chapter 3 research gaps, objectives, conceptual framework...
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Chapter 3
Research gaps, Objectives, Conceptual framework
and Hypotheses Development
65
Chapter 3: Research gaps, Objectives, Conceptual framework and
Hypotheses Development
Chapter Preview
This chapter identifies the research gaps in extant literature, concisely describes the objectives
of the study by identifying research questions, develops the conceptual framework and proposes
an internet banking acceptance model by borrowing key constructs from the theories discussed
in the previous chapter. The proposed model will be subsequently tested for the predictive power
for user acceptance of internet banking, will be refined, and made more parsimonious.
3.1 Background
After reviewing the extant literature on various social psychology theories, information science
acceptance literature, theoretical models for adoption of technology, studies on the internet and
e-commerce and internet banking, it was felt that the current study should look into internet-
banking from a broader perspective and then focus on development of a model for user
acceptance of internet-banking. This multi-method approach will provide insights from different
perspectives and help gain complete understanding of internet banking.
3.2 Research gaps
Review of literature identified the following gaps
1. Most of the research on internet banking has been reported from Asia, followed by Europe and
the Americas. At the country level, majority of studies on internet banking were reported from
Malaysia, followed by the UK and USA. Review of literature on internet banking revealed that
there were only nine research papers from India from the 160 papers published worldwide in
prominent journals. There is a paucity of studies on internet banking in the Indian context and
barring a few, most published literature was of exploratory nature, without any empirical
support. (Sukkar & Hassan, 2005) argued that information technology models established in
developed countries may not be appropriate for less developed countries. Research attention is
therefore required on internet banking in India.
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2. Studies on internet-banking mainly focused on describing the factors which lead to adoption
of internet-banking models, finding the relation between factors that lead to adoption using
models and theories and comparison of internet banking adoption on the basis of demography,
distribution channels, predictive ability and explanatory power of different models. Literature
reveals a plethora of studies on the internet, internet banking adoption and allied areas. However,
there is no comprehensive study involving bank senior management, bank employees, customers
and technology service providers’ all together in order to gain a deeper insight about the
dynamics of internet banking adoption from an Indian perspective.
3. Although different models have been used for understanding the factors responsible for
internet banking adoption, there is still scope for finding new factors, which can improve the
explanatory power of these models. (Alhudaithy & Kitchen, 2009) state that a limitation has been
noted in previous technology adoption models (TAM, TPB and TRA). However, the mentioned
theories may not encompass all the factors that can influence technology adoption. These are still
broad and vague constructs. None of the models specify the aspects of technology that are
influential.
4. The focus of most of the studies was on private banking customers, and very few studies have
paid attention to corporate banking customers.
3.3 Conceptual framework
In order to provide a complete picture of the determinants for adoption of internet banking in the
banking industry, for planning, promoting internet banking, facilitating continued usage and to
accomplish the objectives of the study with academic rigor, it was felt that the reasons for the
low penetration of internet banking in India should be explored from a broader perspective
involving all stakeholders.
Before embarking on developing a framework and model for user acceptability of internet
banking, it was necessary to address research gaps and research questions by adopting the
following process of study:
1. The state of the internet in India and the factors that drive internet usage.
2. Evaluate internet-banking websites of banks that have operations in India based on the
functionality dimension with regard to its content and characteristics. The results of the
evaluation will allow bankers to identify grey areas and take corrective action by
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introducing facilities and features on their bank’s web pages.
3. To conduct semi-structured interviews with bank senior management, employees,
technology providers and users and non-users of internet banking to understand their
views about this new channel of banking and analyze the same to confirm the existence
of latent key constructs which act as facilitators and barriers to internet banking.
4. To obtain information pertaining to internet banking from public sector banks using the
Right To Information Act, 2005.
5. To administer a survey questionnaire to bank employees to understand their perception
about internet banking.
6. Compare web traffic and financial performance of select Indian banks to determine
whether a relationship exists between the two.
7. Internet banking user satisfaction measurement.
8. To propose the best attitudinal framework to model the customers actual use of internet
banking and validate the same.
3.4 Research questions
The main research questions addressed in the thesis are:
1. What is the state of the internet in India and what factors drive/hinder internet usage?
2. What are the perceptions of Bank senior managers towards internet banking?
3. What are the perceptions of Bank employees towards internet banking?
4. What are the main reasons due to which the customer resists internet banking as Channel
for banking?
5. Which are the factors that influence the customers’ decision to use internet banking as a
primary banking channel?
6. Are the banks taking initiative to promote internet banking?
7. Does adoption of internet banking lead to improvement in the financial performance of
the banks?
8. Are the internet banking customers satisfied with the service?
9. What would the best attitudinal framework to model the customers’ actual use of internet
banking be?
10. Is there any impact of socioeconomic status on internet banking use?
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3.5 Research objectives
The intention behind this research was to address the shortcomings of limited research on
internet banking adoption in India. The research aim is to find factors, which are barriers and
drivers to adoption of internet banking and to understand decision factors and the relationship
that leads to the adoption of internet banking by developing a nomological network / model. In
order to understand the problems associated with internet banking in entirety. The Thesis
Advisory committee suggested a mixed method strategy to identify factors responsible for
underutilization of this channel. Table 3.1 shows the research problems and the research
objective to address these problems for amelioration.
Table 3.1: Summary of the research problems and research objective
Sr.
No.
Research Problem /Question Research Objective
1. Low penetration of the internet. To find factors that drives/ inhibits internet
usage and the relative influence of the
factors on usage.
2. Poorly designed bank websites. To evaluate and rank bank websites based
on their functional dimension and throw
light on the missing features.
3. Lack of studies from India, which have
identified and confirmed the existence of the
latent variables that act as drivers, or barriers of
internet banking already identified from existing
literature conducted in developed nations.
Elicitation study to identify these variables
by conducting semi-structured interviews
with bank senior management, employees,
technology providers, users and non-users of
internet banking.
