Factors Influencing the Adoption of Online Banking Services in the Klang Valley
Dzuljastri Abdul Razak1*, Rashinah Abdul Hamid1*, Nurul Izzati Tuan Azhari1*, Putri Sarah Qistina Sonari1*
1 Kulliyah of Economics and Management Science, Universiti Islam Antarabangsa, Gombak, Malaysia
*Corresponding Author: [email protected], [email protected], [email protected], [email protected]
Accepted: 15 August 2021 | Published: 1 September 2021
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Abstract: The purpose of this research is to study the factors that influence the use of online banking services among consumers in the Klang Valley. This research is conducted using the Technology Acceptance Model (TAM) with the extension of including the elements of trust and perceived risks as the significant predictors in influencing the adoption of online banking services by consumers. A questionnaire-based research design is adopted and respondents are selected by using convenience sampling. Data gathered from the questionnaires is processed using the SPSS tests such as factor analysis, reliability analysis, correlation and multiple regression analysis. Based on the findings, consumers’ propensity to trust is the main determinant that influence intention to use online banking services, followed by the perceived usefulness and perceived ease of use. The finding indicates no relationship between perceived risk and the intention to use online banking by customers may be due to broad risks factors.
This study contributes to new knowledge for academicians. It is also beneficial for bank operators to formulate strategies that aim in increasing the usage of online banking services, especially during the COVID-19 pandemic crisis. This further emphasizes the need for an online banking strategy towards achieving e-payment goals.
Keywords: Online services, TAM, Klang Valley, COVID 19, E-payment
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1. Introduction
Banking began with a community-based establishment in the 1970s until 1980s when the industry venture into technology-based banking. After a decade, banks’ focus was primarily on digital banking also known as online banking where transactions are performed and completed using any digital device. Commencing from 2000s, banks have positioned their focus on mobile banking since smartphones have advanced substantially in their usage allowing users multi- purpose functions. Hence, banking industry has gone through a very important structural innovation moving towards the advancement of financial technology over these years.
In this modern time, the mode and delivery of financial services are constantly evolving corresponding to the advancement of digital technology. Many of beneficial banking services such as online banking requires adoption by consumers in order to be relevant and significant.
The main benefit of online banking includes the ability to access and manage consumers’
banking accounts at users on convenience. While the benefits and opportunities presented by digital financial services are clear and proven, majority of people at large has not accepted and adopt those services. This is reported in the Internet Users Survey Report 2018 by the
Malaysian Communications and Multimedia Commission (MCMC) whereby although the amount of transactions made via online banking has reached RM7.6 trillion, only 54.2% of the internet users have adopted online banking.
Malaysia is seen heading towards becoming a cashless society with the Bank Negara Malaysia (BNM) outlining its goal towards accelerating the country’s migration towards e-payments which results in greater cost savings, improved efficiency in the nation’s payment systems and increased competitiveness in the nation’s economy. The BNM’s initiative towards a cashless society can be found in its Financial Sector Blueprint 2011-2020 where it sets to achieve the electronic payment (e-payment) goal by 2020. The e-payment goal aims to enhance the country’s payment systems through its efficiency by the following: 200 e-payment transactions per person; 30 debit card transactions per person; 25 no. of EFTPOS terminals per 1,000 inhabitants; 10 million no. of cheques cleared; all these figures are per annum. Chart 1 below illustrated Malaysia’s Cashless Stands in 2018.
Chart 1: Malaysia’s Cashless Stands in 2018 Source: Fintech Malaysia
Furthermore, the recent outbreak of COVID-19 pandemic that occurred throughout the whole world has created a new norm where every individual is expected to practice social distancing and isolation from crowded places to prevent the infectious disease from spreading widely.
This has greatly changed the mode of doing work, forcing individuals and businesses to stay and work from home. As a result, online banking can potentially play an important role in preventing the infectious disease through the reduction of walk-in customers. Hence, banks have all the more reason to drive its customers to utilize the online banking services especially during the current global pandemic. This is because the practice will help in reducing physical contact of customers coming into the banks. This study examines factors that influence the adoption of online banking services among the consumers in the Klang Valley. The results would provide new knowledge regarding online customers’ behavior. It would also enable bank management and regulators to review its policy and guide lines on online banking services.
Accordingly, the study address two research questions as follows:
(i) What are the key factors that influence customers’ behavioral intentions to use the online banking services?
(ii) How is the consumers’ propensity to trust could influence the consumers’ perceived risks towards the intention to use the online banking?
This paper is structured in the following way, after the introduction in the first section, the literature review will follow in section two whereby we will examine the evolution of online
banking, theoretical background of previous studies and Technology Acceptance Model (TAM). In section three, we will discuss the research framework and hypothesis development.
