Factors Influencing the Adoption and Usage of Internet Banking: A

199 Pages·2005·8.68 MB·English

Factors Influencing the Adoption and Usage of
Internet Banking: A New Zealand Perspective

Braja Podder

This thesis is presented as a part of the requirements for the award of the Degree of
Master of Information Technology at the Auckland University of Technology
June 2005
TABLE OF CONTENTS
LIST OF TABLES.......................................................................................................vii
LIST OF FIGURES.....................................................................................................ix
ATTESTATION OF AUTHORSHIP...........................................................................x
ETHICS APPROVAL...................................................................................................x
ACKNOWLEDGEMENTS.........................................................................................xi
ABSTRACT.................................................................................................................xii
Chapter 1 Introduction...............................................................................................1
1.1 Background to the study.....................................................................................1
1.2 Studying Internet banking adoption....................................................................3
1.3 Research objectives............................................................................................5
1.4 Significance of the research.................................................................................5
1.5 Organisation of this thesis..................................................................................5
Chapter 2 An overview of Internet banking: Global and local perspectives...................7
2.0 Introduction......................................................................................................7
2.1 Internet banking.................................................................................................7
2.2 Global Internet banking trend.............................................................................9
2.2.1 Internet banking trend in U.S.A and Canada..............................................11
2.2.2 Internet banking trend in Europe..............................................................14
2.2.3 Internet banking trend in Africa................................................................17
2.2.4 Internet banking trend in Australia............................................................18
2.2.5 Internet banking trend in Middle East.......................................................19
2.2.6 Internet banking trend in Asia...................................................................21
2.2.7 Internet banking trend in New Zealand.....................................................23
2.3 Chapter summary.............................................................................................25
Chapter 3 Theoretical background of Internet banking adoption or usage behaviour...28
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3.0 Introduction....................................................................................................28
3.1 Theory of reasoned action................................................................................29
3.2 Theory of planned behaviour............................................................................30
3.3 Diffusion of innovation....................................................................................32
3.4 Technology acceptance model..........................................................................35
3.5 Comparison of theories / models......................................................................38
3.5.1 Comparison of TPB and TAM..................................................................38
3.5.2 Comparison of TAM and DOI.................................................................41
3.6 Research models and hypotheses......................................................................42
3.6.1 Research model 1.....................................................................................42
3.6.1.1 Perceived ease of use........................................................................44
3.6.1.2 Perceived usefulness.........................................................................44
3.6.1.3 Perceived self-efficacy.......................................................................45
3.6.1.4 Perceived risk...................................................................................47
3.6.1.5 Actual use.........................................................................................49
3.6.2 Research model 2.....................................................................................49
3.6.2.1 Relative advantage ............................................................................50
3.6.2.2 Compatibility....................................................................................51
3.6.2.3 Ease of use.......................................................................................51
3.6.2.4 Trialability........................................................................................51
3.6.2.5 Observability....................................................................................52
3.6.2.6 Actual use.........................................................................................52
3.7 Chapter summary.............................................................................................53
Chapter 4 Research Method......................................................................................54
4.0 Introduction....................................................................................................54
4.1 Research purpose.............................................................................................54
4.2 Research approach...........................................................................................55
4.3 Research design................................................................................................56
4.4 Data collection.................................................................................................57
4.4.1 Data collection method.............................................................................57
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4.4.2 Designing survey instrument.....................................................................60
4.4.2.1 Measurement of the constructs..........................................................61
4.4.2.2 Ordering questions in the questionnaire.............................................64
4.4.2.3 Choosing the first question................................................................65
4.4.2.4 Raising response rates.......................................................................66
4.4.3 Pre-testing................................................................................................69
4.4.4 Ethical approval.......................................................................................70
4.5 Sample selection...............................................................................................70
4.5.1 Survey error.............................................................................................73
4.5.2 Survey distribution....................................................................................75
4.5.3 Response Rate..........................................................................................75
4.6 Data analysis....................................................................................................75
4.7 Summary.........................................................................................................76
Chapter 5 Research findings.....................................................................................77
5.0 Introduction....................................................................................................77
5.1 Data analysis....................................................................................................77
5.1.1 Sample characteristics...............................................................................77
5.1.2 Construct validation.................................................................................80
5.1.3 Averaging items........................................................................................87
5.1.4 Treating Likert scale data as interval data...................................................87
5.1.5 Correlation matrices.................................................................................88
5.2 Hypotheses testing...........................................................................................91
5.2.1 Perceived ease of use and intention...........................................................93
5.2.2 Perceived ease of use and perceived usefulness..........................................93
5.2.3 Perceived usefulness and intention............................................................93
5.2.4 Self-efficacy and intention.........................................................................93
5.2.5 Self-efficacy and perceived ease of use.......................................................94
5.2.6 Self-efficacy and perceived usefulness........................................................94
5.2.7 Self-efficacy and risk.................................................................................94
5.2.8 Perceived risk and intention......................................................................94
5.2.9 Intention and usage_1...............................................................................95
5.2.10 Intention and usage_2...............................................................................95
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5.2.11 Relative advantage and intention...............................................................95
5.2.12 Compatibility and intention.......................................................................96
5.2.13 Trialability and intention...........................................................................96
5.2.14 Visibility and intention..............................................................................96
5.2.15 Result demonstrability and intention..........................................................97
5.3 Model analysis..................................................................................................98
5.3.1 Model 1: extended TAM...........................................................................98
5.3.2 Model 2: PCI..........................................................................................100
5.3.3 Summary of model analysis.....................................................................101
5.4 Perceptions of Internet banking......................................................................102
5.4.1 t-test of independent sample...................................................................102
5.4.2 Mann-Whitney test.................................................................................103
5.5 Chapter summary...........................................................................................104
Chapter 6 Discussion and conclusion......................................................................105
6.0 Introduction..................................................................................................105
6.1 Discussion.....................................................................................................105
6.1.1 Model 1 variables....................................................................................107
6.1.2 Model 2 variables....................................................................................108
6.1.3 Model performance................................................................................109
6.1.4 Internet banking perception....................................................................110
6.2 Limitations.....................................................................................................111
6.3 Research contributions...................................................................................112
6.4 Practical implications......................................................................................113
6.5 Recommendations for future study.................................................................116
6.6 Conclusion.....................................................................................................117
REFERENCES.........................................................................................................118
APPENDICES.........................................................................................................133