3. Which class/category of bank employees carry
higher negative perceptions about internet
banking
Compare different groups of employees with
regard to positive and negative perception
about internet banking
4. Internet banking usage by bank customers and
its implication on bank performance
To indirectly find internet banking usage by
bank customers using web traffic as a
measure and relating it to financial
performance indicators.
5. Satisfaction level of Internet Banking users. To use a satisfaction measurement model for
measurement of user satisfaction with bank
websites.
6. Factors responsible for internet banking
adoption and relative importance of these
factors.
To select an appropriate Information system
adoption model and modify it for model fit.
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3.6 Theoretical and conceptual framework for finding factors that drives /
inhibits internet usage
Literature review on the state of the internet reveals that the government’ role is a crucial factor
responsible for the diffusion of the internet. The Government of India had been proactive in
driving the growth of the internet to enhance the quality of life of its citizens through societal
applications such as e-education, e-medicine, e-governance, entertainment, and employment
generation. As 69% of the Indian population lives in rural areas, the Government took initiatives
to develop the necessary infrastructure and make internet accessible at Community Service
Centers (CSC) in rural India. The Government of India (GOI) has been empowering students and
teachers’ through its National Mission on Education through Information and Communication
Technology (NME-ICT) and is committed to provide broadband connectivity to all higher
educational institutions in India. The Government of India has made huge investments to develop
e-content to provide high quality knowledge modules over the internet for learners anywhere,
anytime mode. GOI is also facilitating the use of technology by making available the world’s
lowest cost tablet named Aakash, at subsidized rates to all educational institutes as a part of this
initiative. GOI introduced a draft of the Electronic Services Delivery Bill, 2011 that will enable
citizens to make electronic submission of all forms related to government permissions,
certificates, licenses, sanctions, approvals, receipts and payment of money. The draft bill has
provisions to impose penalties and punishment to those employees who do not comply or delay
electronic services to the citizens.
Though India is a stable democracy protecting the freedom of expression under article 19(2) of
the Constitution, the central and state governments have recently been involved in either
selectively filtering internet content citing objectionable content, or arresting individuals using
the provisions of the IT (Amendment) Act, 2008. In 2012, GOI issued directives to block 690
web pages under Section 69 of the Information Technology Act, 2000.
Based on literature review, the following plausible model was proposed and is as illustrated in
Figure 3.1
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Figure 3.1: The Hypothesized model for internet usage
3.6.1 Conceptual Definition of the variables in the proposed model
Table 3.2 provides the conceptual definition of the variables used in the hypothesized model.
Table 3.2: Conceptual definition of the research variables
Research
Variables
Code
Name
Conceptual Definition Reference
Government
Support
GS Government efforts to provide infrastructure and the
legal framework to positively influence internet usage.
(Tan &
Teo, 2000)
Government
Control
GC The use of government legitimate, regulatory powers to
curb democratic values of openness, freedom of
expression on the internet.
(Gomez,
2004)
Attitude ATT An attitude is an individual's disposition to respond
favourably or unfavourably to an object, person,
institution, or event, or to any other discriminable
aspect of the individual's world
(Ajzen,
1989)
3.6.2 Hypotheses Development
Government Support
Government support through various agencies, openness policy regarding standards and
interconnection agreements, helped create a critical mass of users connected to the internet
(Bailey, 1997). Government efforts to provide infrastructure, training, policies and legal
framework to positively influence internet use by its citizens. Government support was found to
Government
Support
Usage of the
Internet
Attitude
Government
Control
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be a significant contributor towards information systems (Dauda et al., 2007; Ndubisi & Sinti,
2006; Tan & Teo, 2000; Hernandez & Mazzon, 2007). Based on existing literature on
Government support the following plausible Hypothesis was formulated
Hypothesis
H1. Government support will have a direct positive effect on attitude towards the internet.
H2. Government support will have a direct positive effect on usage of the internet.
H5. Government support will have an indirect positive effect on usage through attitude towards
the internet
Government Control
The use of the Governments legitimate, regulatory powers to curb democratic values of openness
and freedom of expression on the internet. A United Nations treaty that would have allowed
national governments to have control of the internet by monitoring traffic flow and security was
blocked by several countries including the United States, thus maintaining the status quo of the
internet. These nations felt that the primary reason for the survival and popularity of the internet
was because it is unregulated and it offered immense economic and social benefit to all. These
observations led to the proposal of the following Hypothesis.
Hypothesis
H3. Government control will have a direct negative effect on attitude towards the internet.
H4. Government control will have a direct negative effect on usage of the internet.
H6. Government control will have an indirect negative effect on usage through attitude towards
the internet.
Attitude
Attitude has been found to significantly affect intention to use and usage of information systems.
(Dabholkar & Bagozzi, 2002), suggest that attitude will have a strong direct and positive effect
on intentions. (Bobbit & Dabholkar, 2001), in their model for predicting the use of self-service
technology suggest a pivotal role of attitude in influencing intentions and behaviour. In view of
these findings in existing literature, the following Hypothesis was proposed.
Hypothesis
H7. Attitude towards using internet will have a direct positive effect on usage of the internet.
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3.7 Theoretical and conceptual framework for evaluating internet-banking
websites.
This study investigates the content and characteristics of internet banking websites in India based
on a model proposed by (Diniz, 1998). (Dinz et al., 2005), categorized web services on the
direction of the information flow between the users and the corporation over the Web. The major
element of this categorization is its focus on the services offered, which are divided into the
following three types:
Dissemination: as a vehicle to publish information
Transaction: as a channel to perform transactions
Relationship: as a tool to improve relationship with users
In addition to the above categorization, there is also a second dimension involved, which
subdivides each category into three parts. They are:
Basic services
Intermediate services
Advanced services
As the important element for a bank’s customer is to get all financial needs/information on one
preferred site. Hence, this model for evaluation was chosen. The website’s of public sector,
private sector and foreign banks were investigated and the services and products offered were
categorized into basic, intermediate and advanced as illustrated in Table 3.3.