This is followed by methodology in section four. Data analysis and finding will be on section five followed by discussion, before providing the implication and conclusion in the last section.
2. Literature Review
2.1 Evolution of Online Banking
It is interesting to recall that before the online banking came into the picture, people all over the world queued patiently in the banks to withdraw money or keep deposits into their banks’
accounts. Later, resembling the same situation, banks’ customers changed the queue’s venue.
Instead of queueing in front of the bank’s counters, they started queueing and learned to withdraw money at the automated teller machines (ATM). The whole world witnessed the rapid growth of technology development in the banking sector with the introduction of telebanking and then followed by the commencement of online banking. Online banking or also synonym with the name of internet banking is defined as “a new type of information system that uses emerging techniques such as the Internet and the World Wide Web and has changed how customers perform various financial activities in virtual space” (Shih & Fang, 2006, p. 62).
The first online banking that was opened for public use was launched in 1983 in the United Kingdom known as ‘Homelink’. This system was designed to operate using the Prestel view link and connected via the television set and telephone system in order to transfer money or do payment. It was initiated through a joint cooperation of the Bank of Scotland and British Telecom’s Prestel service. Homelink’s first commencement has been opened for use by the Nottingham Building Society customers prior to being used nationally. In 1994, the Microsoft Money personal finance software has been developed to incorporate the requirement of online banking. As for Malaysia, the development of online banking started in the year of 2000 when Bank Negara approved the introduction of the services to Maybank Berhad. On 15 June 2000, Maybank Berhad launched its first online banking that provided services like fund transfer, bill payment, credit card payment, banking enquiry functions, account summary and transactions history views.
2.2 Theoretical Background of Previous Studies
Several models have been used in previous studies when conducting researches pertaining to the contributing factors on the usage of online banking. In 2000’s, Technology Acceptance Model (TAM) and Theory of Planned Behavior (TPB) have gained popularity to be used for measuring the users’ acceptance towards the information system technology. Lee (2009) has adopted the integration TAM and TPB in studying the relationship between the perceived risks and perceived benefits, attitude and perceived usefulness. In addition, Chauhan, Yadav and Choudary (2018) also has adopted TAM by adding a few other variables which are the consumer innate innovativeness, domain specific innovativeness and perceived security risks.
While recent study by Kaur and Arora (2020) used the Unified Theory of Acceptance and Use of Technology 2 (UTAUT2) proposed by Venkatesh et al (2012) which combined the eight well-known theories like TAM, TPB, Model of PC Utilization, Innovation Diffusion Theory, Social Cognitive Theory and others by making enhancement on the technology acceptance behavior from customers’ views.
There are limited researches on previous studies pertaining to the factors that influence the adoption of online banking in Malaysia. In a study conducted by Ndubisi and Sinti (2006) that use diffusion of innovation theory and motivation research, the variables of importance to
banking needs, compatibility, complexity, trialability and risk have been used to explain the users’ attitude towards the adoption of internet banking. Yu, Balaji and Khong (2014) studied the users’ intention to use online banking using the trust theory by looking into the relationship between trusting beliefs, trustworthiness, trust and internet banking use with the factors of competence, integrity, benevolence and shared values. Meanwhile, the study on
“Understanding Customer Satisfaction of Internet Banking: A Case Study in Malacca” by Goh, Yeo, Lim and Tan (2015), which did not mention any specific theory, used one of the determinants of TAM that is the perceived of ease of use, reflected by the variables of convenience and web design and content.
2.3 Technology Acceptance Model
Technology Acceptance Model (TAM) has been introduced by Fred Davis and Richard Bagozzi based on the Theory of Reasoned Action (TRA) which was developed by Fishbein and Ajzen (as cited in Surendran, 2012). This model was exceptionally prominent and has been widely used by researchers in conducting studies with regards to the acceptance and use of particular information system or technology (Surendran, 2012). TAM has initially been designed as to test the acceptance and use of the IBM’s word processor among its employees (as cited in Surendran, 2012). This model gained popularity over the time when many other researchers have studied this model and testified its hypothesis in examining the technology acceptance behavior among individuals pertaining to various information systems’ platforms.
This model has been used extensively in studying the adoption of ATM, telebanking, mobile banking as well as online banking. Lee (2009) highlighted, TAM hypothesizes that system used is directly driven by individuals’ behavioral intention to use it. This behavioral intention is then, being influenced by the individual’s intention to use the system. In so doing two determinants of intention to use a system are perceived usefulness and perceived ease of use (Surendran, 2012).
3. Research Framework and Hypothesis Development
This research will be conducted using the Technology Acceptance Model (TAM) with the extension of including the elements of trust and perceived risks as the significant predictors in influencing the adoption of online banking services by consumers. The dependent variable, independent variables and the hypotheses are illustrated as in the diagram in Chart 2 below.
