A Study on Mediating Effects on Technology Adoption in Internet Banking
Technology as the differentiator has become the driver of the Indian banking business since the past decade with the financial sector reforms providing firm foundation.
The banking industry has been significantly influenced by evolution of technology. The growing applications of computerised networks to banking reduced the cost of transaction and increased the speed of service substantially. The nature of financial intermediaries made banks improve their production technology by focusing on distribution of products.In other words, the evolution of banking technology has been mainly driven by changes in distribution channels as we see evidence from over-the-counter (OTC), automated-teller-machine (ATM), phone banking, tele-banking, pc-banking and most recently internet banking (IB). Network effects and standardisation have recently become one of the most popular topics as the number of internet users has increased substantially and the application of internet to e-commerce and finance has become evermore versatile.In particular, network effect and standardisation are arguably most common reasons for concentrated market structures in technology intensive industries.
Hence, it seems to be natural to consider progress in banking technology as a reason for market consolidation given the nature of network in banking. However, we lack studies on consumer behaviour relative to vast amount of literature on firms’ behaviour regarding technology adoption and market structure. The major challenge for banks is to fall in line with the emerging scenario and adopting the require technology to provide stake-of-the-art services to the customers.Technology should ultimate results in better customer service, low cost and quick delivery. Although consumers have had an interest in advanced electronic banking services and tended to have various financial sources or tools for money transactions, they have not quickly changed their main propensity to use banking services or goods that they are already familiar with. For example, new electronic banking goods or services have not quickly substituted for traditional ones and non-electronic banking goods or services.
Although various electronic banking services have emerged since the ATM was introduced 30 years ago, a lot of consumers still use checks as a primary source for money transactions, and banks still have a lot of “bricks and mortar” branches in the market. 1. 1 OVERVIEW One might remember the days when he/she physically had to go to a bank branch to deposit or withdraw money and get a bank statement book manually updated by a teller over the counter (OTC). With the introduction of computer networks, a networked printing machine started replacing the manual update of statements.Then, cash dispensers (CDs) and automated teller machines (ATMs) were introduced to facilitate withdrawals, deposits and even transfers accommodating mobility in much wider geographical areas. Phone banking was a revolutionary concept but one of the most substantial changes in banking technology is the recent introduction of internet banking.
As banking technology has focused on reducing cost of distribution, new technologies in banking are characterised as a process innovation by making customers handle their own banking without going to bank tellers.It also allows non-customers to visit virtual banks via public web-network while phone-banking or PC-banking provide only closed network limited to the existing clients. Banking competition is assessed in three different ways, price (interest rate), quantity (deposit and loan size) and quality (reputation-relationship). Traditionally banks have competed in branch network (quantity) to increase the number of clients, i. e. the deposit and loan size.
However, with the benefit of new technologies, the quantity competition seems to be replaced by the network competition in ATM or internet banking. 1. 2 BACKGROUND OF THE STUDYFinancial sector is the spinal cord of sovereign economy of any country. India is no exception. The technology adaptation in banking operations in India was a few decades behind that of in developing countries. Since early 1980s, Reserve Bank of India (RBI, Regulator) has been pushing the Indian banks towards computerization as a mechanisation of operations.
Technology was seen as a key business enabler in six vital areas of banking viz. augmenting profit pool, operational efficiency, customer management, distribution and reach, product innovation and efficient payment and settlement (Shastri, 2004).RBI expected that these developments in the areas of housekeeping and decision-making will improve the customer service levels and productivity, ultimately resulting in better profitability. In recognition of the need to introduce greater competition with a view to achieving higher productivity and efficiency of the banking system, RBI issued guidelines in January 1993 for the entry of “New Private Sector Banks” (NSPB). Subsequently, nine new commercial were granted license to start banking operations.
Liberalisation coincided with the Information Technology Revolution of the 1990s. New Private Sector Banks started with 100% computerisation right from the day 1 of operation and revolutionised the banking service levels in India by matching even banks in developed countries. New Private Sector Banks (NPSBs) used technology as a strategic tool for customer acquisition. This made all government-owned Public Sector Banks (PSBs) and the existing Old Private Sector Banks (OPBs) to go on defensive to invest in IT to retain their customer base as NPBs gained what PSBs and OPBs lost.The banking sector has witnessed a sea change during the last few years.
