Journal of Internet Banking and Commerce

THEME : Internet Banking

TITLE : Journal of Internet Banking and Commerce

AUTHOR :

1.      Rahmath Safeena

Research Fellow, National Institute of Industrial Engineering, Mumbai, India

Postal Address: Vihar Lake, Mumbai - 400 087, India

Organizational Website: www.nitie.edu

2.      Abdullah

Research Fellow, National Institute of Industrial Engineering, Mumbai, India

Postal Address: Vihar Lake, Mumbai - 400 087, India Author's Personal/Organizational

Email: abdullah.km@gmail.com

3.      Hema Date

Associate Professor, National Institute of Industrial Engineering, Mumbai, India

Postal Address: Vihar Lake, Mumbai - 400 087, India

Email: hema_date@yahoo.com

Published : April 2010

INTRODUCTION

Information technology developments in the banking sector have speed up communication and transactions for clients. Online banking is also one of the technologies which are fastest growing banking practices nowadays. It is vital to extend this new banking feature to clients for maximizing the advantages for both clients and service providers (Qureshi et al, 2008). The Internet has an ever-growing importance in the banking sector because of the advantages it brings to both the entities and their customers. Although information system (IS) expenditure is regarded costly and risky financial institutions are one of the largest investors in IS (Mashhour and Zaatreh, 2008; Robson, 1997). Internet is the cheapest delivery channel for banking products as it allows the entity to reduce their branch networks and downsize the number of service staff.

PROBLEM

Customer adoption is a recognized dilemma for the strategic plans of financial institutions. Several studies have investigated why individuals choose a specific bank. Important consumer selection factors include convenience, service facilities, reputation and interest rates

PURPOSE

This study revealed six composite dimensions of electronic service quality, including the provision of convenient/accurate electronic banking operations; the accessibility and reliability of service provision; good queue management; service personalization; the provision of friendly and responsive customer service; and the provision of targeted customer service.

DATA AND RESEARCH METHOD

Dependent Variable: Internet Banking Adoption

Independent Variable:

1.      H1: Perceived usefulness has a positive effect on intention to adopt and use IB

2.      H2: Perceived ease of use has a positive effect on intention to adopt and use IB

3.      H3: Awareness about IB has a positive effect on intention to adopt and use IB

4.      H4: Perceived risks have a negative impact on intention to adopt and use IB

Data

A survey instrument in the form of questionnaire was developed through data collected from previous studies on acceptance of Internet banking. We constructed several questions in the questionnaire based on the objectives of the research. Questions were adapted from the previous studies. Likert scale is used in order to identify the respondents’ perceptions towards Internet banking adoption.

Sample

Convenience sampling method was used. It is a type of nonprobability sampling which involves the sample being drawn from that part of the population which is close to hand. That is, a sample population selected because it is readily available and convenient. The reasons of using this sampling type are twofold. First, it offers an easy way to obtain the raw data for the further analysis. Second, it saves times and costs since the respondents can be randomly selected.

RESULT AND ANALYSIS

Although internet banking provides flexibility in performing financial transaction, fast and easy, however individuals are still reluctant to adopt the system because of several reasons. First, the security and privacy are two elements in the perceived risk. Without a proper knowledge of the system, individuals are not interested to test the system.  Perceived usefulness, ease of use and consumer awareness has positive impact on the intention to adopt internet banking while perceived risk has negative impact on it. When online banking is perceived as useful, customer’s intention to adopt it would be greater. Likewise bank customers are likely to adopt internet banking when it is easy to use. This shows that bank customers anchor their online banking adoption intention to the beneficial outcomes and ease of use process of the system.

Principal component factor analysis with a varimax rotation was conducted. The aim of factors analysis is to confirm the construct validity of the scales could be performed adequately by using principle component analysis. In order to reach this, the minimum factor loading of 0.6 on its hypothesized constructs is proposed (Nunnally, 1978). A number of analyses were conducted for factors analysis. Factor loading values were obtained using varimax rotation. Most of the factor loading for each instrument exceeded 0.6, meeting the essentially significant level of convergent validity. Using an eigenvalue greater than 1 as a selection criterion, four factors emerged. These character factors accounted for 69% of the variance and the factor loading for all items were greater than 0.6. Hence the results show that H1, H2, H3 and H4 are confirmed. The results are consistent and are supported by previous studies.

CONCLUSION

The result of this study shows that perceived usefulness, perceived ease of use, consumer awareness and perceived risk are the important determinants of online banking adoption.  This study meets the desired objective; but it suffers from one setback. Study concludes that majority of customers are accepting online banking because of many favorable factors. Analysis concluded that usefulness, ease of use of the system awareness about online banking and risks related to it are the main perusing factors to accept online banking system. These factors have a strong and positive effect on customers to accept online banking system