Chart 2: The Research Model
3.1 Perceived Usefulness
Based on the framework of TAM, Davis et al. (as cited in Eriksson & Nillson, 2007) defined perceived usefulness as “the extent to which a person perceives increased benefits from using the self-service technology.” This definition stressed the need for system’ users to concentrate on the benefits to them when adopting the system, rather than looking into the properties of the system or self-service technology itself (Eriksson & Nillson, 2007). According to Lee (2009), the results of studies attained by Pikkarainen (2004) and Chan and Lu (2004) concluded that perceived usefulness have more significance than perceived ease of use in determining the use of online banking. In the context of Malaysia, previous study conducted in Malacca has not taken into consideration the determinant of perceived usefulness (Goh et al., 2015). Therefore, this research would explore the following hypothesis:
H1. There is a positive relationship between consumers’ perceived usefulness of the online banking and their intention to use the online banking
3.2 Perceived Ease of Use
As the second determinant of TAM by Davis et al., perceived ease of use is a degree to which an individual would find that the usage of a particular system is effortless (as cited in Surendran, 2012). The study conducted by Gounaris and Koritos found out that consumers would enhance their intention to use a particular system by having the perception that the system is easy to operate (as cited in Patel et al., 2017). Similarly, Patel et al. (2017) concluded that the perceived ease of use has a positive relationship with the consumers’ intention to use the online banking. In addition, Munusamy, Annamalah and Chelliah (2012) revealed that the users in Malaysia perceived ease of use in operating the online banking services compared to the non-users. Meanwhile, Ahmad and Al-Zu’bi (2011) and Goh et al. (2015) discovered that the perceive ease of use has a positive relationship with the customers’ satisfaction toward the online banking. Accordingly, this study hypothesized the following:
H2. There is a positive relationship between consumers’ perceived ease of use of the online banking and their intention to use the online banking
H1: There is a posi tive relationship between consumers’ perceived usefulness of the online banking and their intention to use the online banking
H2: There is a posi tive relationship between consumers’ perceived ease of use of the online banking and their intention to use the online banking H3: There is a posi tive relationship between consumers’ propensity to trust and their intention to use the online banking
H4: There is a negative relationship between consumers’ perceived risks and their intention to use the online banking H5: There is a negative relationship between consumers’ perceived risks and their propensity to trust
Perceived Usefulness of Online Banking
Perceived Ease of Use of Online Banking
Intention to Use the Onl ine Banking
IV DV
H1
H2
H3
Perceived Ris ks of Onl ine Banking
• Security/ Privacy Risk
• Financial Ri sk
• Performance Ri sk
• Time Risk
• Social Ri sk
• Psychological Ri sk H5 Consumer’s Propens ity to Trust
H4
H2
3.3 Consumers’ Propensity to Trust
In the previous literature, many researchers often added the trust factor as the extension of TAM and derived to the consensus that the consumers’ propensity to trust played a major role in attracting them to use the information system technology. In this research, we would like to observe to what extent the trust builds by the banks’ consumers would affect their intention to use the online banking services. The consumers’ propensity to trust can be divided into two categories. The first one is the consumers’ trust towards the banks themselves. Flavian and Guinaliu (2006) emphasized the trust that has been developed by consumers when dealing with bank traditionally prior to the introduction of the online banking services is one of the factors that stimulates the use of online banking at present. While the second one is the consumers’
trust towards the online banking per se, meaning the system itself. In order to gain the consumers’, trust towards the system, it is very crucial for the bank operators to ensure that the systems developed incorporate risk management strategies and improved security features of online banking services (Kaur and Arora, 2020). Thus, this study postulates the following hypothesis:
H3. There is a positive relationship between consumers’ propensity to trust and their intention to use the online banking
3.4 Perceived Risks
Perceived risk is defined as the expectation on the occurrence of loss by the users when performing the online banking transactions (Lee, 2009). The component of perceived risks used in this study include security and privacy risk, financial risk, performance risk, time risk, social risk and psychological risk. These components derived from a study by Littler and Melanthiou (2006) and Kaur and Arora (2020). As initially theorized by Jacoby and Kaplan, perceived risks theory involved all the six components mentioned above except for psychological risk (as cited in Lee, 2009).
The psychological risk deals with low level of self-esteem and ego frustration raised from previous bad or unexpected experience with the online banking by Featherman and Pavlou in their study (cited in Lee, 2009) has been added in identifying the perceived risks factor based on the reason that no matter how much effort being taken by the bank operators to satisfy its customers, the tendency for system’s interruption exist. Thus, it is important to study the contribution of this component towards the perceived risks in determining the factors that influence the users’ intention to use the online banking. Similarly, it is vital to study the social risk, which is associated with the negative or positive views from family, friends or any workgroup on an individual’s intention to use the online banking.
