The History Of Internet Banking Adoption

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02 Nov 2017

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Chapter 1:- Introduction

This chapter introduces the research topic and the aim of the study. A brief introduction is done on the banking environment and the financial system of Mauritius.

Chapter 2:- Literature Review

Chapter 2 presents the Literature Review, where factors affecting Internet banking adoption is discussed and the personal correlates.

Chapter 3:- Overview of the banking sector

This chapter deals with the overview of the banking sector and risks related to Internet banking.

Chapter 4:- Methodology

This chapter addresses the issue on understanding different methods to collect the data needed to fulfill the objective of the study.

Chapter 5:- Analysis of Findings & Discussion

The fifth chapter discusses on the findings from the data collected and analyzed. Discussion is done by supporting the interpretation of findings with literature facts.

Chapter 6:- Recommendation & Conclusion

This chapter presents the recommendations based on the analysis and the study is concluded.

Introduction

About a decade and half ago, internet was relatively alien to the majority population of the world. However, at the turn of the new millennium millions of web sites were found in place (O’Connor and Galvin, 2001. These changes occurring in the various sectors can be attributed to increasing deregulation and globalization, the major stimulus for rationalization, consolidation, and an increasing focus on costs (Ibrahim et al., 2006). In the quest for achieving sustainable competitive advantages in the technical financial service industry, banks have accredited the value to distinguish themselves from other financial organization through innovative and latest service distribution channels (Daniel, 1999). One offspring of this has been the rapid development and use of various new and innovative technologies by banks in the form of electronic banking services (e.g. Pikkarainen et al., 2006; Orr, 1998). Though it started in the 1980s, it was only in the mid nineties that Internet Banking really caught on. The last decade has witnessed a significant growth in Internet Banking transactions. Banks are using this new approach as an additional channel and using Internet as a delivery channel are now on equal footing to provide their banking amenities on the Internet and to compete for customers internationally.

At the basic stage, Internet Banking means the establishment of a web page by a bank to provide information concerning its products and services; at an advance stage, it refers to banking dealings carried out between banks and their customers through Internet (Peterson, 2000). Online banking (Internet Banking) is evolving part of E-Commerce which enables interactive services such as, paying bills, mobile refills, accessing account summary information and gaining access to other banking services and products (Kelaart-Courtney, 2005:1). Burr (1996), for example, depicts Internet banking as an electronic link between bank and customers to prepare, manage and control financial transactions. Banks offer Internet Banking in two main forms; firstly, a bank with physical offices can create a website and provide its customers Internet banking besides to its traditional delivery channels. This is known as the "click and brick" approach. Secondly, a bank may be set up as a "virtual", "branchless", or "internet-only" bank, with a computer server at its heart that is housed in an office that serves as the bank’s legal address or as some other location.

INTERNET BANKING ADOPTION

According to Karjaluoto, Pahnila and Pikkarainen, (2004, p. 224), Online Banking is as an ‘Internet portal, via which customers can utilize different and various kinds of banking facilities ranging from bill payments to making investments’. With the exception of cash withdrawals, Internet Banking provides the opportunity to customers’ like having access to nearly any type of banking transaction at the single click of mouse (De Young, 2001). Internet banking has turned out to be a competitive requisite instead of just a mean to achieve competitive advantage with the advent of globalization and cut- throat competition ( Gan, Clemes; Flavián, Torres, & Guinalíu, 2004, Limsombunchai, & Weng, 2006). Internet Banking offers the option to provide economic and convenient services without reducing the quality of services offered to customers (Akinci et al., 2004).The market for Internet Banking is for cash to grow sharply in the next few years, affecting the competitive advantages enjoyed by traditional branch bank (Duclaux, 1996; Liao et al, 1999). Internet Banking assists in expediting banking transactions, minimizing cost and ensuring that anyone can make use of a wider range of banking services in your living room or even while travelling thousands of miles away from your residence (Peterson, 2000) As Karjaluoto et al. (2002, p. 261) put forward that ‘banking is no longer constrain to geography and time’. The author argued that, with Internet Banking facilities, bank customers who felt that branch banking is time consuming took and effort are needed; now they are able to make transactions at a click of their fingers. Thus, Internet Banking proves to be beneficial for both provider and customers.