Table 3.3: Categorization of website services based on the functionality dimension
Basic Intermediate Advanced
Dissemination News
Interest Rates
Policies and
Guidelines
Search Tool
Downloadable documents
Form links
Use of Flash
Advertisement
Transaction Statement of
account
Cheque book
request
Demand draft
request
Balance Enquiry
Bill Payment
Fund Transfer
Stop payment request
Online Trading
Online Tax payment
E-rail reservation
Airline Booking
Online Shopping
Relationship Email
FAQ
Phone helpline
Equated Monthly Instalment
(EMI) calculator
Branch locator
Loan application
Chat
Forums
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A score of one is assigned for the presence of a feature and zero for the absence of the feature
based on Table 3.3. A maximum score of eight for dissemination, nine for transaction and nine
for relationship can be assigned. Based on these scores the most well developed website will
have a maximum score of 26.
3.8 Elicitation study to identify latent constructs
The paucity of studies in India on internet banking acceptance was the reason for conducting this
study. It was decided to conduct interviews with bank senior management, technology providers,
employees, users and non-users of internet banking. This study was qualitative in nature and was
conducted to confirm the relevance of latent constructs found in technology acceptance literature
viz. TRA, TPB, IDT and TAM, which were found relevant in the studies in developed countries
are valid in the Indian context. An interview guide was prepared for each of these stakeholders
with a view to capture the key constructs identified in literature. The questions are presented in
Appendix B.
3.9 Theoretical and conceptual framework for determining employee’s
perception towards internet banking
Extant literature reveals several advantages of using technology in the banking sector.
Technological developments have removed repetitive, time-consuming tasks, reduced human
error and extended access to banking related facilities (Curry & Penman, 2004). (Mankidy,
2000), points out that the workload of employees reduced because of computerization as tasks
such as daily balancing of books, which used to take hours was done in minutes. The belief is
that internet banking reduces the transaction cost, will improve the profitability of banks,
increases sales, improves the bank image, minimize queues in the branch, improve customer
service and satisfaction but at the same time may lead to a decrease in the number of employees
in the banks and increased risks, may lead to customer alienation. The items in the questionnaire
are based on both positive and negative aspects of internet banking usage and are discussed
below.
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Cost reduction
The main reason for offering internet banking is to increase cost-effectiveness, increase customer
reach and retain market share (Centeno, 2004). Electronic banking frees personnel from simple,
repetitive, routine tasks, allowing them to devote more time to revenue-generating activities
(Sarel & Marmorstein, 2002). The reduction in transaction cost may eventually lead to an
increase in the bank’s profitability, but this improvement in performance is gradual and may take
a few years.
Bank’s Image
(Nath et al., 2001) in their study on banks in the United States observed that 81% of the
respondents agreed that the internet banking facility provided by the banks gives an impression
of a cutting edge bank. (Aladwani, 2001) argues that enhancing the banks image is one of the top
drivers for introduction of online banking. (Flavian et al., 2004), point out that it has become
extremely important to study and measure the image of the bank, especially in internet banking,
to help the management of banks operating on the internet to make decisions. (Nguyen &
LeBlanc, 1998) found that the customers’ overall impression of the image of the financial
institution would ensure loyalty to the organization and they would recommend it to others.
Queue minimization
Several studies have found that queuing time creates a negative influence on the customers.
Queuing time and speed of handling, has a direct influence on loyalty. Customers are not willing
to spend their valuable time waiting for services. Banks that consider this promote loyalty among
their customers, (Bloemer et al., 1998). Customers often have to wait during the process of
acquiring and consuming many products and services. These waiting experiences are typically
negative and have been known to affect the customers overall satisfaction with the product or
service, (Kumar et al., 1997). (Nicholls et al., 1993), in their study on service satisfaction
conducted on 1058 bank customers in south Florida, found that consumption time is the most
important factor that makes an impact on customer satisfaction.
Increased sales
Many banks are counting on a payoff in the near-term from technological improvements in their
traditional delivery channels. In particular, many banks hope to increase marketing and “cross-
selling,” i.e., the sale of additional products and services to a customer, based on analysis of data
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about the customer’s current purchases of products and services, (Furst et al, 1998). Internet
banking would initially only increase the efficiency of distribution of existing products and
services, but generate significant operational and transactional cost-savings, and eventually could
create cross-selling opportunities by encouraging traffic to a bank’s website, (Gopalakrishnan et
al., 2003). The increase in sale will also be due to market expansion as internet banking
eliminates geographical boundaries for conducting business.
Customers’ alienation
(Curry & Penman, 2004), found that a balanced approach that avoids over use of technology at
the expense of personal touch to service delivery could be disastrous. They also found that both
the customers and employees felt that the human element in the banker/customer relationship is
more influential than the technology element. (Sciglimpaglia & Ely, 2002), conducted a study in
six branches of a financial institution, and the findings show that institutions were vulnerable to
loss of customers to rivals on implementation of extensive online services. (Nath et al., 2001), in
their study on banks in the United States found that majority of the bank employees were of the
opinion that internet banking will reduce customer visits to the bank branch and thereby have a
negative impact on the customer-banker relationship.
Customer service and satisfaction
Ignoring the trend in online banking could be a strategic mistake for banks that emphasize total
customer satisfaction. The consequence of this may lead to a decline in its market share
compared with other banks and non-banks, (Polatoglu & Ekin, 2001). (Walker & Johnson,
2005), conducted a study on internet banking services to determine whether the diminishing
interaction of bank employees with customers due to this new channel is effective in maintaining
mutually beneficial customer-bank relationship. They undertook a field survey involving face-to-
face interviews with 180 respondents. They found that regular use of internet banking was not
necessarily because of willing or satisfied use, and that it did not imply loyal patronage or a
sense of relationship with the bank.
Decrease number of employees
(Mols et al., 1999) argued that if customers accepted internet banking, an adaptation process,
which may follow, would result in closure of bank branches and reduction in the number of
employees. The bank employees’ unions were opposing computerization because it may make
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existing staff surplus and block fresh employment opportunities. In fact, the views of the unions
who went on strike upon introduction of computers have undergone a significant shift. In one of
the letters addressed to the Ministry of Finance, Government of India the United Forum of
Nationalized Bank Officers Association have demanded a five-day week in banks. Their
argument is that due to introduction of internet banking and the growing network of ATM, and
important clientele adopting a five-day workweek, a lot of petrol/diesel will be saved by
introducing the five-day work week.