In view of the possibilities that the security and privacy risk is referring to the inappropriate conducts like internet theft, phishing, hacking, intrusion and others, it is always the online banking users’ desires to ensure all the online transactions conducted or all the information kept online are safe. In the same manner, it is also crucial to address the financial risk which is associated with the potential of loss of money in the event of transaction error or hacker’s intrusion (Lee, 2009). While the time risk refers to the time loss due to difficulty in using the system or delayed (Lee, 2009). The research’s findings by Lee (2009) revealed that the perceived risk is an influential factor towards the consumers’ intentions to use the online banking. Hence, in view of the significance of the perceived risks factors, this study would like to observe the following hypothesis:
H4. There is a negative relationship between consumers’ perceived risks and their intention to use the online banking
3.5 Perceived Risks in Relation to Trust
As the banks’ consumers started to grow their trust towards the banking operations, the factor of perceived risks may be seen as less significant in relation to the intention of consumers to use the online banking services. This is supported by the fact that since the first commencement of digital mode of transaction via automated teller machine, followed by the telebanking services, bank operators have conducted extensive improvement in ensuring that the online banking systems’ quality especially in terms of performance and security is to the utmost.
Nevertheless, there were several inconsistent findings on the relationship between the perceived risks and trust. Certain researches like Kesharwani and Singh Bisht, Kim et al., Grabner-Kra ̈uter and Faullant found out that the trust gained by banks’ customers determines the way they perceived risks (as cited in Kaur and Aurora, 2020). While some other researches’
outcomes showed that the perceived risk is an antecedent to trust (Damghanian et al., 2016;
Rouibah et al., 2016). According to Harridge-March (2006), by having sufficient trust in a particular company or towards its products, customers can outweigh the level they perceived risk. While recent research by Kaur and Arora (2020) found that “trust moderated the relationship between perceived risk and behavioural intention”. Therefore, this study hypothesized the following:
H5. There is a negative relationship between consumers’ perceived risks and their propensity to trust
4. Methodology
A questionnaire-based research design has been adopted using a sample of respondents in the Klang Valley, Malaysia. The respondents are selected by means of convenience sampling method. This method is chosen as it enables convenient accessibility which provides ease to reach out to more people and contact. Furthermore, convenience sampling also helps to select respondents from the online community by spreading the survey link through social network sites such as Facebook, Twitter, WhatsApp and other chat groups. The online self-administered questionnaire for collecting the data consists of two main sections. Respondents reported their socio-demographic characteristics such as age, gender, nationality, occupation and monthly income in the first section using nominal scale. While, the second section includes questionnaires on their Perceived Usefulness, Perceived Ease of Use, Propensity for Trust, Perceived Risk as well as their Intention to use the online banking. In this section, five-point Likert-type scale was employed (where 1=Strongly agree to 5=Strongly disagree) to explore factors influencing intention to use online banking. A total of 430 responses were received.
Out of this, 404 respondents (94 percent) have completed answering all the questionnaires, 10 have responded that they have never used the online banking based on particular reasons, while another 16 respondents have not completed answering the questionnaires. As a result, data from 404 completed surveys was analyzed using a structured improved research instrument to assess several aspects of consumers’ intention to use online banking.
5. Data Analysis and Finding
The analysis of the research is based on descriptive and quantitative methods. The literature review and data analysis of the socio-demographic characteristics have been used to formulate
the descriptive analysis as well as to support the data for quantitative analysis. The statistical programme SPSS then processed and analysed data gathered from the questionnaires. The proposed hypotheses were tested using quantitative methodologies, as well as the intention to utilise online banking. Statistical techniques were used to process the data include factor analysis, reliability analysis, correlation and multiple regression analysis.
5.1 Model Specification
The structural equation model is used to examine the link between factors of online banking adoption and the independent variable of interest. The functional form can be expressed in the following way:
𝐼𝑂𝐵 = 𝛽0+ 𝛽1(𝑃𝑈) + 𝛽2(𝑃𝐸) + 𝛽3(𝐶𝑇) + 𝛽4(𝑃𝑅) + ε
IOB = Intention to Use Online Banking PU = Perceived Usefulness
PE = Perceived Ease of Use CT = Customer’s Propensity to Trust PR = Perceived Risk
5.2 Analysis of Demographic Variables
Gender, age, and educational level are few of the demographic factors gathered from respondents. Following Table 1 summarizes the respondents’ demographics.