Conceptual framework

The conceptual framework is based on the objectives of the study and was developed by integrating variables from different theories on the adoption of Internet banking from the literature.

Independent Variable

Trial-Ability

Security

Relative Advantage

Complexity

Compatibility

Legal Support

Internet Banking

Personal Factors

Age

Education level

Income

Occupation

Antecedents of use of internet banking

The factors influencing the adoption of internet banking are:-

Organizational factors

Personal factors

Oganizational factors

RATIONAL FOR USING INTERNET BANKING

Bank Perspective

Internet Banking is advantageous for the providers as well as the customers (Peterson, 2000). Internet Banking is mainly related to cost savings (Sathye, 1999; Robinson, 2000). Banks use Internet banking as it is one of the economical and cheapest delivery modes for banking products and services (Pikkarainen et al., 2004). According to Brogdon 1999; Jayawardhena & Foley, 2000 put forward that Internet Banking enhances the bank’s reputation, better customer service and satisfaction. In fact, Internet banking services enable banks to enhance and broaden their relationship with the customer that is, increased customer base Robinson (2000). Competition is yet another important factor as with increasing competitive pressures from existing banks and new entrants in the market, Internet Banking scheme has been an attractive way to maintain and retain existing customers at the same time attracting new ones. The use of Internet Banking as an alternative and new delivery channel has also been allowing banks to aim for numerous and different demographic segments more effectively.

Also, such service saves the time and money of the banks with an added benefit of reducing the likelihood of making errors on part bank tellers (Foley& Jayawardhena, 2000). Following and managing the cash position for individuals and firms for interest optimization is possible via E- banking. It offers convenience in terms of the time, labor, capital, and all the resources required in performing a transaction. E-banking has enabled banks to increase their data collection, and management, efficient financial engineering that have enhanced the aptitude of assessing potential creditors, evaluating the creditworthiness of potential borrowers as well as to price the risk related with those borrowers through standardized mechanisms such as credit scoring (Zigi&Micheal, 2003, p.248).

Factors affecting Internet banking from bank perspective

Trial-ability is one of the factors that affect the adoption of Internet Banking. Rogers (1983) defined trial-ability as the degree to which one can experiment with an innovation on a limited basis before making an adoption or rejection decision. He argued that if customers are given the opportunity to test, learn and experiment the Internet Banking application on a limited basis, then certain doubts and fears might be overcome. Rogers (1983) suggested that potential adopters of an innovation when allowed to experiment with the innovation would feel more comfortable with the innovation and hence would be more likely to adopt it. The opportunity given to consumers to experiment an innovation would reduce their uncertainty of the innovation before adopting it. According to Tan and Teo (2000) if banks grant their customers an opportunity to attempt the innovation, it will reduce certain unknown doubts, particularly when customers found that their errors could be rectified; thereby providing a predictable situation. A quicker diffusion transpires when consumers can have low-risk trial or low-cost of the service. Internet Banking facilities are free of cost. Costs and risks to trial are relatively low particularly when Internet access is available from work places. In reality, trial-ability can bridge the gap between satisfaction and unknown fear of adoption. Hernandez and Mazoon (2007) elaborated that trial-ability has a positive effect on adoption new technology. Chance of trial can assure the users that rectification of mistakes is possible which may arise during use of new technology (Tan and Teo, 2000). Hence, this research hypothesizes

H1-There is a significant relationship between trial-ability and the adoption of Internet Banking