Appendix A: Covering letter...........................................................................................1
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Appendix B: Survey Questionnaire.................................................................................2
Appendix C: Survey Area...............................................................................................8
Appendix D: Survey distribution..................................................................................10
Appendix E: Survey data (original data) ........................................................................12
Appendix F: Box-Cox transformed data........................................................................19
Appendix G: Survey data(after averaging items)............................................................26
Appendix H: SPSS results............................................................................................28

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LLIISSTT OOFF TTAABBLLEESS
Table.2.1: Country-wise adoption trends and factors influenced adoption or usage .........26
Table 3.1: Summary of prior studies used TAM.............................................................36
Table 3.2: Risk source and dimension in electronic shopping context.............................48
Table 4.1: Features of two research paradigms...............................................................55
Table 4.2: Internet adoption research works: surveys and case studies............................57
Table 4.3: Advantages and disadvantages of various methods of data collection..............59
Table: 4.4: List of items by construct............................................................................62
Table 4.5: Summary of changes after pre-testing questionnaire for user..........................69
Table 4.6: Summary of changes after pre-testing for non- user.......................................70
Table 4.7: Summary of populations in Auckland west and cental region..........................71
Table 5.1: Summary of demographic profile..................................................................78
Table 5.2: Male and female population..........................................................................79
Table 5.3: Intention to use Internet banking services in future.......................................79
Table 5.4: Intention to use Internet banking services.....................................................79
Table 5.5: Frequency and actual use of Internet banking in last 30 days..........................79
Table 5.6: Internet banking experience..........................................................................80
Table 5.7: Internet use experience.................................................................................80
Table 5.8: Factor analysis and Cronbach alpha coefficient..............................................81
Table 5.9: Correlations of item to item and variation of perceived ease of use........................84
Table 5.10: Correlations of item-to-item and variation of risk.........................................85
Table 5.11: Correlations of item to item and variation of risk.........................................86
Table 5.12: Construct-wise items in survey and used in data analysis...............................86
Table 5.13: Pearson correlation coefficients...................................................................89
Table 5.14: Kendall’s tau correlation.............................................................................91
Table 5.15: Regression analysis.....................................................................................92
Table 5.16: Stepwise regression analysis of model 1.......................................................98
Table 5.17: Explanation power of variables associate with model 1................................99
Table 5.18: Excluded variables of model 1....................................................................99
Table 5.19: Stepwise regression analysis of model 2.....................................................100
Table 5.20: Stepwise regression analysis of model 2.....................................................100
Table 5.21: Stepwise regression analysis of model 2.....................................................101
Table 5.22: Result of independent sample t-test...........................................................103
Table 5.23: Mann-Whitney U-test analysis...................................................................104
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Table.6.1: Result of hypotheses testing with prior studies.............................................106

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LLIISSTT OOFF FFIIGGUURREESS
Figure 2.1: Processing cost (US$) per transaction.............................................................8
Figure 2.2: Rate of diffusion (by % total banking customers)............................................9
Figure 2.3: Estimates Internet banking services users.....................................................10
Figure 2.4: Diffusion of Internet and Internet banking services (% total population).......11
Figure 2.5: Projected and actual Internet banking users..................................................12
Figure 2.6: Clustering of on-line banking in Europe.......................................................15
Figure 2.7: Internet banking criteria required by customers in South Africa.....................17
Figure 2.8: Analysis of Internet banking services for Middle East banks.........................20
Figure 2.9: Service-wise channel preferences of Internet banking in New Zealand...........24
Figure 3.1: Theory of reasoned action model (TRA)......................................................30
Figure 3.2: Theory of Planned Behaviour (TPB)............................................................31
Figure 3.3: Adoption of innovation curve......................................................................33
Figure 3.4: Technology acceptance model (TAM)..........................................................35
Figure 3.5: Research model 1 (extended TAM)..............................................................43
Figure 3.6: Research model 2 (modified PCI)................................................................50
Figure 4.1: Schematic presentation of research method..................................................54
Figure 4.2: Role of researcher in two paradigms............................................................56
Figure 5.1: Regression analysis of model 1.....................................................................95
Figure 5.2: Regression analysis of model 2.....................................................................97
Figure 5.3 Example of data distribution........................................................................98
Figure 5.4: Model 1 regression analysis........................................................................100
Figure 5.5: Model 2 regression analysis........................................................................101

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AATTTTEESSTTAATTIIOONN OOFF AAUUTTHHOORRSSHHIIPP

“I hereby declare that this submission is my own work and that, to the best of my
knowledge and belief, it contains no material previously published or written by another
person nor material which to a substantial extent has been accepted for the qualification of
any other degree or diploma of a university or other institution of higher learning, except
where due acknowledgement is made in the acknowledgements.”

Yours sincerely,

(Braja Podder)

EETTHHIICCSS AAPPPPRROOVVAALL

The research conducted as a part of this thesis has been approved by the Auckland
University of Technology Ethics Committee, Reference Number: 04/235
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