Financial literacy and its influence on internet banking behaviour

This paper presents the survey results for financial literacy among Cypriot adults and reportstheir financial aptitude and behaviour. Additionally, it investigates for the first time theimplications of financial literacy on respondents' usage of digital financial services, particularlyinternet banking (i-banking). The focus is on Cyprus, a country that experienced an unprecedentedfinancial crisis in 2013 that resulted in a bail-in and an enormous subsequent shrinkageof the banking sector. Cypriot consumers face an ever-increasing need for financial sophisticationto effectively utilise and manage digital banking services. Neverthless, financial literacy isstill low in Cyprus, whereby only 37.33% of survey respondents showed proficiency in financialknowledge. The findings indicate that there is a statistically positive relationship between thelevels of financial knowledge and the frequency of i-banking use. More importantly, financiallyilliterate consumers appear to report - far more often than their financially literate peers - thelack of trust in i-banking, as well as a lack of self-confidence in financial and digital skills as themain reasons for not using this service. The findings highlight the interplay between financialliteracy and digital proficiency, and their implication on individuals' use of i-banking services