Despite the efforts of banks to develop better Internet Banking systems, these systems remain largely unnoticed by customers, and are seriously underused in spite of their availability (Orr, 2003; Wang et al., 2003). Studies of Lee et al., 2005, Kim and Prabhakar, 2004, White and Nteli, 2004 cited among other factors that explain why the increase of Internet usage for banking purposes has not increased to the satisfaction of banks relates to consumer fear about security, despite the media coverage and the technical and verbal reassurances provided by the banks, still preys heavily on consumer’s mind. Security is another factor that affects the adoption of Internet Banking. For, e.g. the threat from hackers and the abuse of customers’ accounts prevents customers from using this new approach. If Internet Banking sites are not enough secured that is the protection system is not sufficient, this might be a severe menace for banks as customer might be unwilling to perform transaction via Internet Banking while compared to the traditional banking service method such as ATM. Additionally, the Walls report (1997) also reported that unless security is improved, more households would be willing to conduct their transactions over the Internet. According to Polatoglu and Ekin, (2001), security comprises of three dimensions: reliability, safety, and privacy. Consumers’ concerns about security, which arise from the use of an open public network, have been emphasized as being the most important factor inhibiting the adoption and use of internet banking (Sathye, 1999; Daniel, 1999; Hamlet and Strube, 2000; Tan and Teo, 2000; Cox and Dale, 2001, Polatoglu and Ekin, 2001, Black et al., 2002, Giglio, 2002; Howcroft et al., 2002 Howcroft et al., 2002) In USA, Thorton Consulting (1996) a survey have being conducted focusing on banks concluded that 67% of US banks feel that "security concerns" is the major obstacle for Internet Banking. The same results obtained from the study of Booz et al. (1997), reveals that security concern among customers was the top-ranking barrier for non-adoption of Internet banking in Latin America. Thereby; it is proposed that

H2-There is a significant relationship between security and the adoption of Internet Banking.

Factors affecting the adoption on Internet banking from customer perspective

Internet Banking provides new value to customers. For instance, Internet banking services offer convenience as well as advantages to the clients as they are able to access bank account from anywhere and whenever they want. With such advancements in internet services, banking is no longer restrained to time or geography. Consumers around the world have a comparatively 24 hours access to their account; that is seven days a week at any time. Moreover, the Internet banking can also increase consumer convenience, since many banking transactions such as transferring funds and paying bills can be conducted on line. Customers can manage their banking affairs when they want, and they can enjoy more privacy while interacting with their banks. It has been claimed that Internet Banking offers the customers more benefits at a lower costs (Mols 1998). These kinds of services ease clients’ financial management as they can access their bank account information easily. Turban et al. (2002) indicated that Internet banking is extremely beneficial as it saves time, costs and space for customers and it quickly response to complaints, and its delivery of improves services, all of which benefits make for the easier banking. The greatest advantage of internet banking is that it is inexpensive or we can say it is free to customers. However, price seemed to be one factor militating against Internet Banking (e.g. Sathye 1999). Two important factors in the price debate are firstly geographical differences and on the other are between the costs of internet connections or telephone call pricing. It has also been argued that Internet Banking is more likely to change in response in customers’ demands (Brogdon 1999). As a result, Internet banking saves time and money, provides connivance and accessibility, and has a positive impact on customers’ satisfaction (Karjauloto, 2003). In view of the advantages that Internet banking services offer, it would thus be expected that individuals who perceive Internet banking as advantages would be likely to adopt the service as well [18]. Thus it hypothesizes,

H3-There is a significant relationship between relative advantage and the adoption of Internet Banking

However, despite these advantages, yet Internet Banking is not adopted because of complexity. Cheung, Chang & Lai (2000) has defined complexity as the extent to which an innovation is considered relatively difficult to use, understand and found it adversely influencing the adoption of Internet Banking. Adoption of Internet Banking will be less likely if the innovation is perceived as being complex or difficult to use (Rogers, 1983:230). Complexity is also regard as the contradictory of ease of use, which directly impacts on the adoption of the Internet banking, ( Maupin, Sena Lederer, & Zhuang, 2000). Research by Davis (1989:338) has found that perceived complexity is associated with the adoption of electronic technologies. Research conducted in Estonia (Kerem, 2001:7) states that the most important factors in starting to use internet banking are first and foremost better access to the services (convenience), better prices and a high-level of privacy. Better service (i.e. preferring self-service over office-service) was also of above average importance. Therefore the adoption of internet banking is likely to be increased when customers consider using internet banking processes to be easy. For example, an individual is far less likely to adopt a new technology if this requires a high level of technical skills. Conversely the adoption of internet banking is far more likely to occur if the internet banking processes are simplified and easy to use. Cooper and Zmud (1990) revealed that a system that needs less operational efforts and technical skills will be more likely to be accepted and consequently generate better performance and consumers normally reject an innovation if it is very complex and not user friendly. So, the more complex the product or service is to understand and use, the slower is its adoption rate. It is argued that Internet Banking customers who have enough knowledge of the computer and computer-related technology because of their good educational background do not perceive Internet Banking services as being difficult/complex to use. Thus, it hypothesizes that

