCH METHODOLOGY

The study conducted is quite exploratory in nature, because no known hypothesis was developed Hence the objective called for an exploratory research instead of a conclusive one

The information needed were not available from secondary sources hence involves primary data collection Primary data was collected after using structured questionnaire developed in reference with the UTAUT model mentioned below

Sampling Technique: Random Sampling

Sampling Unit: Member or Leader of SHG’s

Sample Size: 150 SHG’s

Population of Study: SHG’s in Dharwad District

4.1 Model Used

After analysing various other literature on technology acceptance, the use of Unified Theory of acceptance and Use of technology (UTAUT) model is found to be suitable for the said study

The model is as follows:

Figure 1 Source: Venkatesh et.al., (2003)

5 FINDINGS

A pilot study using the earlier questionnaire was done to validate the investigation mechanism Feedback about the layout of the questionnaire and question ambiguity was obtained Relevant changes were done to the questionnaires as considered suitable The revised questionnaires were circulated across all the talukas and villages in the district The data collected using the questionnaire was tabulated, analyzed and presented

in tables and descriptions The demographic profile of respondents were also collected Table 1 exhibits the sample characteristics, usage and awareness

5.1 Demographic Profile of the Respondents

Gender

Age Group

Education Level

Technical or Vocational 5 3.3

Duration of Bank operations

Frequency of ICT Enabled Banking Services usage

ICT enabled Banking services awareness

Table 1 Demographic Profile of Respondents

Table 1 exhibits that, 92.7% of the respondents were females, as compared to males This is quite obvious because, most of the established SHG’s are created to empower women in these areas Very few male SHGs are active and functional 47.3% of the respondents are above 35 in age, and either leader(s) or second leader(s) member in the groups 88.7% of the respondents are literates with at least primary schooling (37.3%) About 84.7% of the respondents are directly involved in banking transactions

6 ASSESSMENT OF VALIDITY

Construct power is a concern of seriousness between the constructs For the current research, 19 different items are selected, classified into five different constructs in the UTAUT model The renamed abbreviation and descriptive figures of each construct and item are presented in Table 2:

Scales/ Items Mean

Standard Deviation

Performance Expectance[PE] (In conducting banking affairs, ) 3.86 535

(PE1) using ICT enabled banking would improve my performance 3.80 724

(PE2)using ICT enabled banking would save my time 4.03 639

(EE1)Learning to use ICT enabled banking is easy for me 3.80 705

(EE2)Becoming skillful at using ICT enabled banking is easy for me 3.35 852

(EE3)Interaction with ICT enabled banking is easy for me 3.41 812

(EE4)I would find ICT enabled banking is easy to use 3.27 730

(SI1)People who are important to me think that I should use ICT enabled

(SI2)People who are familiar with me think that I should use ICT enabled

(SI3)People who influence my behavior think that I should use ICT enabled

(SI4)Most people surrounding with me use ICT enabled banking 3.52 783

(FC1) My living environment supports me to use ICT enabled banking 3.67 700

(FC2) My working environment supports me to use ICT enabled banking 3.53 720

(FC3) Using ICT enabled banking is compatible with my life 3.93 778

(FC4) Help is available when I get problem in using ICT enabled banking 2.87 900

Behavioural Intention [BI] (When dealing with banking affairs) 4.03 619

Table 2 Respondent Data Descriptive Statistics

As defined by Wikipedia (Standard Deviation, 2016)“the standard deviation is a measure that is used to quantify the amount of variation or dispersion of a set of data values A low standard deviation indicates that the data points tend to be close to the mean (also called the expected value) of the set, while a high standard deviation indicates that the data points are spread out over a wider range of values In addition to expressing the variability of a population, the standard deviation is commonly used to measure confidence in statistical conclusions.”

Table 2, clearly exhibits that, the scale items are not much deviated from its mean values Except for FC4 which is 0.9 and is on a higher side compared to all the other items Almost all the items standard deviation is below 1 and hence, it can be concluded that the data set for all the items are not much deviated from their mean scores

Correlations PE4 EE3 EE4 SI2 SI3 SI4 FC1 FC2 FC3 FC4 BI1 BI2 BI3

PE2 662

Table 3 Correlations of construct items

Correlations amongst the construct items was carried out to have a better understanding of the linkages Table 3 exhibits that, 13 items are correlated with each other Other items which are not listed above are correlated but only the ones above 0.5 are considered for significant positive correlations