The emergence of NPSBs, expansion by the foreign banks, the changing business model of the nationalised banks compounded by financial reforms and burgeoning of middle class, has, over the last ten years, completely transformed the ways banks in India operate. The government-owned commercial banks today have a market share of around 75% (down from the earlier 95%), the private sector banks about 20% and the foreign banks about 5% (Kannabiran and Narayan, 2005). NPSBs perceived that future competition mong banks would be essentially based on the technology and developed state-of-the-art technology infrastructure, comparable with that of banks in developed countries. While the entire banking industry is moving fast to improve the IT infrastructure and to implement core-banking solution to integrate the entire banking operations, it is very much important to study in the Indian context how computerisation has influenced the banking habits and preferences of Indian customers. As IT services have come into the Indian banking only in the last ten years, not many research works are documented in Indian context.This study is intended to understand the preferences of customers of Indian banks on technology-based services.
1. 3 PROBLEM DISCUSSION It is well known that most of the individuals are late adopters of the Internet and its applications with regards to Internet banking. Since most of the customers are late adopters, it seems that Internet banking is facing many difficulties. Some issues are: •Although many customers perceived usefulness and eases of use as benefits of the Internet, they have not transferred this attitude toward the application of the Internet to bank operations.May banks customers are reluctant to use online banking. Some customers simply don’t like the technology at all, and others fear their computer will garble their accounts.
•Lack of banking services through the web due to a limited number of banks using the Internet. •Data and network security, in addition privacy problems. •Lack of infrastructure and weak telecommunications. •Broken and slow Internet connections. •Lack of Internet awareness, because this service is still widely unaccepted. It is believed that customers are still not fully confined with using ATM cards, and telephone banking.
Greater awareness could show them the benefits of using new systems and could encourage them to adopt Internet banking transactions. •Customers are afraid to use Internet banking and purchases through the Internet because they think that any mistake or error could mean a loss of money. •Connection costs and costs of building and managing site. 1. 4 PROBLEM DEFINITION Traditional branch-based retail banking remains the most widespread method for conducting banking transactions. However, Internet technology is rapidly changing the way personal financial services are being designed and delivered.
Many commercial banks are trying to introduce Internet-based e-banking systems to improve their operations and to reduce costs. Despite all their efforts aimed at developing better and easier Internet banking systems, these systems remained largely unnoticed by the customers, and certainly were seriously underused in spite of their availability. Therefore, there is a need to understand users’ acceptance of Internet banking, and a need to identify the factors that can affect their intention to use Internet banking. 1. 5 OBJECTIVESThe main objectives of this study are: 1. To find out the adoption of new technology in banking sectors in the study area.
2. To suggest the suitable methods for the adoption of new technology in banking sectors. 1. 6 LIMITATIONS OF THE STUDY This study was conducted to find the mediating effects on technology adoption in Internet banking services. As such, there is still room for further investigation into the adoption of Internet banking services. This study has focused on users who are inexperienced or one-time users of internet banking.
However, prior research has suggested that determinants of behavioral intention change in terms of users’ level of experience (McKnight et al. , 1998; Karahanna et al. , 1999). First, future studies should be carried out on non- Internet users to investigate their adoption intentions of such service. Second, as Internet banking services are still relatively new in India, this study has been unable to measure the actual usage behavior of such services, which was suggested by the theory of planned behavior (Ajzen, 1985).
1. 7 CHAPTERIZATION ?CHAPTER 1 – IntroductionThe first chapter represents the background of the study, Problem Discussion, Problem Definition, Objectives and Limitations of the study that leads us to our purpose. Subsequently it reports the contribution of the study. ?CHAPTER 2 – Review of literature This chapter explains the basic terminology of electronic banking and Internet Banking and outlines the definition of adoption. ?CHAPTER 3 – Research Methodology This chapter discusses the research methodology of the dissertation.
The sampling methods and sources of data used are presented in this chapter. CHAPTER 4 – Analysis and Interpretation In this chapter the data collected are analyzed based on basis of frame of reference of this study. ?CHAPTER 5 – Conclusions Based on the result obtained in the study, a discussion of theoretical and practical implication will be presented on this chapter. CHAPTER 2 REVIEW OF LITERATURE 2. 1BASICS OF ELECTRONIC BANKING Electronic banking is a high-order construct, which consists of several distribution channels.