H4-There is a significant relationship between complexity and the adoption of internet banking

According to researchers (Agarwal & Prasad, 1998), an innovation is more likely to be adopted when individuals find it compatible with their past experience, beliefs and they way they are accustomed to work. Tornatzky and Klein’s (1982) in their meta-analysis of innovation found that when an innovation is compatible with the individual’s job responsibilities and value system, the innovation will be more likely to be adopted. Taylor and Todd (1995) stated that when the attributes of an innovation tend to correspond perfectly to users’ needs, then it is more probable for these users to adopt the innovation. Therefore, if an innovation that is incompatible with the values and norms of a social system will not be adopted as quickly as an innovation that is compatible with existing values and norms. Indeed, it’s human nature to derive the higher satisfaction from those innovations which are found compatible to his/her life style. This higher level of satisfaction causes a source of penetration of that innovation in the social group of concerned satisfied individual. In the Internet Banking context, compatibility can be viewed as how well does the service fit the way consumers manage their finances and how does it suits their lifestyle or current situations. Bradley and Stewart (2003:1089) discovered that the perceived compatibility of internet banking is a key driver in the adoption of internet banking. Black, ET al. (2001:393) concludes that past experiences and the values of consumers in the UK appear to have a significant impact on their willingness to adopt internet banking. Those that indicate that they are comfortable with the Internet are more positive about internet banking. In addition, Tan and Teo (2000) indicate that Internet Banking is compatible with the average profile of the modern day banking customer, who is already familiar with the Internet and computer–literate. Hence, it is expected that a computer– oriented individual is more likely to perceive Internet Banking to be more compatible with his/her lifestyle. As a result, this research hypothesizes that:-

H5-There is a significant relationship between Internet banking and compatibility

Customer protection is important for building online customers since there is no face-to-face contact, and there is great possibility for having or making mistakes via the Web. With a lack of specific and standard laws governing Internet banking, bank customers hesitate to use this service. (Larpsiri et al., 2002). As a result, one of the major reasons why Internet Banking has not been accepted internationally is due to the lack of governmental policies that guides Internet Banking operations across international borders (Kannan, 2004). Electronic banking makes available a number of benefits to customers and new business prospect for banks and decreases traditional banking risks but yet customers are not making full use of it. In some ways they are right as the governmental policies that guide Internet banking operations across international border are not always efficient (Fojt, 1996, p.79-81). But sometimes performing transactions through the Internet is essential, for e.g. if a customer is abroad and urgently needs to verify his account midnight, so he/ she will have to check it via the internet or through his mobile as banks will not be operating that time. (Kannan, 2004) Even though substantial work has been done in various countries in adapting banking and supervision rules and regulations, constant vigilance as well as revisions will be crucial as the scope of E-banking amplifies (Aladvani, 2001, 222). Besides, another problem regarding to legal issue for the use of using Internet in commercial dealings is the jurisdiction of the courts and dispute resolution process. Online dealings records are not accepted by certain courts due to the difficulties in presenting authentication of electronic transmission. Many businesses are still cautious of making huge transactions over the Web due to the lack of enough law about electronic documents as legal proof (Farhoomand et al., 2000). Furthermore, court is related to about the documentation which can be required and used as financial evidence, since such documents cannot be fully obtained by Internet banking, customers are hesitant to adopt this new advancement. (Larpsiri et al., 2002). Thus, it can be hypotheses that:-

H6-There is a significant relationship between Legal support and the adoption of Internet banking.