Table 1 summarizes the demographic description of each of the participants. Males (n=156, 38.6 percent) had a higher proportion than females (n=248, 61.4 percent). Most of the respondents are Malaysians (n=401, 99.3 percent) and a third of the respondents (n=137, 33.9 percent) were 41-50 years old. Half of the sample proportion had completed their bachelor’s degree (n=210, 52.0 percent) and majority of participants work in private sector (n=166, 41.1 percent). In terms of annual income, the largest share of respondents (n=137, 33.9 percent) earned between RM5,001-RM10,000, and most of the participants live in Selangor (n=250, 61.9 percent).
Table 1: Demographic Profile
Demographic Information Frequency Percentage
Gender Male 156 38.6
Female 248 61.4
Nationality Malaysian 401 99.3
Non- Malaysian 3 0.7
Age <21 years old 9 2.2
21 - 30 years old 81 20.0
31 - 40 years old 128 31.7
41 - 50 years old 137 33.9
51 - 60 years old 40 9.9
Above 60 years old 9 2.2
Education Primary/Secondary School 14 3.5
High School/Diploma 90 22.3
Bachelor’s degree 210 52.0
Master’s degree/PhD 88 21.8
Competency 1 0.2
Professional qualification 1 0.2
Occupation Government 144 35.6
Statutory Body/GLC 38 9.4
Private Sector 166 41.1
Self-Employed 23 5.7
Unemployed 15 3.7
Student 18 4.5
Monthly Income Less than 3,000 91 22.5
3,001 - 5,000 100 24.8
5,001 - 10,000 137 33.9
10,001 - 20,000 53 13.1
More than 20,000 23 5.7
Residential Area Kuala Lumpur 83 20.5
Putrajaya 71 17.6
Selangor 250 61.9`
5.3 Analysis of the Structural Model
In order to determine the suitability of data for structure detection, Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) and Bartlett’s test was conducted. The KMO is a statistic that shows how much of the variance in variables can be explained by underlying factors. High scores (around 1.0) indicated that the data may benefit from factor analysis.
Bartlett's test of sphericity tests the hypothesis that correlation matrix is an identity matrix. This suggests that the variables are unrelated and hence inappropriate for structure detection. Factor analysis may be effective with the data if the significance level is small (less than 0.05) (Dziuban and Shirkey, 1974).
The results in Table 2 confirmed that there was sufficient inter-correlation as the KMO measure of sampling adequacy was 0.912. The Bartlett’s test of Sphericity was significant (p<0.01) with an approximate Chi-Square of 6,401.105.
Table 2: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.912 Bartlett's Test of Sphericity Approx. Chi-Square 6,401.105
Df 325
Sig. 0.000
The data were then analysed using factor analysis to identify and validate the items that contributed to each component, as shown in Table 3 below.
Table 3: Factor Analysis
Indicators Variables
PU PE CT PR IOB Online banking allows me to accomplish my tasks more quickly 0.900
Online banking makes it easier for me to conduct my banking transactions 0.846 Online banking allows me to manage my finances more efficiently 0.567
Online banking increases my productivity 0.616
I find it is easy to use online banking 0.530
My interaction with the online banking information system is clear and
understandable 0.709
It is easy to operate the online banking website 0.776
Online banking website has an easy enquiry procedure 0.836
It is easy for me to remember how to perform task with online banking. 0.631 The reputation and performance of bank provides assurance of online banking
integrity. 0.613
I believe the banks will always continue to ensure the online banking services are
efficient. 0.664
The online banking services nowadays are reliable and trustworthy. 0.954 I trust transactions and payments made through online banking channel will be
processed securely 0.787
I believe my personal information on online banking will be kept confidential 0.682 I am afraid that I will lose money in the transaction process due to my careless
mistakes. 0.868
I worry that I cannot get refund from banks in the event transactions errors
occurred. 0.867
I worry that the online banking services may not perform well due to slow
download speed, servers down or the website is undergoing maintenance 0.673 I am afraid the online banking servers may not perform well and process payments
incorrectly 0.615
I am afraid it would take me a lot of time to learn how to use the online banking
services 0.555
I lose confidence to use the online banking after experiencing delayed
transactions. 0.710
Based on past experience, I feel frustrated to use the online banking since it is very
hard to get assistance 0.954
If I have access to online banking, I intent to use them 0.705
I intend to use online banking as often as needed 0.725
I am interested to use online banking for new banking products or services offered
in the future 0.792
I strongly recommend others to use online banking services 0.889
I prefer to use the online banking services totally for any transaction or application
on the financial products and services 0.678
Eigenvalue 1.360 1.857 3.557 2.270 9.349
Percentage of variance 5.230 7.141 13.680 8.731 35.959 Cumulative (%) 5.230 12.370 26.051 65.362 70.741
The results above indicated that firstly, consumers’ perceived usefulness is mostly contributed by the factor of which online banking allows them to accomplish tasks more quickly (0.900).