It should be noted that electronic banking is a bigger platform than just banking via Internet.However, the most general type of electronic banking in our times is banking via the Internet, in other words Internet banking. The term electronic banking can be described in many ways. In a very simple form, it can mean the provision of information or services by a bank to its customers, via a computer, television, telephone, or mobile phone (Daniel, 1999). Burr (1996), for example, describes it as an electronic connection between bank and customer in order to prepare, manage and control financial transactions. Internet banking allows consumers to access their bank and accounts to undertake banking transactions.
At an advanced level Internet banking is called transactional online banking, because it involves the provision of facilities such as accessing accounts, transfer of funds, and buying financial products or services online (Sathye, 1999). The terms Internet banking and online banking are often used in the literature to refer the same things. Nowadays the Internet is the main channel for electronic banking. Furthermore, electronic banking is said to have three different means of delivery: telephone, PC, and the Internet. It is important to remember that Internet Banking is different from PC Home Banking.The obvious difference is that Internet Banking is browser-based, whereas PC Home Banking requires customers to install a software package assigned by the bank on their PC.
Moreover, PC Home Banking allows customers to do their banking services only on PCs that have been installed the assigned software package. Karjaluoto et al. (2002) suggests that the main electronic delivery channel in banking is the Internet, accessed via personal computer. Telephone banking does not play such a big role in banking today. However, nowadays the delivery platform is shifting from wired Internet connections to wireless mobile technologies.Thus, electronic banking does not necessarily have to be on a computer screen.
It can, for example, be on the tiny screen of a mobile phone or any other wireless device. With these wireless applications, customers can, for example, consult their bank account payments or orders to buy and sell securities, and also send e-mail to their banks. When technology opened several channels of delivery like internet banking, telephone banking, ATM, mobile banking, etc. , different views were expressed about future acceptability of technology-based services.One view was that ‘brick and mortar’ would be substituted by ‘click of the mouse’. NPSBs with a fewer number of branches and staff strength focused on creating IT-based delivery channels to compete with thousands of branches of PSBs located in every street corner.
The argument against technology was that it caused ‘depersonalisation’ or increases the gap between the customers and the bank. A trend of depersonalisation is emerging in the banking industry, and as such, its impact on the way in which banking business will be conducted in future bears a heavy question mark.Moreover, it will become more difficult for customers to differentiate the services offered by one bank from another, as any technological advantage gained will be short-lived (Moutinho and Curry, 1994). Many financial institutions have clearly embarked on the development of technology driven strategies, which they hope will be translated in terms of customer preferences, and consequently, higher returns and market penetrations. ATMs have been playing a pioneering and pivotal role in the advancement of this technological transformation of banking scene.Consumers’ increasing familiarity with ATMs, coupled with falling technology costs, means that virtual banks are on the horizon.
New formats such as ATMs or telephone banking can encourage customers to carry out more transactions. This increased usage can increase banks’ costs per customer even if cost per individual transaction is lower. The research of Ulengin (1998) in Turkey and Almossawi (2001) in Bahrain concluded that ATM network in convenient locations was a dominant factor in bank selection decision-making of consumers in those countries.The late 1980s and 1990s saw the sudden surge in the raise in use of technology as a differentiator for banks in USA. This is the period when ATMs became the prime interface between the banks and the customers.
Branches became secondary. The whole branch area has been neglected over the past 5–10 years; partly because many bankers believed that the branch would become less important at a time when the internet was seen as up and coming. It was believed that the lower transaction costs would spell the end of branch banking. They recognise now that that’s not going to happen” (Marenzi, 2002). So far the trend has not shown any bias against branches. Banks thought that the introduction of ATMs will cut costs by reducing need for tellers.
In fact, consumers did not stop using tellers to the extent banks had hoped, but they also used ATMs to frequently that the reduction in cost per use was more than off-set by the higher volume of transactions (Boss et al. , 2000). Studies suggest that customers do not want to bank purely by internet, ATM or phone, but want to use several channels, especially branches.Though ATMs are popular among customers, studies by Dove consulting have concluded that only 10% of deposits in USA and only 2% in UK are made through ATMs. In spite of the availability of new technology-driven channels, the customer expects a humane relationship with his/her banker in addition to low pricing, flexible terms, etc.