Personal Factors

Personal factors comprises of age, gender, income, education, occupation and location and other characteristics. Each of these characteristics impacts whether to accept or reject an innovation. Age, income, education level and occupation are the most dominant demographic variables influencing Internet use. The consumer demographic factors relevant to this study are therefore age, education level, income and occupation.

Age

Age affects the attitude of individuals towards Internet banking and their ability to learn how to invest. We expect to find that consumers in the young age group are more likely to invest the time to learn to use Internet banking because young consumers can create more benefits through time saving. Polisak and Wisniewski (2009) find that the younger individuals tend to have higher adoption rates of Internet banking. Kim et al. (2005) also demonstrates that consumers who are younger are more likely to adopt Internet banking. However, Bauer and Hein (2006) identify that older consumers are less likely to adopt Internet banking. In addition, according to Flavián et al. (2006), younger people are most likely to carry out transactions via the Internet and alternatively, older people are less likely to use online banking.

Education level

Wan et al. (2005) suggest that educational level is associated with the adoption of Internet banking. Polatoglu and Ekin (2001) report that highly educated consumers are more likely to accept Internet banking whereas Gerrard et al. (2006) illustrate that less-educated people are less likely to use Internet banking. It is also noted that well educated individuals will adopt Internet banking relatively more quickly than less educated individuals because the new technology, Internet banking, guarantees reduction of the time needed for money transactions. Well educated individuals might be willing to submit training time to learn how to use Internet banking as they have the skills to acquire the knowledge quicker. However, those who are less educated might be unwilling to adopt this new innovation. Additionally, Yiu et al. (2007) find that consumers with a Bachelor‘s degree or above have a much higher Internet banking adoption rate than those people less qualified. Polasik and Wisniewski (2009) find that lack of formal education hinder Internet banking adoption.

Income

In terms of consumers’ income level in Internet banking, Lassar et al. (2005) establish that income is a demographic variable that affects the adoption of Internet banking. Wan et al. (2005) find that income positively influences the adoption of Internet banking. Padachi et al. (2007) find that higher income people are more likely to use online banking. Flavián et al. (2006) reported that in Chile, lower income groups are less likely to conduct their banking operations using the Internet. Finally, Stavins (2001) notes that white collar consumers adopt Internet banking more readily than other consumer groups.

Occupation

Karjaluoto et al. (2002) showed that occupation was a factor for adoption of Internet banking. They divided occupation into two groups, white-collar workers and blue-collar workers. White-collar workers were more likely to adopt Internet banking than blue-collar workers. Occupation can be associated with adoption of Internet banking in terms of ability. Consumers who have managerial, professional, and technical jobs probably use computers or the Internet frequently in their workplace, so they basically have more ability to use computer or the Internet than those consumers who have service, labor, farming and fishing jobs are included in the second group. They probably have less opportunity to use computers or the Internet in their workplace, so their ability to use computers or the Internet might be relatively weaker than the first group. Consequently, those having the ability will be more likely to adopt Internet banking.

Empirical perceptions on Internet Banking

A research framework based on the theory of planned behavior (Ajzen 1985) and the diffusion of innovations theory (Rogers 1983) was utilized to identify the attitudinal, social and perceived behavioral control factors that would manipulate the adoption of Internet banking in Singapore. The results derived are that attitudinal and perceived behavioral control factors, rather than social influence, have a considerable role in influencing the adoption of Internet Banking. More specifically, elements like perceptions of relative advantage, compatibility, trial ability, and risk also impact on the intentions to adopt Internet Banking services. Furthermore, confidence in using such services as well as perception of government support for electronic commerce was also found to influence intentions. (Tan et al., 2000)