Secondly, it shows that consumers’ perceived ease of use is influenced largely by the factor that online banking website has an easy enquiry procedure (0.836). Thirdly, the consumers’
propensity to trust is contributed largely by the factor that online banking services nowadays are reliable and trustworthy (0.954). Fourthly, the table shows that consumers’ perceived risks is contributed largely by two factors of which they are afraid of losing money in the transaction process due to their own mistakes (0.868) and they worry of not able to get refund in the event transaction errors occurred (0.867). Finally, the intention to use the online banking is mostly
influenced by the factor that the respondents strongly recommend others to use the online banking services (0.889). The percentage of variance of 35.959 indicates that all the 26 factors explain 35.96% of the variation in the data.
Cronbach's Alpha test was then utilised in this study to assess the reliability or internal consistency of the scales designed to measure attitudes and behavioural biases. According to (Liu, Wu and Zumbo, 2010) This test is typically used in behavioural studies as an indicator of reliability and appropriate for used in behavioural finance.
Table 4: Cronbach Alpha, Mean and Standard Deviation
Variables Items Cronbach α Mean SD
Perceived Usefulness (PU) 4 0.828 4.59 0.49
Perceived Ease of Use (PE) 5 0.876 4.40 0.60
Customer’s Propensity to Trust (CT) 5 0.877 4.26 0.64
Perceived Risk (PR) 7 0.838 3.20 0.79
Intention to Use Online Banking (IOB) 5 0.883 4.46 0.63
The Cronbach’s Alpha was calculated for each scale and was summarised in Table 4, ranging from 0.828 (for Perceived Usefulness) to 0.883 (for Intention to Use Online Banking). With coefficient alphas surpassing the cut-off value of 0.70, these results show a good degree of reliability (Hair, Sarstedt and Hopkins, 2014). Perceived Usefulness has the highest mean at 4.59, whilst Perceived Risk has the lowest mean at 3.20.
Table 5: Inter-Correlations of Key Variables
Variables PU PE CT PR IOB
Perceived Usefulness 1.000
Perceived Ease of Use 0.611** 1.000
Customer’s Propensity to Trust 0.521** 0.646** 1.000
Perceived Risk -0.045 -0.155** -0.250** 1.000
Adoption of Online Bank 0.614** 0.571** 0.515** -0.139** 1.000
** Correlation is significant at the 0.01 level (2-tailed).
Table 5 demonstrates the Pearson Correlation of variables to each other. The test statistic Pearson's correlation coefficient evaluates the statistical link, or association, between two continuous variables. The date indicated that all variables, except perceived risk are positively related and significant to the Intention to Use Online Banking since the p-value is less than the significance level p < 0.01. Perceived Usefulness has the strongest correlation to Intention to Use Online Banking at 0.614.
5.4 Multiple Regression
A method of examining the relationship and effect of two or more independent variables (or predictors) on a single dependent variable (or criterion) is known as multiple linear regression.
By fitting a linear equation to observed data, it seeks to model the connection between two or more independent variables and a dependent variable (Green and Salkind, 2008).
Multiple linear regression analysis was used in this study, with Intention to Use Online Banking as the dependent variable and the other four variables (PU, PE, CT, and PR) as independent variables.
𝐼𝑂𝐵 = 𝛽0+ 0.223 (𝑃𝑈) + 0.152 (𝑃𝐸) + 0.397 (𝐶𝑇) − 0.049 (𝑃𝑅) + 𝜀
Table 6: Multiple Regression Analysis
Variables Standardized β p-value VIF
Perceived Usefulness 0.223*** 0.000 1.909
Perceived Ease of Use 0.152*** 0.003 2.198
Customer’s Propensity to Trust 0.397*** 0.000 1.941
Perceived Risk -0.049 0.207 1.083
R2 0.456
Adjusted R2 0.450
Correlation Matrix:
***Correlation is significant at the 0.01 level (p >0.001)
Regression analysis in Table 6 revealed that altogether, the model explains Intention to Use Online Banking and all the independent variables considered were significant predictors of Intention to Use Online Banking, except for the perceived risk factor. All Variance Inflation Factor (VIF) is less than 10 and Tolerance greater than 01 which indicated that the absence of multicollinearity. This proof that the variables are independent of each other and reliable for interpretation of the model.
The results were analysed and explained using a regression weight table. First, there is a statistically significant link between supporting Perceived Usefulness and Intention to Use Online Banking (p>0.001). This supported H1 by suggesting that those who have a favourable attitude regarding the perceived usefulness of online banking are more likely to utilise it.
The relationship between Perceived Ease of Use and Intention to Use Online Banking was found to be statistically significant (p>0.001). This supported H2, suggesting that those who find online banking simple to use are more inclined to utilise it. This finding is in accordance to research made by Ahmad and Al-Zu’bi (2011) and Goh et al. (2015) that the perceive ease of use has a positive relationship with the customers’ satisfaction toward the online banking.