Service Differentiation
(Thornton & White, 2001), discussed the increasing importance of non-price factors, which can
be used for differentiation, leading to increased revenue growth and improved market share as
most of the banks offer almost the same price on deposits and loans. Time and proximity is likely
to be significant in differentiating internet banking from traditional retail banking, (Liao &
Cheung, 2002). Internet banking is becoming increasingly popular, and competing banks have
limited avenues to exploit establishing differentiation, (Jayawardhena & Foley, 2000).
Market Transparency
(Daniel, 1999), conducted a mail survey addressed to managers of retail banks in UK and
Ireland. Findings indicate that use of internet banking would decrease consumer loyalty as price
of products and services can be easily compared. A disadvantage of internet banking would be
that it would be difficult to differentiate offerings, the market will be more transparent, and the
competition fiercer and it may become difficult for banks to earn profits because of intense price
competition, (Mols, 2000).
Increased non-bank competition
The proliferation of the internet has given birth to new business models, which are challenging
the traditional methods of borrowing and lending. Social lending sites like Zopa, Prosper,
Lending Club, to name a few which promote peer to peer lending are challenging traditional
banking channels by connecting people who want to invest money with the people who are in
need of money. They offer cheaper loans to borrowers, (based on their credit rating) and higher
interest to lenders. In India there are organizations offering loans for the people, by the people,
schemes promoted on websites such as mutualloans.in, i-lend.in. The internet has given rise to a
disruptive force, which is challenging banks and forcing them to introduce their offerings via the
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internet route. (Daniel, 1999), found that respondents to a mail survey addressed to managers of
retail banks in the UK and Ireland were of the opinion that in the near future banks will face
increased competition from non-bank players entering the market.
Increased risk
Banks do realize that adopting a new channel of service delivery such as internet banking has
inherent risks. Proper security procedures are the only means to mitigate this risk, but refraining
from providing this new channel of banking which offers lot of convenience to the customer
involves market risk. The threats from competitors for the banks are much higher compared to
the risks of implementing internet banking. Web 2.0, Rich Internet Application (RIA) technology
and use of social media platform like Facebook for internet banking, which allows third party
services provide customers value added services, but at the same time increase security
vulnerability. Banks’ entry into the electronic marketplace brings with it increased exposure to
technological failure. The success of a banks’ effort to market products over the internet will
depend on the continued smooth functioning of their computers and the underlying computer
network. If individual computers fail, causing customer inconvenience the reputation of
individual banks may be damaged; and if the network fails, a large amount of business may be
lost. Banks could also suffer financial losses if hackers entered fraudulent transactions that
compromised bank systems, forcing the institutions to shut their systems down, (Wenninger,
2000).
3.9.1 Conceptual Definition of the variables
The variables that are important from a branch employee’s perspective were identified from
existing literature. It was felt that some of these factors would be positive and others would be
negative towards growth of internet banking channel. These variables would determine the
perception towards internet banking. The purpose of identifying these variables in the study was
to find the categories of employees based on demographic classification, who have a negative
mind-set towards internet banking.
The conceptual definition of the variables used in this study is shown in Table 3.4
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Table 3.4: Conceptual definition of the research variables (Employees perception)
Research
Variables
Code
Name
Conceptual Definition Reference
Cost Reduction CR The perception that using internet banking will
improve operational efficiencies, decrease
unwarranted expenses, resulting in increased
profits.
(Centeno, 2004)
Banks’ Image IM The feeling that adopting internet banking will
enhance the status of the bank
(Nath et al.,
2001)
Queue
minimization
QM The reduction in waiting time for consuming a
product or service.
(Kumar, et al.,
1997)
Increased Sales IS The perception that increases in internet
banking will improve sales of the bank’s
products.
(Gopalakrishnan
et al., 2003)
Market
transparency
MT The ability of customers to observe information
about competing products and services
(Hasbrouck,
1995)
Service
Differentiation
SD Service offering that differ largely from
competitors offering given a certain price.
(Porter, 1980)
Increase Risk IR The perception that internet banking will
increase perceived uncertainty
(Aldás-Manzano
et al., 2009)
Increased non-
bank
competition
IC The perception that with internet banking the
bank can effectively compete with non-banks
(Daniel, 1999)
Customer
Alienation
CA The feeling that when customers start using
internet banking, their personal relationships
with the bank will decrease.
(Nath et al.,
2001)
3.10 Theoretical and conceptual framework for determining whether a
relationship exists between increased internet usage and the financial
performance of the bank.
The primary aim of this study was to determine whether there is an association between the
traffic the bank website attracts and the financial performance of the bank. Banks do not report
the revenues and expenses related to internet banking, as this information is not a mandatory
requirement. This study uses an alternative approach to determine whether the banks, which
attract high internet traffic on their websites, have high performance.
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Traffic Rank
The traffic rank is obtained from the website alexa.com, which is an Amazon company. Alexa
uses aggregated historical traffic data and other traffic data sources and is a combined measure of
page views for all sites on the web on a daily basis. First rank is assigned to the site with the
highest combination of visitors and page views.
Total Assets
The amount of cash, gross investments, receivables and other assets as presented on the balance
sheet.
Total Income
The sum of all money received by the organization from all sources as presented on the balance
sheet.
Operating Profit
The profits earned by an organization from its core business operations. It is the earnings before
interest and tax.
Figure 3.2 shows the relationship between website traffic and the bank’s performance. The
dependent variables are Total assets, Total income, Operating profit and the independent variable
is the traffic rank.
Figure 3.2: Relationship between website traffic and the bank’s performance
After reviewing extant literature the following plausible hypothesis was formulated
Operating
Profit
Total Assets
Total Income Website
traffic
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Hypothesis
H1 a. The banks Global website rank will be negatively associated with the bank’s total assets.