, and there seems to be no substitute for a face-to-face meeting either on advice on loan, a house purchase or insurance services (IBA bulletin, 2004).Even in developed economies, especially USA, while the number of banks is coming down, the actual number of branches is on increasing trend (Rao, 2004). If a bank already has a reputation for technical innovation, its customers are more likely to feel comfortable with more technology. But, if a large share of its profits or growth comes from older customers who prefer personal service, it could be unwise to push ATMs too hard. Bank marketing managers need to continuously assess the customer’s decisions-making process as well as the formation of attitudes, preferences and satisfaction of automated services.
It is of little use for an organisation to attempt to position an offering by emphasising a particular attribute(s) that do not constitute significant choice criteria in target market (Devlin, 2002). The banking industry has tried to take advantage of the productivity and customers service gains associated with technology by provisions of ATMs, which consumers can use to carry out day-to-day banking transactions. However, while these new technologies may offer significant advantages to the consumers, many are unwilling to adopt them.It is very important to understand the customer preferences, attitudes and adaptations of these services to properly use them as marketing tools to attract new clients and retain the existing clients. A large number of consumers are resistant to new way that represents loss of personal contact. Kolodinsky et al.
(2000) and Kolodinsky and Hogarth (2001) studied the adoption of new innovations and services like electronic transfer of funds, electronic bill payment, phone banking, and PC banking, to identify the characteristics of these innovations that are most related to consumer adoption, or rejection of e-banking technologies.The study looked beyond current users and included consumers’ intentions to adopt Internet the future. They concurred with the opinion that there is an e-banking revolution in the USA. From the study of data from Federal Reserve Board commissioned set of questions during September–October 1999, out of a sample of 1000, 57% used direct deposits, 55% used ATMs, 36% phone banking, 22% used EFTs, and 11% PC banking. They estimated that the relative advantage, compatibility, complexity, trialability, and observability associated with the four technologies studied are important in their adoption by consumers.They concluded that with the exception of income, they could not consistently infer that any set of variables is associated with the adoption of all e-banking products.
It is clear, however, that individual who has higher incomes have higher probabilities of currently using or intending to use these products. If relative income matters in adoption, then lower income households will continue to be left out. For India, which has substantial rural, poor and illiterate population, this is a significant observation to be taken note of.The study also concluded that current and expected future users were younger (with the exception of electronic bill payment) and of higher economic status. Gender differences existed for phone banking, electronic funds transfer and PC banking. Men were more likely to have adopted or plan to adopt direct bill payment and PC banking compared with women.
More women have already adopted phone banking, but more men indicated an intention to adopt it. Joseph and Stone (2003) investigated some of the various roles technology played Internet US banking sector, and now technology, in general, impacts the delivery of banking system.The study was conducted on a six-factor model •accurate ATM and e-banking – relates to accuracy, security and convenience of Accessing, information on provided in electronic channel Vs through human interaction •customer service – relates to the ability of bank to provide friendly, efficient out atmospherically pleasing services in the infinity of bank •excellent telephone and internet banking – relates to the ability to provide quick, convenient, personalised and user-friendly electronic services •secure and flexible service – relates to providing special needs in both ATM and electronic services easy and convenient banking – relates to case of use of electronic delivery services (ATM and online instructions) •personalised services – relates to personalisation of electronic services (such as acknowledging the name of individual accessing ATM or online webpage. The result indicated that the general population was satisfied with the technological aspects of banking industry and banks are concentrating on areas where customer felt important. Most customers were found to be familiar with basic services provided by ATMs and bank website.The study also indicated that the technology was found to be an integral part of the service mix and high scores on ability to deliver service via technology appeared to be correlated with high satisfaction with services deemed most important to customers.
As most of the customers were found dealing with larger conglomerate banks, the importance of ‘personalised relationship’ may not be quite important as offering an efficient level of service. The emphasis should be on providing speedy efficient service than a friendly smile and doughnuts.Mols (1999) divided the bank customers into an internet banking segment and branch banking segment. Internet banking segment consists of computer literates having access to internet either at home or workplace and branch-banking segments consists of computer illiterates. Internet banking segment does not put high value on their personal relationship with local bank, and it is relatively price-conscious and well educated.