SI2 and SI4 are with a correlation score of 0.855, exhibits that these scale items are positively and highly correlated with each other, SI2 is also having a remarkable correlation with SI3 Similarly, SI3 is significantly correlated with SI4, SI2 and SI1 EE2 and EE3 are also highly correlated with a significant value of 0.703

Rotated Component Matrix a

Extraction Method: Principal Component Analysis

Rotation Method: Varimax with Kaiser Normalization

a Rotation converged in 6 iterations

Table 4 Rotated Component Matrix of Item under each constructs

Factor Analysis with VARIMAX Rotation

Note: Only Item loadings above 0.5 on their theoretically associated factor are considered

The factor loading for scale items based on VARIMAX rotation is shown in Table 4

After performing factor analysis on individual constructs, few scale items like PE3, EE1 & FC4 falling below 0.5 factor loading were dropped to attain a significant ideal loading across the item and components Remaining scale items are more ideal in their respective components Thus, this analysis confirms the validity for the use of UTAUT Model which proved a strong correlation for many scale items in the constructs

7 ASSESSMENT OF RELIABILITY

As with the general understanding, (Introduction to SAS., 2016) “Cronbach's alpha is a measure of internal consistency, that is, how closely related a set of items are as a group It is considered to be a measure of scale reliability Exploratory factor analysis is one method of checking dimensionality Technically speaking, Cronbach's alpha is not a statistical test - it is a coefficient of reliability (or consistency).”

Construct validity remains a vital measurement tool between the constructs, while reliability is measured within the constructs In this study, the reliability of data is analyzed using Cronbach’s Alpha technique Table 5 & 6 clearly states a very high level of reliability coefficient According to Venkatesh et al.(2003) a reliability coefficient of 0.7 or above is normally considered acceptable Which confirms the status of internal consistency amongst the constructs Thus, the results confirm the reliability analysis of constructs from the above model

Table 5 Inter-Factor reliability using Cronbach's Aplha for each construct

Reliability Statistics for all items together

Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items

Table 6 Factor reliability using Cronbach's Alpha technique for all constructs together

Inter-Item Correlation Matrix Performance

Expectancy

Effort Expectancy

Social Influence

Facilitating Conditions

Behavioural Intention

Performance

Expectancy

Effort

Expectancy

Social

Influence

Facilitating

Conditions

Behavioural

Intention

Table 7 Inter Item Correlation Matrix

To add up, the inter-item correlation matrix between the constructs is reflected in Table 7, which exhibits

a self-determining relationship between variables Correlation as explained above shows the linkage between each constructs In the above table 7, the inter-item correlation matrix, the values 1.0 shows that these constructs are highly independent and the lesser value (for e.g, 0.207 for Effort expectancy and Behavioral Intention) determines that these items are not much dependent on each other Independency of each construct

is clearly visible And the results of this matrix supports more evidence in proving the reliability of UTAUT scale items considered for the study

8 CONCLUSION

ICT has a very significant role to play for faster, smoother and efficient development through information exchange And, the usage of ICT by SHG’s is barely available, despite some efforts by a few supporting NGO’s active in the areas of study UTAUT Model was considered to be suitable to have an overall understanding of the current scenario Many other different models were available, but only the UTAUT model gave consideration to assess the usage of ICT by SHG’s Study reveals that, no proper ICT mechanism exists between the SHG’s and banks/ Micro-financial institutions operating in this region On the other hand, from the data collected, it clearly specifies that, members of SHG’s do have the intention of learning and adopting the technology, which are currently only being used by urbanites

Bankers and MFI’s have been trying hard to bring in technological changes, especially to assist the SHG’s in rural areas A proper technological mechanism is a must need to meet out the requirements of the SHG’s Financial Institutions have a very significant role to play, as they are the key to create awareness and bring in technology to its users Hence, they are required to conduct camps to train these SHG users to use and operate their banking activities using technology

The main insights of using the UTAUT model to meet the objectives of the study are as follows

Firstly, the factor analysis proved the validity of acceptable constructs used, despite some variables and scale items were dropped Secondly, each scale items have obtained a very high level of Cronbach’s Alpha reliability The inter-item correlation matrix and degree of correlation between items have showed a positive result for the usage of the UTAUT Model in the study

In conclusion, it is suggestive that, banks must involve in bringing technology to every SHG’s and its members, thus improvising and reducing the efforts of all the individuals concerned And this is possible, through simplification of technology and timely training to all the SHG members As SHG’s are playing a vital role in handling micro-finances, importance must be given to ease their banking needs and that is only possible through the use of technology

ACKNOWLEDGEMENT

The authors acknowledge the generous financial support extended by Canara Bank Chair to undertake the

research study

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