H1 b. The banks Global website rank will be negatively associated with the bank’s total income.
H1 c. The banks Global website rank will be negatively associated with the bank’s operating
profit.
H2 a. The banks India website rank will be negatively associated with the bank’s total assets.
H2 b. The banks India website rank will be negatively associated with the bank’s total income.
H2 c. The banks India website rank will be negatively associated with the banks’ operating
profit.
(Website rank and website traffic are inversely related. It implies that, the less the web rank, the
more the web traffic.)
3.11 Theoretical and conceptual framework for measurement of internet
banking user satisfaction.
The early adopters of internet banking may not continue to use internet banking if internet
banking fails to meet their specific needs and overall satisfaction levels. The opinion of these
initial adopters is likely to influence the decision of several other potential bank customers who
are likely to use this channel. Literature review revealed that there were many instruments to
measure customer satisfaction for internet related services, (Giese & Gote, 2000; Spreng &
Mackoy, 1996; Lele, 1987; Wang & Tang, 2001; Brown & Buys, 2005). This study was an
attempt to find internet banking user satisfaction with the service. The End User Computing
Satisfaction (EUCS) instrument was used to measure satisfaction of using internet banking. The
selection of this instrument was that it was parsimonious, easy to answer and short. The
instrument has been a standard and its predictive validity is established and reported in many
studies, (Gelderman, 1998; McHaney et al., 2002; Dowing, 1997; Igbaria & Tan 1997).
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Content
Content is information presented to an audience for a specific purpose through a channel.
Complete information about the product or service on the website improves customer
satisfaction. In case of internet banking the content should also be up to date.
Accuracy
Accuracy is the correctness of the output information, (Bailey & Pearson, 1983). Accuracy in the
case of internet banking would be correct display of bank account and other related information
and a reliable and accurate transaction system that correctly processes the activity.
Format
The material design of the lay out and display of the output contents, (Bailey & Pearson, 1983).
The information presentation style and logical form of representing will decide user satisfaction.
Ease of use
This construct is an important construct for measurement of information systems success. This
construct has been widely used in literature, (Davis, 1989; Adams et al., 1992; Venkatesh et al.,
1994; Venkatesh & Davis, 1996). This construct is found to affect the attitude towards
technology and usage, (Lee, 2009; Eriksson et al., 2005; Adams et al., 1992).
Timeliness
(Bailey & Pearson, 1983) stated that timeliness was the availability of the output information at a
time suitable for its use. (Abdinnour-Helm et al., 2005), were of the opinion that the construct
timeliness in case of web-based construct needs to be redefined with respect to the efficiency in
finding the required information measured by the number of steps or operations to be performed
and the time required for finding the information. Respondents may not be aware whether the
speed of acquiring information is due to the server, optimized graphics or a well-designed
website and they recommended further research on this.
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Figure 3.3 shows a block diagram representation of the different constructs responsible for
satisfaction in the EUCS model
Figure 3.3: End User Computing Satisfaction model
3.12 Theoretical and conceptual framework for developing internet banking
adoption model.
The theoretical framework is grounded on the constructs found in the technology acceptance
literature. The foundation for the development of the proposed model was from the literature
outlined in the previous chapter. The proposed model borrows constructs from existing theories
and models by adding or deleting certain items to make it relevant to the internet-banking
context. It was felt that as the earlier models on technology acceptance have been empirically
tested in research studies, they enhance the predictive power of the proposed model. Figure 3.4
Satisfaction
Content
Accuracy
Format
Ease of Use
Timeliness
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shows a block diagram representation of the different theories used to develop the internet
banking acceptance model.
Figure 3.4: Development of Internet banking acceptance model from existing theories
As TAM and IDT have been conceived and tested mostly in western countries, there is a need to
modify these models for Indian conditions. This study proposes valid antecedents for perceived
usefulness, perceived ease of use, based on Indian conditions and cultural beliefs. An extended
TAM was proposed as the research model for this study. Figure 3.5 shows some of the
antecedents, which influence the constructs.
3.12.1 Proposed Research Model
The proposed research model for this study is shown in Figure 3.5
TRA TPB
IDT
TAM TAM 2
SCT
Internet Banking
Acceptance Model
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Inte
rnet
usa
ge
Eff
icac
y
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3.12.2 Conceptual Definition of the variables in the proposed model
Table 3.5: Conceptual definition of the research variables (TAM and E-TAM)
Research
Variables
Code
Name
Conceptual Definition Reference
Perceived
Usefulness
PU The degree to which a person believes that using a particular
system would enhance his or her job performance.
(Davis, 1989)
Perceived
Ease Of Use
PEU The degree to which a person believes that using a particular
system would be free of effort.
(Davis, 1989)
Trust TR Customers’ trust in e-banking is defined as the willingness of
customers to perform on-line banking transactions, expecting
that the bank will fulfill its obligations, irrespective of their
ability to monitor or control the banks’ actions.
(Yousuafzai et
al, 2005)
Perceived
Risk
PR Perceived risk is the consumers subjective expectation of
suffering a loss in pursuit of a desired outcome
(Greatorex and
Mitchell, 1994)
Internet
Banking Self-
Efficacy
IBSE The degree to which an individual believes that he or she has the
proficiency/capability to perform Internet Banking.
(Bandura, 1977;
Taylor & Todd,
1995)
Internet Usage
Efficacy
IUE Internet Usage Efficacy (IUE) is the belief in an individual’s
capability to execute actions using the internet to attain the
desired goals.
(Hsu & Chiu,
2004)
Subjective
Norm
SN The person’s perception that most people who are important to
her or him think that he should or should not perform the
behaviour in question.
(Fishbein &
Ajzen, 1975)
Government
support
GS The efforts of the government to provide infrastructure and legal
framework to positively influence internet banking.
