Online Banking Adoption Research Articles

Online banking adoption: We should know better 20 years on

During the 20 year lifetime of the Journal of Financial Services Marketing the study of online banking adoption has emerged and matured as a field. Now 20 years on, we reflect on the accumulated online banking adoption knowledge and consider what this tells us. On the basis of an audit of published research over a 10-year period, 1998–2008, we identify the core theories and approaches utilised to study online banking. The findings reveal the widespread application of the Technology Adoption Model (TAM). Drawing on the current debate regarding TAM within the Information Systems domain, we critically evaluate the ongoing appropriateness of TAM for online banking adoption research, and call for a refreshed approach to the study of bank technology adoption. The paper concludes by highlighting other theories that offer potential to extend knowledge in this area.

Online banking adoption

Purpose – The study considers a five-factor model toward online banking adoption in the context of banking customers in India and validates the proposed model. In addition, the authors consider the impact of validated factors on overall satisfaction of customers. Design/methodology/approach – A five-factor online banking adoption model has been tested for reliability and validity by confirmatory factor analysis. For determining contribution of factors toward overall satisfaction level of banking customers structural equation modeling has been adopted. Four explanatory variables have been used to assess the overall satisfaction level of online banking users. A structured questionnaire incorporating variables identified from literature has been used as survey instrument for the study. Final respondent sample was 280 banking customers. Findings – Trust, Usage Constraint, Ease of Use, Accessibility and Intention to Use as reliable and valid factors determining internet banking adoption among customers in India. Accessibility, Usage Constraints, Intention to Use portrayed strong and significant relationship with overall customer satisfaction. Trust and Ease of Use are relatively weaker and insignificant contributors toward overall customer satisfaction. Originality/value – The existing studies in the context of e-banking in general and online banking in particular have been majorly confined to proposing key drivers toward adoption of such alternate banking mediums. By providing an insight towards satisfaction level of customers adopting online banking the proposed model attempts to fill this gap. As the study relates to banking customers in India, findings will be of particular value to domestic and foreign banking entities looking to leverage technology as a tool to attain stronghold with an emerging economic set-up.

Cooperative Banks, the Internet and Market Discipline

This paper analyzes market discipline mechanisms at Polish cooperative banks within the special context of their internet activity. I demonstrate that despite being less financially sophisticated, cooperative banks’ depositors are able to distinguish appropriately between less and more risky institutions. Additionally, I demonstrate that banks that are more active on the internet face stronger market discipline and their depositors pay special attention to the banks’ equity levels. I observe that there are two reasons for this. First, a bank’s extensive internet activity is a reflection of its greater transparency. Second, adoption of online banking systems and presenting detailed information regarding the deposit offer on a bank’s website increases deposit mobility. The results have important policy implications. These findings demonstrate that a greater emphasis could be placed on stimulating market discipline at cooperative banks, as a large number of cooperative banks hampers their regulatory discipline. To strengthen the market discipline mechanisms, regulators should promote internet activity at cooperative banks and among their depositors, as well as require banks to present detailed financial information on their websites and to adopt online banking systems.

Consumer trust and distrust: retaining paper bills in online banking

Purpose– The purpose of this paper is to explore the role of paper bills and statements in online and mobile banking and how they may serve to support trust along with mitigating distrust for consumers when dealing with banks and billing firms.Design/methodology/approach– A two-phase study with 208 Canadian online bill payers. Phase 1 verified the comprehension of the measurement items being tested. In Phase 2, exploratory factor analysis was used to determine the factor structure. Regression analysis was used to identify the relationship of the factors with the intention to continuing receiving paper bills.Findings– Four factors for trust and distrust were identified in this study of which two (structural assurance and counted on to help) plus subjective norm predict the intention to continue receiving paper bills.Research limitations/implications– Trust and distrust are shown to co-exist in this study. Consumers feel vulnerable to the risks inherent in online financial interactions, but signal their willingness to trust by adopting online and mobile banking. Consumers mitigate the distrust they have in banks and billing firms by continuing to receive paper bills and statements. This study is limited to paper bills and statements. The role of other paper documents in customer relationship management is worthy of further exploration.Practical implications– This research investigates the role of financial documents in the consumer-firm relationship. This study suggests that paper bills are a communication method that supports consumers’ trust in the banks and billing firms and their adoption of online and mobile banking. Banks and billing firms’ continued emphasis on consumers’ giving up paper bills while insisting on original paper documentation in problem resolution situations, sends mixed messages to consumers, which heightens their distrust in these firms.Originality/value– This is the first study to suggest that paper bills and statements have a role in influencing trust or distrust of banks and billing firms.