In India, a research was carried out on "Customer’s perception on usage of internet banking" pointed up that education, gender, income play an essential role in use of Internet Banking. This study was performed to validate the conceptual model of Internet Banking. In fact limited research has been done on these areas since they were concentrated more on the acceptance of technology rather than on people. The research supported the conceptual framework affirming that if skills can be enhanced there will be an increase in the usage of Internet Banking by consumers. However, inhibitory factors like trust, gender, education, culture, religion, security, and price can have minimal impact on consumer mindset towards Internet Banking. (Srivastava, 2007)

A study "Analyzing the Factors that Influence the Adoption of Internet Banking in Mauritius" has put emphasis on the factors that affect Internet banking adoption in an emerging African economy of Mauritius. Using factor analysis to distinguish among the different factors affecting Internet banking adoption in Mauritius, it was noted that the most significant factor is ease of use and other related factors are trust, cost of computers, unwillingness to change, convenience of use and relationship in banker, security concerns and internet accessibility. In addition, Supplementary analysis using cross tabulations hint at important statistical relationship between awareness, length of banking relationship, access to Internet facility, people working in the finance/Internet banking sector, education level in the category ‘post graduate’ and income group also with the usage of internet banking. (Padachi et al., 2007)

Factors influencing Internet banking adoption varies between country for example in Mauritius relative advantage, compatibility, complexity and other factors are important whereas in India elements like education, gender and income have an impact on the use of internet banking and in other countries there are different factors. Thus, according to the author, to have an effective use of the Internet Banking all these issues should be considered by banks; whichever suits their country, their infrastructure, pace of technology and their acceptance and so on. But yet in Mauritius the factors encouraging the use of Internet Banking are unknown; which will be identified through the research.

OVERVIEW OF THE SECTOR

The ICDT model (Angehrn, 1997) presents the following model on the basis for distinguishing between four separate types of ‘Internet presence’.

The Four Domains of Internet Strategies

Source :Angehrn (1997)

In 1995, Mauritius Telecom developed a subsidiary company named Telecom Plus to provide Internet amenities and other value added services in Mauritius. Internet access was made available to residential and business users at that time. But today, the number of Internet users has multiplied rapidly. Everyone can use Internet via ordinary telephone line, ADSL, My.T and WIFI. The number of Internet subscribers at the end of 2011 has reached 370,000, representing an increase of 29.4% over the figure of 285,970 in 2009.

Source: - Information and Communication Technologies Authority (ICTA) http://www.gov.mu/portal/goc/cso/ei846/toc.htm http://www.internetworldstats.com/list2.htm

EVOLUTIONS OF BANKS IN MAURITIUS

The banking sector of Mauritius has noted a significant growth in the recent years. Banks have achieved high level of profits and well sustained. Structural, economical, financial changes, including high quality services and enhanced delivery of banking services, reflect the direction taken by the sector. Mauritius has an excellent, reliable and dynamic banking system. At present 19 banks (Refer to Appendix 1) licensed under section 3 of the Banking Act 1988 are in operation. Actually, the sector is dominated by two large domestic banks (MCB & SBM) control roughly 70% of the market and the two largest foreign banks (HSBC & Barclays) control a further 22%.

INNOVATIONS IN BANKING PRODUCTS AND SERVICES IN MAURITIUS

The business environment is a dynamic environment whereby there is fierce competition. In reality, competition is not only from existing banks but also from the entrance of newly non banking institutions; banks have to cope with new and challenging regulatory as well as the changing political environment, as well as changing needs and demand of customers.

Domestic banks in Mauritius have broaden their network of services through branches, counters, ATMs, phone banking, indicating sustained demand for both volume and quality service. Banks have diversified their services to both personal and corporate customers. This diversification is being attained, by investing in state-of-the-art technology and the offer of enhanced services such as plastic cards (cash, credit, debit cards, gift cards, etc), phone banking and Internet banking. Most banks conduct on-line on a real time basis with their branches. (Refer to Appendix 2 for the number of ATMs and number of Internet banking users for MCB & other banks in Mauritius.)

