Financial Literacy and Its Influence on Consumers’ Internet Banking Behaviour

Abstract

This study examines the level and antecedents of financial literacy and investigates its influence on consumers' internet banking behaviour. The focus is on Cyprus, a country that experienced an unprecedented financial crisis in 2013 that caused an enormous shrinkage of the banking sector. Ever since then, banks have been investing in financial innovations, such as internet banking (i-banking), aiming to enhance customer service and efficiency in the age of financial digitalization. Notwithstanding, the results show that financial literacy is yet too low in Cyprus, whereby only 37.33% of the study's survey adults have a good financial knowledge proficiency level. The results indicate that financially literate consumers show a strong preference for frequent use of i-banking, whereby the odds of using i-banking frequently are increased by more than 64% for one standard deviation increase in the respondents' financial knowledge score. The findings highlight the crucial interplay of digital and financial sophistication, and their positive influence on consumers' usage of digital financial services. The evidence from Cyprus also points to policy directions according to which digital financial education programs should be a central element in national financial literacy strategies.

Alternative Banking Channels in the Greek Banking Sector

“…The impact that the capital controls had on ABC adoption was spectacular. The card usage skyrocketed in terms of both number of transactions as well as transaction value (Andreou and Anyfantaki, 2019). At the same time bank customers of all institutions took a massive turn to e-banking and mobile banking for their everyday transactions (Hellenic Banking Association, 2021).…”

“…These innovative forms of banking are becoming the new mainstream and are expected to completely substitute most of a traditional branch's functions in years to come. Until recently Greece was somewhat lacking in this area compared to other developed countries but in recent years has made leaps towards modernizing its banking system (Andreou and Anyfantaki, 2019).…”