Factors that Influence the Adoption of Online Banking Services in Hyderabad

The purpose of this research paper is to determine those factors that influence the adoption of online banking services in Hyderabad. A theoretical model is provided that conceptualizes and links different factors influencing the adoption of online banking in Hyderabad. A total of 302 respondents in Hyderabad were sampled for responding. Factor analyses and regression technique are employed to study the relationship. The results of the model tested clearly that use of online banking is influenced by channel convenience, perceived risk, security perception, prior internet knowledge and information on online banking. The results also determine that demographic factors also impact significantly on online banking. Finally, this paper suggests that an understanding the factors affecting intention to use internet banking is very important to the practitioners who plan and promote new forms of banking in the current competitive market

Determinants of Online Banking Adoption among Ghanaian University Students

The objective of this study is to determine bank customers’ awareness of Internet banking and the effect of trust and customer loyalty on Internet banking adoption intentions. The study employed the survey research design. The population of the study consisted of university students in Ghana. The convenience sampling technique was used to select the respondents. Data were analysed using multiple regression. The findings indicate that the respondents are aware of Internet banking. Additionally, the study found awareness, trust and customer loyalty as antecedents of Internet banking adoption. Recommendations have been provided at the end of the study.

Factors affecting adoption of online banking: A meta-analytic structural equation modeling study

Despite the potential benefits that online banking offers consumers, it has low adoption rate. We systematically review online banking adoption literature to propose two research models of factors affecting pre-adoption and post-adoption of the online banking. To test our proposed models, we applied a two-stage random-effects meta-analytic structural equation modeling method to data collected from 25,265 cases from primary empirical studies of online banking adoption. Our findings show that ten factors affect consumers’ adoption of the online banking. Furthermore, we show that the relative importance of these factors differs depending on consumers’ pre-adoption and post-adoption of the online banking.

Resistance to Internet Banking Adoption in Tunisia

Adoption of online banking has been studied in detail with respect to theories of consumer behavior, yet the adoption of Internet banking still provides an attractive area of research. A new wave of research supports the importance of understanding consumer behavior within the perspective of resistance, and attempts to address the theoretical knowledge gap between technology acceptance and adoption. In this respect, this research examines the factors that inhibit people to adopt and use Internet banking as a complementary financial service. An abductive investigation based on the grounded theory methods has been used. Findings suggest that the important factors which slow the adoption of Internet banking were the lack of information about the service, and the satisfaction with the existing alternative that individuals are currently using (bricks-and mortar, ATMs, and mobile banking). Other influential factors are highlighted. Implications for academicians and practitioners are discussed.

An Evaluation of Green Banking Practices in Bangladesh

Green Banking is any form of banking that benefits the environment. Green banking shifts banks from the ‘profit, profit and profit motive to ‘planet, people and profit’ motive. Green banking is very important in mitigating the Credit Risk, Legal Risk, Security Risk and Reputation Risk in the banking sector. The study mainly aims to analyze the Green Banking practices among SCBs, SDBs, PCBs and FCBs in Bangladesh. The study is of analytical and theoretical in nature based on secondary data. The study finds that 47 banks have adopted the Green Banking policy, formed Green Banking Unit, allocated and utilized budget for green banking. But the allocation and utilization of budget of SCBs and SDBs are not satisfactory. Online banking and ATM facilities of SCBs and SDBs are very poor. It is also found that there is a sharp increase in giving loans to environmentally friendly projects by banks. Researcher found that some banks still do not and some banks are in the first phase in the policy guideline set by BB. The greatest reason for not adopt Green Banking perhaps is that it often require a large initial cost. As SCBs and SDBs are far behind to adopt online banking and ATM facilities, our government should provide enough fund and technical support to them. Bangladesh Bank should enforce SCBs, SDBs, PCBs and FCBS, that they should assess the sensitive issues like vulnerable groups; involuntary displacement etc while investing or funding the projects. Keywords: GB= Green Banking, FCBs = Foreign Commercial Banks, PCBs = Private Commercial Banks, SCBs = State owned Commercial Banks, SDBs = Specialized Development Banks.