Mols say that the former is growing and latter is shrinking, which will result Internet popularity for internet-based banking channels.Mols also found that, compared with non-users, users of home banking have higher intentions of repurchasing, provide more positive word of mouth communications and are less likely to switch banks. Moutinho and Smith (2000) studied the bank customer satisfaction through mediation of attitudes towards human and automated banking. Their findings suggest that the drive towards ‘ease of banking’ and convenience is favoured by customers and therefore banks should find alternative strategic routes designed to improve service delivery, either human-based or technology-based.The study also suggests that bank customer’s attitudes towards the human provisions of services and subsequent level of satisfaction will impact on banks switching more than when the same delivery is made through automation.
Although millions of dollars have been spent on building internet banking systems, reports have shown that potential users may not use the systems in spite of their availability. According to Technology Acceptance Model (TAM), perceived ease of use and perceived usefulness constructs are believed to be fundamental in determining the acceptance and the use of various information technologies.Yin-Shun et al. (2003), based on a sample study of 123 users, concluded that extended TAM was successful Internet predicting the intensions of the users to adopt internet banking. It is also demonstrated the significant effect of computer self-efficacy on behavioural intentions through perceived use.
Berry et al. (1988) built an instrument SERVQUAL containing 22 items spanning five dimensions as tangibles, reliability, responsiveness, assurance and empathy, to measure the quality of services.Sharma and Mehta (2004) made a comparative study of quality perceptions on four banks in India – State Bank of India, Corporation Bank (both government-owned banks), UTI Bank (NPSB) and J;K Bank (OPSB) using SERVQUAL model. The result indicated that there is a difference in the service quality perception of customers in the public sector and private sector banks. On tangibility dimensions, UTI Bank topped the list followed by Corporation bank, SBI and J;K Bank.
Public Sector Undertaking Banks were ranked better when compared with private sector banks on reliability.On the dimensions of responsiveness (employees’ capability to respond to customers), the ranking was that corporation bank leading the list followed by UTI, SBI and J&K Bank. On empathy dimensions (Bank’s understanding of customer needs), Corporation bank lead the ranking followed by UTI, SBI and J;K Bank. 2. 2CONCEPTION OF INTERNET BANKING Internet Banking means that banking services such as services introduction, loan application, account balance inquiry, fund transfer and so forth are provided by a bank through the Internet.Internet banking has evolved into a “one step service and information unit” that promises great benefits to both banks and customers, According to Michael Karlin, the President and Chief Operation Officer of the world’s first virtual bank, Security First Network Bank, the idea of the Internet banking is as follows: 1.
You do not have to purchase any software, store any data on your computer, back up any information, since all transactions occur on the bank server over the infrastructure of the Internet. 2.You will be able to conduct your banking services anywhere you like but you need to have a computer and a modem, no matter where you are (e. g. At home, at office, or in a place outside the country). 3.
You can use the banking services 24 hours a day, 7 days a week, and 365 days a year. You no longer have to reconcile a bank statement or manually track your ATM and paper checks. 2. 3 INTERNET BANKING IN INDIA The technological development in banking can be traced as follows:- 1960 – Mechanised banking introduced. 970 – Introduction of computer based banking industry.
1980 – Introduction of computer-linked communication based banking. Advent of computer technology has created a major impact on working of banks. The computerization and subsequent development in history of Indian banks can be traced back to 1966 when Indian Bankers Association (IBA) along with exchange banks association signed first wage settlement with the unions, which accounted for the use of IBM or ICT accounting machines for inter-branch reconciliation etc.In 1970s, SBI installed a ledger-posting machine along with a mainframe computer at selected branches. A committee on computerization and mechanisation was appointed by RBI in 1983 under chairmanship of Dr.
C. Rangrajan. Its objective was to chalk out a plan for mechanization of Indian banking industry. It was recommended that computerization and installation of Advanced Ledger Posting Machines (ALPM) at branch, regional and head offices of banks will bring around a new era in banking.Narsimhan committee in 1991 paved way for reform phase in banking.
Saraf committee was constituted by RBI in 1994 that recommended the use of Electronic Fund Transfer System (EFT), introduction of electronic clearing services and extension of Magnetic Ink Character Recognition (MICR) beyond metropolitan cities and branches. The rate of adoption of IT by foreign and private sector bank in the country has been significant over the last five years, which can be attributed to fierce competition and the internet phenomena worldwide.The arrival of private and multinational banks with their superior state of the art technology based services pushed the Indian banks to follow the suit by going in for the latest technologies to meet the threat of competitors and retain their customer base. Technology was the rational for bank introducing ATM and POS (Point of sales) in 1970s, telephone banking in 1980s and internet banking in 1990s. In Mumbai, Shared Payment Network System (SPNS) was set up in February 1997.