(Tan & Teo,
2000)
Banks
Initiative
BAI The efforts of the bank to promote and support internet banking. (Polatoglu &
Ekin, 2001)
Trialability TRI Trialability is the degree to which an innovation may be
experimented with, on a limited basis
(Rogers, 1995)
Image IM The degree to which an individual perceives that use of
innovation will enhance his or her status in his or her social
system
(Moore &
Benbasat, 1991)
Attitude ATT An attitude is an individual's disposition to respond favourably
or unfavourably to an object, person, institution, or event, or to
any other discriminable aspect of the individual's world
(Ajzen, 1989)
Behavioural
Intentions to
Use
BI A person's subjective probability that he will perform some
behaviour
(Fishbein &
Ajzen, 1975)
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3.12.3 Hypotheses development for the proposed model
3.12.3.1 Perceived Usefulness
This construct has been one of the strongest indicators of adoption of internet banking.
Information system researchers, (Chinn & Todd, 1995; Venkatesh & Bala, 2008; Venkatesh &
Morris, 2000; Agarwal & Prasad, 1997; Jackson et al., 1997), have extensively used this
construct. (Adams et al., 1992) replicated TAM, which was the work of Fred Davis in his
doctoral thesis. They found that perceived usefulness is influenced by many different variables
depending on the environment. Taking this into account the items of the construct perceived
usefulness was adapted for internet banking usefulness. (Lockett & Litter, 1997) study of
adoption of internet banking in the UK showed that the most useful feature of internet banking is
its 24-hour availability. (Moon & Kim, 2001) pointed out that TAMs fundamental constructs do
not fully reflect the specific influences of technological and usage-context factors that may alter
user acceptance. They also found that the factors influencing acceptance of new information
technology vary with target audience and context. In this study, the items in the construct
perceived usefulness, is therefore, made more relevant to internet banking usefulness.
Hypothesis
H1. Perceived usefulness has a direct positive effect on the intention to use internet banking.
H2. Perceived usefulness has a direct positive effect on attitude to use internet banking.
3.12.3.2 Perceived Ease of Use
(Venkatesh & Davis, 2000), found that perceived ease of use is not a strong predictor as
compared to perceived usefulness towards the users’ attitude towards adoption of technology.
However, perceived ease of use became more significant as the length of use increased. Many
studies state that perceived ease of use has a positive impact on attitude towards use of
technology. (Karahanna et al., 1999), found a positive link between ease of use and attitude to
use Windows 3.1. (Taylor & Todd, 1995) in their comparative study of TAM, TPB, DTPB on
the use of the computer resource centre, found that paths from perceived ease of use to perceived
usefulness and attitude were significant.
87
Hypothesis
H3. Internet banking Perceived Ease of Use of has a positive influence on Perceived Usefulness.
H4. Perceived ease of use will have a direct positive effect on attitude towards using internet
banking.
3.12.3.3 Trust
Trust is a cross-disciplinary concept, incorporating ideas from economics, marketing sociology,
psychology, organization behaviour, strategy, information systems and decision sciences
(Mukherjee & Nath, 2003). (Rotter, 1967), defines trust as “a generalized expectancy held by an
individual that the word of another can be relied on.” (McKnight & Chervany, 2002), justify a
parsimonious interdisciplinary typology and relate trust constructs to e-commerce consumer
actions, defining both conceptual-level and operational-level trust constructs. Conceptual-level
constructs consist of disposition to trust (primarily from psychology), institution-based trust
(from sociology), and trusting beliefs and trusting intentions (primarily from social psychology).
Each construct is decomposed into measurable sub constructs, and the typology shows how trust
constructs relate to already existing internet relationship constructs. (Ganesan, 1994) showed that
trust is related to environmental uncertainty, reputation and satisfaction. Trust is a fundamental
prerequisite for any banking activity and unless customers can trust new technology, they will be
reluctant to use it, (Howcroft et al., 2002). Consumer trust is believed to be the most essential
component of, as well as the most formidable barrier to commercialization of the internet,
(Ambrose & Johnson, 1998). This study propounds that trust will have a significant effect on
perceived ease of use, perceived usefulness and attitude.
Hypothesis
H5. Trust in internet banking will have a positive effect on perceived ease of use.
H6. Trust in internet banking will have a positive effect on perceived usefulness.
H7. Trust in internet banking will have a positive effect on attitude towards internet banking.
H8. Trust in internet banking will have a positive effect on behavioural intention towards internet
banking.
3.12.3.4 Perceived Risk
Previous studies indicate perceived risk as a major factor that negatively influences internet-
banking adoption. (Cunningham et al, 2005), found that there is a risk premium for e-banking
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services and the risk level is more than the traditional banking channel. (Sathye, 1999),
investigated internet banking adoption by Australian consumers, and found that security
concerns and lack of awareness were the main obstacles to adoption. Perceived risk on the use of
internet banking may impair customers’ perception of the consequences of adopting internet
banking and thus negatively influence the adoption of such technology, (Aldás-Manzano et al,
2009). There is a negative impact of perceived risk on customers’ intention to engage in online
transaction, (Pavlou & Gefen, 2004). Trust and perceived risk are subjective concepts embedded
in social behaviour. (Featherman & Pavlou, 2003) investigated the effect of risk on e-services
adoption, and they found that although perceived risk adversely affects adoption, perceived
usefulness and perceived ease of use reduce risk perceptions. (Lee, 2009), found that the
dimensions of perceived risk directly and significantly affect perceived usefulness and the
intention to adopt internet banking. (Loh & Ong, 1998) found that user concerns about privacy
and security would be one of the key determinants for the adoption of a new system. In another
study conducted by (Aladwani, 2001) on potential customers of internet banking, it was found
that they ranked internet security and privacy as the most challenging issue banks would face in
the future. Extant literature supports the role perceived risk plays in trust formation, (Pavlou,
2003; Chen & Dhillon, 2003). However, the directionality of the causal relationship between
trust and risk still needs examination (Kesharwani & Bisht, 2012; Kim et al., 2009) and is still
inconclusive. This study propounds that perceived risk will negatively influence trust.
Hypothesis
H9. Perceived Risk will negatively influence perceived usefulness.
H10. Perceived Risk will negatively influence perceived ease of use.
H11. Perceived Risk will negatively influence intention to use internet banking.