EVOLUTION OF INTERNET BANKING IN MAURITIUS

Banks have traditionally been in the forefront of harnessing technology to enhance their products, services, credibility and efficiency. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is extensively utilized by banks as a channel for obtaining instructions and delivering their products and services to their customers. This mode of banking is known as Internet Banking.

An increasing number of financial institutions are introducing, expanding as well as implementing their offerings of electronic banking products. In Mauritius, Internet banking has become in operation since the year 1997. Among the 19 banks, only 2 or 3 banks are not offering Internet Banking services till now. This new service has enable bank to augment their distribution channels with transactional website. The types of services offered encompasses the following main ones among others: inter account funds transfer, payment to other account, transfer of funds to credit card account, foreign transfer, draft recharge mobile phones, and request the issue of account statement and standing order transactions. (Refer to Appendix 3 for services offered on internet banking by some banks in Mauritius)

Risks

Internet banking risks can negatively impact on an institution earnings and capital. The risks can be from point of view of banks and customers. To assist institutions, in managing risks related to Internet banking, the Bank of Mauritius (2001) has categorized the following risks.

Bank Perspective

1.Strategic Risks

A wrong business decision or an incorrect implementation of business decisions.

2.Transaction Risks

Flaws in system design, implementation or ineffective monitoring; leading to frauds, errors and failures to provide banking products and services.

3.Reputation Risks

Systems or products do not work as expected and cause widespread negative public reaction. Internet banking systems that are poorly executed would represent this risk.

4.Compliance Risks

Failures to observe laws, rules and regulations, prescribed practices or ethical standards when delivering Internet banking services.

5.Operational Risks

Heavy reliance on new technology to provide banking services makes security and system availability the principal operational risk associated with online banking.

Customer Perspective

1. Security/privacy risk

An impostor/ hacker may get unauthorized access to the online bank user’s account and fraudulently obtain sensitive/confidential information, such as usernames, passwords and credit card details (Lee, 2009; Littler and Melanthiou, 2006).

2. Financial risk

Represents the likelihood of monetary loss due to transaction error or bank account abuse (Lee, 2009).

3. Performance risk

An unanticipated breakdown of system servers or disconnection from the Internet while performing online transactions and the consumer may not be sure whether the transactions are performed or not (Lee, 2009).

4. Psychological risk

Occurs when something goes amiss with Internet banking transactions and consumers are likely to feel frustrated or annoyed, and their self image may be negatively affected by the adoption of Internet banking (Littler and Melanthiou, 2006) .

5. Social risk

The possibility that using Internet banking may result in the

dissatisfaction of one‘s family, friends or work group. Consumers who are not adopting Internet banking may have negative or positive opinions depending on how Internet banking is perceived by other people (Lee, 2009).

6. Time risk

Significant length of time entailed in learning and making use of Internet banking (Lee, 2009). Time risk is also associated to the time involved in dealing with erroneous transactions or the failure to effect transactions expeditiously (Litter and Melanthiou, 2006).

Research Methodology

Introduction

This chapter discusses about how the research problem was explored and the data collection tools.

Research Population

The research population is Internet Banking users of who are related to the research topic.

Sample Method

The sampling method used is non-probability sampling. A quota sampling has been used where the population has been stratified according to Internet banking users. Both qualitative and quantitative methods were used to collect data. Concerning the qualitative method, the author had an interview with the Banking Staff and much information was obtained on the factors affecting the adoption of Internet Banking in Mauritius. The facts gathered were very helpful which was supported in the literature review.

Sample Size

A sample of 130 users has been taken from the general population.

Occupation

Sample Used

Heads of departments, Managers, Supervisors

15

Bank Staff

45

Clericals

30

Businessman

15

Others

25

Total

130

Since it was a peak period (December), only limited amount of the different working population was chosen. Several studies have shown as well that their sample size was based on ¼ of the whole population and researchers considered it as being representative. Following Roscoe (1975) cited in Haque (2010) as a rule of thumb, sample sizes between 30 and 500 are appropriate for most research. However, for more precise information, 45 banking staff was chosen from different banks in Mauritius.