In addition, the relationship between Customer’s Propensity to Trust and Intention to Use Online Banking of consumers (H3) is also supported (p>0.001) in the study. This finding is consistent to Flavian and Guinaliu (2006) who found customer’s propensity trust to be a significant fact or in adoption of online banking.
The data however suggested that Perceived Risk is not a contributing factor to the Intention to Use Online Banking of consumers, thus (H4) is not supported. This may because the perceived risk is too broad, future research should focus on just few aspects of perceived risk in adopting online banking rather than all six aspects of perceived risk elements.
Thus, Intention to Use Online Banking was significantly determined by Perceived Usefulness, Perceived Ease of Use and Customer’s Propensity to trust resulting in an R2 of 45.7 per cent.
In other words, the aforementioned factors accounted for 46% of the variation in Intention to Use Online Banking.
Another test was conducted to predict the value of the Customer’s Propensity to Trust based upon the remaining dependent variable. The data indicated that perceived risk has a significant meaning to the Customer’s Propensity to Trust and thus (H5) is supported. Further reinforcing previous literatures by Kesharwani and Singh Bisht, Kim et al., 2009, Grabner-Kra ̈uter and Faullant that perceived risk has a negative impact on trust (as cited in Kaur and Aurora, 2020).
The findings of the hypothesis testing are summarised in Table 7 below.
Table 7: Hypothesis Summary
Sl. Hypotheses Finding
H1 There is a positive relationship between consumers’ perceived usefulness of the online
banking and their intention to use the online banking Supported H2 There is a positive relationship between consumers’ perceived ease of use of the online
banking and their intention to use the online banking Supported H3 There is a positive relationship between consumers’ propensity to trust and their intention
to use the online banking Supported
H4 There is a negative relationship between consumers’ perceived risks and their intention to use the online banking
Not Supported H5 There is a negative relationship between consumers’ perceived risks and their propensity
to trust Supported
6. Discussion
Based on the findings above, it indicated that the key factors that influencing the intention to use the online banking services are consumers’ perceived usefulness, consumers’ perceived ease of use and consumers’ propensity to trust. Therefore, this has answered one of the research questions posed on the needs of this study. The results indicated that consumers’ propensity to trust has a strong impact (beta=0.397) and is the main factor that influences consumers’
intention to adopt online banking. The finding on trust as one of the factors that leads to consumers’ intention to use the online banking is supported by the results of previous research by Yu et al. (2014) and Szopinski (2016). Based on the factor analysis result, the consumers’
propensity to trust is contributed largely by the factor that online banking services nowadays are reliable and trustworthy (0.954). Accordingly, it is very pertinent for the banks to ensure that they maintain high quality services and keep updating the system security versions or features so that the system runs smoothly. The advancement of information technology at present could be the contribution factor that triggers consumers’ trust towards the online banking services.
The second factor that influences the intention to use online banking is the consumers’
perceived usefulness towards online banking services (beta=0.223). This finding is consistent with other previous studies by Eriksson and Nilsson (2006), Lee (2009), Patel et al. (2017) and Chauhan et al. (2018). Since consumers’ perceived usefulness has highest correlation (0.614) with the adoption of online banking, banks should explore more appropriate and beneficial functions of online banking services in order to retain and motivate consumers to use the online banking. From the factor analysis, consumers’ perceived usefulness is mostly contributed by the factor of which online banking allows them to accomplish tasks more quickly (0.900). In consequence, all banks must make certain that any services interruption is to be avoided and proactively foreseen for immediate recovery.
The third factor that influence the intention to use online banking is the consumers’ perceived ease of use (beta=0.152). This finding is also in line with the study conducted by Patel et al.
(2017). Hence, the banks should ensure that their online banking services are user-friendly.
Banks should always update, made available and easily access online any relevant information and guidance for users in the event any new technology or enhancement being released so that users are quick in making the changes and this is aligned with the result of factor analysis for perceived ease of use variable. Furthermore, a quick survey can also be conducted by banks to obtain consumers’ or users’ experience in utilizing a particular banks’ online systems as well as to observe the time spent for specific transaction to identify areas for improvement towards achieving the ease of use’s objective.
Many researchers like Cheng et al., Lee, Odzemir et al., Martin et al. and Deb and David found that perceived risk has negative relationship with the consumer’s intention to use the innovative financial services like internet banking (as cited in Chauhan et al., 2019). However, this study found that the variable of perceived risk is not a determinant in influencing consumer’s intention to adopt for online banking. This study failed to prove that there is relationship between perceived risks and intention to adopt online banking by banks’ customers. Apart from that, the perceive risk elements are too broad as highlighted in the above findings. On the other hand, this study also anticipates the probability that the consumers’ confidence level towards the reliability of information technology has greatly increased which make the perceived risk is no longer a determinant in this context.