H12. Perceived Risk will negatively influence Trust
3.12.3.5 Internet banking self-efficacy
Computer self-efficacy has been receiving attention from information system researchers in the
recent past. (Torkzadeh et al, 2006), reported that computer anxiety and attitude towards
computers were the main factors effecting computer self-efficacy. They also found that computer
training significantly contributed to the development of computer self-efficacy. (Igbaria & Iivari,
1995) found that computer experience had a strong positive effect on self-efficacy. (Compeau &
89
Higgins, 1995) defined computer self-efficacy as “A judgment of one’s ability to use a
computer”. Internet banking self-efficacy scale is developed by taking items from computer self–
efficacy.
Hypothesis
H13. Internet banking self-efficacy positively influences the behavioural intention towards using
internet banking.
H14. Internet banking self-efficacy positively influences the perceived ease of use towards using
internet banking.
H15. Internet banking self-efficacy positively influences the perceived usefulness towards using
internet banking.
3.12.3.6 Internet Usage efficacy
(Bandura, 1986), first proposed the theory of self-efficacy. Computer self-efficacy has been
recently receiving a lot of attention as an external variable to TAM; see (Johnson & Marakas,
2000; Venkatesh & Morris, 2000; Hong et al, 2001). Self-efficacy is a time variant parameter
and can change as the individual attains more information and experience. (Compeau & Higgins,
1995) conducted a survey among Canadian managers to develop and validate a measure for
computer self-efficacy. The measures used for computer self-efficacy may not be useful for
measuring an individual’s internet usage competence. (Eastin & LaRose, 2000) developed an
internet self-efficacy scale, which measured basic knowledge of the internet, the hardware and
software. They proposed that future research in this area should focus on the interplay of
computer self-efficacy, internet stress and online support. As such, these scales have become
obsolete due to fast changing technology. Internet banking self-efficacy, or the belief in one’s
capabilities to organize and execute courses of internet actions required to produce given
attainments, is a potentially important factor to explain the consumers’ decisions in e-commerce
use, such as eservice, (Hsu & Chiu, 2004). Previous research (Venkatesh & Morris, 2000;
Agarwal & Karahanna, 2000; Hong et al, 2001; Venkatesh & Davis, 1996; Igbaria & Iivari,
1995), found significant relationship between computer self-efficacy and perceived ease of use.
(Fenech, 1998), observed that the addition of self-efficacy improved the model fit in determining
acceptance of the World Wide Web.
90
Hypothesis
H16. Internet usage efficacy positively influences the attitude towards using internet banking.
H17. Internet usage efficacy positively influences the perceived ease of use towards using
internet banking.
H18. Internet usage efficacy positively influences the perceived usefulness towards using
internet banking.
H19. Internet Usage Efficacy will positively affect Internet Banking Self-Efficacy towards
internet banking
3.12.3.7 Subjective Norm
(Fishbein & Ajzen, 1975), define subjective norm as an individual’s perception that most people
who are important to him think he should or should not perform the behaviour in question. TAM
does not include TRA’s subjective norm as a construct to determine behavioural intention.
Subjective Norm may indirectly affect behavioural intention via attitude. (Venkatesh & Davis,
2000), found that subjective norm is a predictor of perceived usefulness. They also found that the
effect of image on subjective norm was significant. Subjective norm is as important as attitudinal
judgments in influencing service acceptance decisions, (Bhattacherjee, 2001). (Karahanna et al,
1999) conducted a study to determine user acceptance of the Windows 3.1 operating system, and
they found that subjective norm influences the intention to use the operating system.
Hypothesis
H20. Subjective Norm will have a positive influence on perceived usefulness.
H21. Subjective Norm will have a positive influence on image.
H22. Subjective Norm will have a direct positive influence on the intention to use internet
banking
3.12.3.8 Government Support
Government support lends credibility as well as feasibility to new electronic commerce
applications such as internet banking, thereby making them more likely to be accepted by
potential adopters, (Tan & Teo, 2000). (Tornatzky & Klein, 1982) claimed that government
support is a major factor which acts as a driving force for internet banking adoption because it
assures the user that the internet-banking channel will operate in an orderly and well-managed
way. Governments’ intention to provide suitable technological infrastructure and internet
bandwidth is an enabler for internet banking, (Jaruwachirathanakul & Fink, 2005).
91
Hypothesis
H23. Government support will positively influence the intention to use internet banking.
H24. Government support will positively influence attitude to use internet banking.
H25. Government support will positively influence Trust.
3.12.3.9 Banks Initiative
(Polatoglu & Ekin, 2001), conducted an exploratory study of consumer acceptance of internet
banking in a Turkish bank. They found that marketing effort on the part of the bank is an
important driver for adoption of internet banking. (Sathye, 1999), found that one of the main
reasons for non-adoption of internet banking in Australia was lack of awareness. Therefore, it
was felt that the banks’ initiative like promotion of internet banking by media campaigns will go
a long way in eliminating doubts and encouraging customers to use this channel of banking.
(Akinci et al, 2004), found that non-users of internet banking were not aware of all the benefits
of internet banking and believed that it is not possible to do several categories of transactions
using the internet and therefore preferred going to the bank branches despite internet access
availability. (Lichtenstein & Williamson, 2006), recommended that lack of awareness of internet
banking and its benefits can be tackled by better marketing, informing consumers about the
features, benefits, advantages and convenience. They suggested that marketing campaigns,
attractive dedicated literature, and awareness sessions might prove valuable for creating
awareness. These finding suggest that banks’ initiative in creating awareness about the different
possible transactions using the internet, updating their website with latest information and
making their websites user friendly would go a long way in creating internet banking channel
acceptability.
Hypothesis
H26. Banks initiative will positively influence perceived usefulness of internet banking.
H27. Banks initiative will positively influence perceived ease of use towards internet banking.
H28. Banks initiative will positively influence attitude towards use of internet banking.