Social Engineering Preparedness of Online Banks: An Asia-Pacific Perspective

Social engineering is becoming the most prevalent strategy used by hackers today. With continually blossoming e-commerce activity on the web, customers adopting online banking services will become prime targets for such hackers. As such, banks have a responsibility to contain this issue in order to sustain their competitive advantage. Most banks have security policies that manifest their strategy to counter hackers and yet social engineering attacks are rampant. In this study, we analyse the security policies of online banks from 11 countries in the Asia-Pacific region (APAC) region using content analysis to assess their preparedness to handle social engineering attacks. The results show that, except for phishing, there is a dearth of information regarding new and emerging trends in such attacks. The findings also show that although the majority of security best practices include preventive measures, they were presented as ‘general tips’. Without specifying the context of an attack providing these tips can be seen as an ineffective way of presenting information.

Expanding the Technology Acceptance Model to Examine Internet Banking Adoption in Tunisia Country

This paper aims to empirically examine the factors that affect the adoption of Internet banking in Tunisia. In order to explain the factors, this paper extends the “Technology Acceptance Model” by adding additional external factors such as security and privacy, self efficacy, social influence, and awareness of services and its benefits. The findings of the study suggests that the security and privacy, self efficacy, social influence, and awareness of services and its benefits have significant effects on the perceived usefulness (PU), perceived ease of use (PEOU) and attitude toward Internet banking acceptance. Age and education have also significant impact on the attitude towards the likelihood of adopting online banking. These findings may provide for banks useful guidelines for developing Internet banking services and for marketing Internet banking.

Factors affecting the Adoption of Online Banking in Ghana: Implications for Bank Managers

Internet usage in Ghana is on the increase and all indications points to the direction of the possibility of its application on online banking to be successful. However, online banking adoption that will lead to a cashless economy is facing doubts. This paper aimed at critically examining the factors that influence the adoption of online banking in Ghana. The study was based on TAM (Technology Acceptance Model), which has been used expansively in similar studies, a descriptive cross-sectional mixed-methodology approach was used. To generalize the findings the researchers used a multi case study approach to help find out the factors that influence online banking adoption. Data was analysed by using multiple Regression Analysis in SPSS to generate ANOVA results. The results showed that the original constructs of TAM i.e. Perceived Usefulness (PU), Perceived Ease of Use (PEOU) as well as the extensions of government support, trust and security were all significant to customers’ intensions to adopt online banking . An implication for bank Managers is that they should concentrate on the promotion and advancement of the priceless paybacks that are gained from ‘Intended and Unintended Benefits’ such as lower transaction fees, high deposit rates among others which are realized from the usage online of banking linked to Perceived Usefulness

An investigation on online banking adoption

Online banking, an innovation to traditional branch banking system, is now used as a channel for delivering financial services by virtually all banks in India. Online banking provides improved convenience and customer service; however it is observed that Indian banking customers are reluctant to adopt online banking services. This study identifies the factors influencing adoption of online banking services using Roger's innovation diffusion theory. The perception of risk is a significant influencer of adoption of new technology which is also included as one of the dimension along with Roger's innovation attributes. The findings of the study suggest that, the young users adopt online banking when it is suitable for their lifestyle and if the website is user-friendly. Online banking is not perceived as either relatively advantageous than other banking channels nor risky by young users.

An extended technology acceptance model for detecting influencing factors: An empirical investigation

Article history: Received June 22, 2013 Received in revised format 28 August 2013 Accepted 27 September 2013 Available online September 29 2013 The rapid diffusion of the Internet has radically changed the delivery channels applied by the financial services industry. The aim of this study is to identify the influencing factors that encourage customers to adopt online banking in Khorramabad. The research constructs are developed based on the technology acceptance model (TAM) and incorporates some extra important control variables. The model is empirically verified to study the factors influencing the online banking adoption behavior of 210 customers of Tejarat Banks in Khorramabad. The findings of the study suggest that the quality of the internet connection, the awareness of online banking and its benefits, the social influence and computer self-efficacy have significant impacts on the perceived usefulness (PU) and perceived ease of use (PEOU) of online banking acceptance. Trust and resistance to change also have significant impact on the attitude towards the likelihood of adopting online banking. © 2013 Growing Science Ltd. All rights reserved.