Subsequently, the finding of this study has also addressed the research question whether the consumers’ propensity to trust could influence their perceived risks towards the intention to use online banking. The result indicated that there is a negative relationship between consumers’ perceived risks and their propensity to trust. This means increases in consumers’
propensity to trust towards the banks and its online banking system would significantly reduce their perceived risks in making financial transaction online. This finding is supported by Kaur and Aurora (2020) whereby they emphasized, it is always due to sufficient trust towards the online providers that makes consumers perform their transaction via online system even in the presence of perceived risk. This finding indirectly also supports the idea that trust is the strongest determinant in influencing the intention to adopt online banking among customers in the Klang Valley. Therefore, the inclusion of trust in TAM is seen as relevant and strengthen the structural model.
Furthermore, the outcomes of this research have managerial implications on the banking industry. Having the understanding that trust, perceived usefulness and perceived ease of use are the factors that motivate consumers to perform transactions via online banking, first, banks should re-strategize and give concentration to the element of trust in obtaining its customers’
acceptance to use the online banking services. Both the trust to bank institution and the online banking system carry equal weightage that there is no way bank should disregard one to another. Banks need to realize that losing trust in any of this two would somehow affect its partner. Hence, there is always cost involved in gaining trust. If necessary, banks need to re- brand their company so that they become more valuable. On top of that, banks also should invest more in making sure their online systems are superb, trustworthy and reliable.
Second, banks should review their online system to ensure that they always provide useful features that is ahead from their consumers or stakeholders’ demand. It is not the demand today that they should worry about, it is the need for future that they should be able to achieve.
Therefore, banks must always balance the requirement of practicality with innovative and creativity. By transforming this vision into their strategic action plan, bank will be able to attract its customers to use the online banking system. Furthermore, in response to the present COVID-19 pandemic crisis, out of 404 respondents, 398 or 98.51% agreed that they prefer to use the online banking services, while 323 or 79.95% agreed that the online banking is the best mechanism to apply for personal loans and mortgage financing in this COVID-19 pandemic.
With these outcomes, it can be concluded that consumers agreed on the use of online banking services. Nonetheless, there are still who are reluctant. Hence, there is a need to carry out further research on the appropriateness and effectiveness of certain banking products to be processed or transacted online. In other words, this also should be considered when banks put attempts to enhance the benefits of online banking services as to address the factor of consumers’ perceived usefulness and ease of use.
Third, as mentioned in the research methodology, there are 10 respondents who have responded that they have never performed any payment or financial transaction through the online banking based on several reasons. Even though the number is very small, we have some idea on the rationale which is the most common reason, or five responses is due to the feeling of more secure to deal with banks directly. Therefore, towards achieving the e-payment goal by 2020 as highlighted by BNM, banks have to put more effort in understanding and addressing the factors that associate with non-users of online banking. A strategic policy, marketing and training plan should be made available together with aggressive and comprehensive approaches to motivate the non-users to perform transactions via online banking. Lastly, the findings of this study can be used by the authorities like Malaysian Communications and Multimedia Commission and Bank Negara Malaysia to formulate policies as to encourage consumers to adopt for online banking as well as providing incentives to banking institutions and system developers or providers in materializing the e-payment goals and towards achieving a developed country in 2020.
7. Conclusion
This study supported findings from previous researches on the determinant that influence consumers’ intention to use online banking services. In consistent that the three variables which are the consumers’ propensity to trust, perceived usefulness and perceived ease of use have been the factors that motivate banks’ customers to perform online transactions. The findings of this study differ from previous studies in this field, which found that in the presence of TAM model determinants, perceived usefulness and ease of use, the main determinant for the intention to use online banking is the consumers' propensity to trust banks and their systems.
Nonetheless, there a few limitations identified in this study. Firstly, this study is limited to the Klang Valley, and as such may not accurately reflect the factors that affect Malaysian online banking users as a whole and the sample size of respondents is insufficient for complete generalization of the findings. Secondly, this study is using convenience sampling with aims to obtain feedbacks from online banking users in this region and the results are not able to generalize. Thus, it is recommended that future study use the simple random sampling to reduce sampling bias and to ensure proportionate coverage based on certain characteristics like the number of respondents according to population size of particular locality as well as to address the factor that demotivate non-users to adopt online banking services. Finally, it is suggested a comparative study on the factors influencing the intention to perform online banking between consumers’ in peninsular Malaysia and East Malaysia is conducted since there are several distinctions between this two like cultures and demographic background that may contribute to different outcomes.
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