3.12.3.10 Trialability
Providing internet-banking demonstration at the bank’s website increases the likelihood of
registration as it reduces customer concerns regarding the complication of I-banking, (Chung &
Paynter, 2002). (Rogers, 1995), concluded that allowing users to try the innovation makes them
92
comfortable to use it and aids in adoption of the innovation. In this study, based on previous
literature it is felt that trialability will positively affect perceived usefulness, perceived ease of
use and the attitude towards usage of internet banking.
Hypothesis
H29. Trialability will have a direct positive influence on the intention towards using internet
banking.
H30. Trialability will have a direct positive influence on the perceived ease of use.
H31. Trialability will have a direct positive influence on the perceived usefulness.
3.12.3.11 Image
Image was found to be a weak predictor of adoption in a study on the perception of adoption of
information technology acceptance, (Moore & Benbasat, 1991). IDT suggests that a major factor
of adopting a certain innovation is the individual’s desire for higher social status. (Karahanna et
al, 1999) also found that one of the reasons for adopting Windows 3.1 was it led to a feeling of
higher image amongst their peers.
Hypothesis
H32. Image will have a direct positive influence on perceived usefulness.
H33. Image will have a direct positive influence on attitude towards using internet banking.
H34. Image will have a direct positive influence on the intention towards using internet banking
3.12.3.12 Attitude
An attitude is an individual's disposition to respond favourably or unfavourably to an object,
person, institution, or event, or to any other discriminable aspect of the individual's world,
(Ajzen, 1989). The attitudinal model of the Technology Based Self-Service (TBSS), (Dabholkar
& Bagozzi, 2002) suggests that attitude will have a strong, direct and positive effect on
intentions. (Bobbit & Dabholkar, 2001), in their model for predicting the use of self-service
technology suggest a pivotal role of attitude in influencing intentions and behaviour.
Hypothesis
H35. Attitude towards using internet banking will have a direct positive effect on behavioural
intention to use internet banking.
93
3.12.3.13 Behavioural intention
It is the user’s likelihood to engage in banking using the internet. These questions were framed to
understand the intent of the respondent in adopting internet banking in the near future. This
construct has a strong correlation with the actual usage of internet banking. (Moon & Kim,
2001), found that actual usage was directly related to behavioural intention.
Hypothesis
H36. Behavioural intention towards internet banking will have a direct positive relationship with
actual use.
3.12.3.14 Actual Usage
Several studies have used self-reported usage, (Igbaria et al, 1996) and frequency of use, as
actual usage. Data about actual usage of internet banking by individual customers would have
been a more appropriate measure, but this data was not possible to obtain because of the bank
policies on privacy. This study used self-reported usage as the actual usage.
Table 3.6: Summary of the major hypotheses to be tested in this study
Hypothesis
The state of the Internet in India
1. Government support will have a direct positive effect on attitude towards the internet.
2. Government support will have a direct positive effect on usage of the internet.
3. Government support will have an indirect positive effect on usage, through attitude towards
the internet.
4. Government control will have a direct negative effect on attitude towards the internet.
5. Government control will have a direct negative effect on usage of the internet.
6. Government control will have an indirect negative effect on usage of through attitude
towards internet.
7. Attitude towards using the internet will have a direct positive effect on usage of the internet.
Web Traffic and Banks’ Financial performance
1. The banks global website rank will be negatively associated with the banks’ total assets.
2. The banks global website rank will be negatively associated with the banks’ total income.
3. The banks global website rank will be negatively associated with the banks’ operating
profit.
4. The banks India website rank will be negatively associated with the banks’ total assets.
5. The banks India website rank will be negatively associated with the banks’ total income.
6. The banks India website rank will be negatively associated with the banks’ operating profit.
94
Table 3.6 (Continued)
Internet Banking Adoption
1. Perceived usefulness has a direct positive effect on intention to use internet banking.
2. Perceived usefulness has a direct positive effect on attitude to use internet banking.
3. Internet banking perceived ease of use of has a positive influence on perceived usefulness.
4. Perceived ease of use will have a direct positive effect on attitude towards using internet
banking.
5. Trust in internet banking will have a positive effect on perceived ease of use.
6. Trust in internet banking will have a positive effect on perceived usefulness.
7. Trust in internet banking will have a positive effect on attitude towards internet banking.
9. Perceived risk will negatively influence perceived usefulness.
10. Perceived risk will negatively influence perceived usefulness.
11. Perceived risk will negatively influence trust.
12. Perceived risk will negatively influence intention to use internet banking
13. Internet banking self-efficacy positively influences the attitude towards using internet
banking.
14. Internet banking self-efficacy positively influences the perceived ease of use towards using
internet banking.
15. Internet usage efficacy positively influences the attitude towards using internet banking.
16. Internet usage efficacy positively influences the perceived ease of use towards using
internet banking.
17. Subjective norm will have a positive influence on perceived usefulness.
18. Subjective norm will have a positive influence on image.
19. Subjective norm will have a direct positive influence on intention to use internet banking.
20. Government support will positively influence intention to use internet banking.
21. Government support will positively influence attitude to use internet banking.
21. Banks initiative will positively influence perceived usefulness of internet banking.
22. Banks initiative will positively influence perceived usefulness of internet banking.
23. Banks initiative will positively influence attitude towards use of internet banking.
95
Table 3.6 (Continued)
24. Trialability will have a direct positive influence on attitude towards using internet banking.
25. Trialability will have a direct positive influence on perceived ease of use.
26. Trialability will have a direct positive influence on perceived usefulness.
27. Image will have a direct positive influence on perceived usefulness.
28. Image will have a direct positive influence on attitude towards using internet banking.
29. Attitude towards using internet banking will have a direct positive effect on behavioural
intention to use internet banking.
30. Behavioural intention towards internet banking will have a direct positive relationship with
actual use.
Chapter Summary
This chapter provided the conceptual framework, research questions, theoretical model and
proposed hypotheses. The final proposed model is built upon the Technology Acceptance Model
(TAM) but also uses constructs from TRA, TPB, SCT, and IDT to build a comprehensive model
to investigate relationships between the constructs. The next chapter will discuss the research
approach and methodology for the study.