Factors Underlying the Adoption of Online Banking by Mexican Consumers

Although Mexico is considered one of the most important emerging markets in global business, there is littleknowledge about the adoption of internet banking in Mexico. Thus, the purpose of this study is to examine thefactors underlying the adoption characteristics of internet (online) banking by Mexican consumers, which willbenefit both academics and financial institutions. The paper uses both qualitative and quantitative approaches forresearch methodology. The qualitative method is used to gain insight into how consumers value online bankingby interviewing both adopters and non-adopters of internet banking (hereafter IB). Then, a questionnaire isdeveloped to include thirty-nine questions. The paper utilizes Factor Analysis to identify the characteristics ofthe adoption and the Analysis of Variance (ANOVA) to examine the differences between adopters andnon-adopters’ attitudes toward some attributes of the adoption. The results from Factor Analysis suggest eightcharacteristics of the adoption, namely difficulty, trust, compatibility, third party concerns, human contact, socialinfluence, security, and computer proficiency. Analysis of Variance shows that adopters and non-adoptersdiffered on their attitudes toward four attributes of the adoption: difficulty, trust, compatibility and humancontact. Comparing the attitudes of adopters and non-adopters with the issues of security and third partyconcerns, the study found no significant differences. An interesting finding was that human or physical contactwas considered important for non-adopters, showing the weakness of online banking. A discussion of the resultsand the implications for bank managers were included in the study.

Determinants and Outcomes of Internet Banking Adoption

This paper examines the drivers of adoption of Internet banking and the linkages among adoption drivers and outcomes (product acquisition, service activity, profitability, loyalty). We relate Internet banking adoption to customer demand for banking services, the availability of alternative channels, customers' efficiency in service coproduction (“customer efficiency”), and local Internet banking penetration. We find that customers who have greater transaction demand and higher efficiency, and reside in areas with a greater density of online banking adopters, are faster to adopt online banking after controlling for time, regional, and individual characteristics. Consistent with prior work, we find that customers significantly increase their banking activity, acquire more products, and perform more transactions. These changes in behavior are not associated with short-run increases in customer profitability, but customers who adopt online banking have a lower propensity to leave the bank. Building on these observations we also find that the adoption drivers are linked to the postadoption changes in behavior or profitability. Customers who live in areas with a high branch density or high Internet banking penetration increase their product acquisition and transaction activity more than Internet banking adopters in other regions. Efficient customers and those with high service demand show greater postadoption profitability. This paper was accepted by Sandra Slaughter, information systems.

Management Insights

Management Insights

Factors influencing online banking adoption: evidence from the Austrian market

Many bank customers are still reluctant to conduct their financial transactions online. The aim of this paper is to provide an improved understanding of determinants of online banking adoption in Austria. The authors propose a conceptual model that integrates perceptions of innovation characteristics and individual differences and report an empirical study with 372 bank customers in Austria. Logistic regression is used to analyse the data. The findings confirm the relevance of perceived innovation characteristics to online banking acceptance. Beyond that, the results suggest that internet trust and preference for personal contact are individual difference variables that predict online banking adoption.

Application of an Extended TAM Model for Online Banking Adoption

The understanding of factors leading to the acceptance or rejection of information systems (IS) is important and relevant. Although there have been studies examining the adoption of Internet Banking (IB), research on this topic in the Gulf context and from an IS perspective is lacking, even though societal factors are acknowledged as having an impact on technology adoption. To fill this gap, this paper uses a version of the Technology Acceptance Model (TAM), extended by the compatibility and trust constructs. An empirical study, using students from a large university in the region, validates the research model.

Internet Trust as a Specific Form of Technology Trust and its Influence on Online Banking Adoption

The construct of trust is important for online banking, because it underlines what is conducive to an enabling online banking environment. This chapter reports on an empirical study of 381 bank customers in Austria that investigates the role of Internet trust as a specific form of technology trust in the context of Internet banking. Furthermore the impact of propensity to trust as a facet of personality on Internet trust is investigated. The findings stress the importance of Internet trust as a determinant of consumer attitudes toward Internet banking and its adoption. In addition, the results show that propensity to trust is a determinant not only for trust in interpersonal relationships but also for trust in technological systems.