2.11 THEORETICAL BACKGROUND OF FINTECH CUSTOMER PERCEPTION
2.12.1 THE VALENCE FRAMEWORK
Net Valence theory was originated from the economics and psychology discipline developed by Peter and Tarpey (1975), based on Lewin (1943) and Biley (1955) were pioneered to outline that customers perceive products in both desirable positive and negative sides. The theory uses cognitive rationale to explain consumer decision making, assumes that consumers will perceive products and services with both negative (e.g. perceived risk) and positive (e.g. perceived benefit) attributes. Based on the theory, customers will make a decision based on maximizing perceived benefits and minimizing perceived negative (Peter and Tarpey 1975; Kim et at. 2000). In other words, consumers are looking for a high-value gain of acquired products, as indicated by Ozturk et al. (2017) that convenience and utilitarian value were the main positive driven factors for consumers to use online payment. Similarly, Al-Malkawi, Mansumitrchai & Al-Habib (2016) investigated the factors that affect customer usage of online banking in Saudi Arabia. The study adopted eight factors namely, convenience, trust, difficulty, lifestyle, physical contact, complexity, reference group and third-party concern. They conducted the study among Saudi customers of retail banks and found that convenience and lifestyle were the major benefits of using online banking and trust, difficulty, physical contact, complexity and third-party concern were considered as barriers for using online banking services.
Kim et al. (2008) used a valence theory to understand customers’ decision process when purchasing from a given website. They integrated the trust element in their analysis to develop a trust-based decision-making model in electronic commerce. They used a single dimension to study perceived benefits and risks. They collected data from 468 internet customers in the United State for the analysis. Their results found that trust and perceived risk significantly impact internet consumer purchasing decisions. Similarly, Liu et al. (2012) proposed a theoretical model based on a risk-benefit framework to explain consumer adoption of mobile payment technology. In this study, perceived benefits were seen as a single construct, whereas the perceived risk was understood in multi-dimensional factors (i.e. financial risk, privacy risk, psychological risk) to predict consumer intention to use mobile payment. 336 was the sample size for the study. The data was collected from Chinese consumers who are familiar with the internet. They found that perceived benefit and risk directly affect consumers’ intention to use mobile payment, and consumers consider financial risk as the main aspect to adopt the technology.
However, Tingchi Liu et al. (2013) used valence theory to investigate how perceived benefits and perceived risks are influencing Chinese consumers’ trust in group online buying. In the study, they used three factors to explain benefits (i.e. price benefit, convenience and reactional benefit), and four factors of risks (i.e. financial risk, psychological risk, product risk and time risk). They collected data from 578 customers. The results show that perceived benefits and perceived risks have significantly affected consumer attitudes toward online group buying. Interestingly, Lee et al. (2013) explored qualitatively the benefit and risk factors to explore the benefits and risks influencing consumer intention to share their information on social network services.
Lee et al. (2013) explored qualitatively the benefit and risk factors (related to information sharing) impacting users’ intention of using and sharing information on a social network. They suggested
various types of benefits (i.e. Self-clarification, social validation, relationship development, social control, self-presentation, social benefit, and commerce benefit), and five types of risks (i.e.
security risk, stigma risk, face risk, relational risk, and role risk). The results showed that both proposed benefits and risks significantly influence users’ intention to share their information.
Interestingly, they found that despite privacy risks users were willing to share their private information. The author suggested future researchers consider the user’s type and characteristics.
Ozturk et al. (2017) tested a theoretical model to explain how and why consumers use mobile payment in the hospitability sector with the main focus on understanding the main drivers of consumer behaviour in mobile payments. They have proposed positive valence, convenience, utilitarian value and negative valence in addition to perceived risk and privacy concerns based on valence theory. This is joined with consumer individual differences, compatibility and smartphone affinity that was considered as a factor affecting positive and negative valences of consumer behavioural intention of mobile payment. The utilitarian factor was added as an additional factor and not commonly addressed. It was described as a consumer gain element from the provided efficiency and timely service by the service provider. Privacy concerns, utilitarian value and convenience were found to significantly affect consumer behaviour to use mobile payment.
Moreover, the study claims that consumers’ decision-making and behaviour of using technology when it comes to payment is a factor influenced by their perception which is according to the study based on a utilitarian value.
Therefore, Ozturk et al. (2017) conducted a study that had twofold implications: for restaurant managers to consider making payment easy and being flexible with customers to eliminate the time-consuming process of payment and to reduce carrying credit cards or cash through paying
through mobile devices. This study suggests practitioners consider utilitarian and convenience factors in analyzing people's behaviour. Importantly, this study considers consumer differences towards accepting the use of technology as a payment method and raised the matter of exploring the lifestyle of customers. As they believe that customers use innovative technology if they believe that it fits their lifestyle. Hence, consumer lifestyle is future research to be considered and not widely considered in previous contexts (Ozturk et al. 2017).
Mbama & Ezepue (2018) proposed a theoretical model to analyze the consumer experience of using digital banking and its impact on UK banks' financial performance. They suggested benefit- risk dimensions to be integrated with other dimensions drawn from marketing theories to explain customer perception of using digital banking. In this study, the perceived positivity of using digital banking was understood in multi-dimensions (i.e. perceived value, convenience, service quality, brand trust, employee-customer engagement, perceived usability, innovation), whereas risks were seen as a single construct. The study gathered data using primary and secondary data, namely surveys from 680 UK bank customers and annual reports from six banks. This paper presented an integrated understanding of customers’ perception towards digital banking utilization with customer perception and loyalty factors and how they impact bank financial performance.
According to the research, consumer low response rate was highlighted as the main limitation whereas the number of the included banks in the study could be another limitation. Researchers suggested extending the study to other countries, also suggesting developing countries in Africa.
Although previous studies have supported the continued use of valence framework in e-commerce studies, it has been suggested to be extended by combining dimensions from TAM and TRA
theories if it is used in a mobile environment or advanced technology (Lu et al. 2011; Bilgihan &
Bujisic 2015). The sections below demonstrate studies based on TAM theory in Fintech