Questionnaire

The questionnaire consists of 5 point Likert Scale. The respondents were guided by the researcher during administration of questionnaires in how to select the most appropriate answer. The rating scale is as follows:

1. Strongly Disagree

2. Disagree

3. Neutral

4. Strongly Agree

5. Agree

MEASUREMENT SCALES OF ADOPTION LEVEL

Mean score

Level of adoption

1.00-2.00

Low

2.01-3.00

Moderate

3.01-4.00

High

4.01-5.00

Very High

Best (1997) measurement scales of adoption level have been adapted to the likert scale of the study and the evaluation criteria are as follows:-

Table () shows the measurement scales of adoption level

RELIABILITY OF INTERNET BANKING ADOPTION QUESTIONNNAIRE

Reliability is an important component to consider when assessing an instrument. The Internet banking questionnaire has been tested for reliability and the Cronbach‟s Alpha coefficient is 0.790, which is considered as good.

Questionnaire Structure

The questionnaire is divided into 3 sections namely:

Section A: Organizational Factors

Section B : Reasons for using Internet Banking & future prospects of Internet banking

Section C: Demographics (Personal Characteristics)

Designing of Questions

Section A: Organizational Factors

ï‚· Question A: Overall Satisfaction

This question was set to know about the overall satisfaction level of Internet banking.

ï‚· Question B: Trial-Ability

Question B is based on Trial-ability. The sub questions 2 to 4 were designed to determine how the users perceive Internet banking.

ï‚· Question C: Relative Advantage

Question C is based on relative advantage. The questions 5-7 relate to the opinion of respondents in accordance to the advantages of Internet banking.

ï‚· Question D: Complexity

Question D discusses about the qualities that the users need to have to be able to use Internet banking.

ï‚· Question E: Compatibility

Compatibility is the fourth determinant of Internet banking. The questions 11-13 were set to know whether Internet banking suits the lifestyle of users; the way they manage their finance and their work profile.

ï‚· Question F: Security

This question is related to the security aspects of Internet banking. It discusses on the willingness to use the service and the reliability of the protection system.

ï‚· Question G: Legal Support

Legal Support is an important determinant of Internet banking adopters. The questions 17 to 20 are based on the legal support for using Internet banking. The questions deal with legal protection from both the govt. and banks.

Section B

Question 21

It focuses on the purpose for using Internet banking.

Question 22

It is related to reasons for opting for Internet banking.

Question 23

It deals with the future prospects of Internet banking in the coming years.

ection C: - Personal factors/ Demographics

The questions in part C were based on individual factors influencing Internet banking adoption.

DATA CAPTURING

When the questionnaires were filled in, the researcher input the answers in the Statistical Package for Social Sciences (SPSS) version 16.0.

Data Analysis

Once all the data was collected, the following methods of data analysis were performed:-

Descriptive Statistics

Descriptive statistics like mean, standard deviation and percentage values are calculated for both the dependent and independent variables. Frequency distributions were carried out for all the personal factors of the respondents.

Inferential Statistics

1. Cronbach’s Alpha

Cronbach‟s Alpha is a statistical test used to assess the reliability of Internet banking instruments used in the questionnaires of this study. Sekaran (2000) states that coefficients less than 0.6 are considered as poor, coefficients above 0.6, but less than 0.8 are satisfactory and coefficients greater than 0.8 are considered as excellent.

2. Chi-square

Chi-square test will be used to test whether there exist a relationship between Internet banking adoption and personal factors.

3. Simple Linear regression

Simple Linear Regression shall be used to test relationship between the six independent variables and the dependent variable. According to MacColl (2004), the p-level indicates the reliability of a result. If the p-level is high, this means the relationship between the two variables tested is less reliable. If the p-level is lower than the alpha significance of 0.05, the null hypothesis will be rejected (Sekaran, 2000)

Limitation of the study

As mention above, as the questionnaire was sent in the month of December; very few working population were chosen. This caused a problem when doing analysis, as no significance was obtained for some variables. Perhaps, the survey results would have been different if the sample size was larger. The higher the sample size, the more valid and authentic would have been the results.



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