It was a network of 28 ATMs with 11 banks. The ATM card was branded as ‘SWADHAN’.SPNS could link with international hubs such as VISA and MASTERCARD. CITIBANK a US multinational was first bank in India to offer ATM card facility in 1985. “The last four years have seen dramatic changes, making customers’ convenience critical aspect of banking”. Indian metros are surging ahead in online banking usage.
Today the delivery channel of banks include direct dial up connections, private networks, public networks etc. and the devices include telephone, Personal Computers including Automated Teller Machines, etc.Technology has thus initiated a paradigm shift from branch banking to ‘Anywhere Anytime’ banking. Thanks to technology, today banks are able to manage in much better way, thereby gaining greater efficiency in operations. 2. 4 ADOPTION Adoption is the acceptance and continued use of a product, service or idea.
According to Rogers and Shoemaker (1971), consumers go through “a process of knowledge, persuasion, decision and confirmation” before they are ready to adopt a product or service. So the stages through which a technological innovation passes are: 1. Knowledge 2.Persuasion 3. Decision 4.
Implementation 5. Confirmation A potential adopter passes through certain stages before decision is made on whether to adopt or reject an innovation. Rogers has been one of the number of researchers who has focused upon the adoption process, which he defines as the “the process through which an individual or other decision-maker unit passes from first knowledge of an innovation, to forming an attitude toward the innovation to a decision or rejection to implementation of the new idea, and to confirmation of this decision” (Frambach, 1993).The innovation adoption process defined by Rogers is the process through which an individual or other decision making unit passes from knowledge of an innovation, to forming an attitude towards the innovation,to a decision to adopt or reject, to implementation of the new idea, and to confirmation of this decision (Figure 2-1). As the Figure 2.
1 shows there are five stages in innovation decision process. These are: 1. Knowledge: Socio-economic characteristics, Personality variables and communication behavior all relate to innovativeness.Innovativeness is the degree to which an individual or other adoption unit is relatively early in adopting new ideas compared to other members of a system (Rogers, 1995). According to Rogers early adopters have more formal education than later adopters and are more likely to be (socio-economic characteristics). 2.
Persuasion: The potential adopter’s attitude towards the innovation is formed in this stage. By anticipating and predicting future use satisfaction and risk of adoption, the potential adopter develop positive or negative attitudes to the innovation, which play important role of modifying the final decision.Perceived attitudes of an innovation as its relative advantage, compatibility and complexity are especially important here (Rogers, 1995). 3. Decision: The decision stage occurs when an individual engages in activities that lead to adoption or rejection of the innovation.
In this stage the adopter starts to actively seek out information about the innovation that assists the decision making. 4. Implementation stage: In this stage, mental information processing and decision making come to an end, but the behavioral change begins. 5.Confirmation stage: After the adoption of innovations, the adopter keeps evaluating the results of his / her decision.
If the level of satisfaction is significant enough, the use if innovation will continue; however, it is also possible that the rejection occurs after adoption. In the latter case, the reverse of previous decision is called “discontinuance”. Figure 2. 1 A model of stage in the innovation-Decision Process. Source: Rogers, 1995 The time frames for adopting an innovation can be compressed or fairly lengthy. For example, awareness of an innovation may precede the decision to adopt by months or years.
Rogers (1995) has data showing awareness preceding the adoption of hybrid seed corn by about 1. 7 years for early adopters and by as much as 3. 1 years for later adopters. Further, the decision to adopt and the implementation of the decision may be separate acts and may be separated in time (Reed et al. , 1996). So we can briefly define adoption: Adoption is the acceptance and continued use of a product, service or idea.
According to Rogers and Shoemaker (1971), consumers go through “a process of knowledge, persuasion, decision and confirmation” before they are ready to adopt a product or service.CHAPTER 3 RESEARCH METHODOLOGY 3. 1 INTRODUCTION The present study is an attempt to examine the customer’s adoption of new technologies in nationalized banks in Thiruchirappalli, TamilNadu. Some of the nationalized banks with internet banking facility are Allahabad Bank, Bank Of India, Canara Bank, Central Bank of India, Dena Bank, Indian Overseas Bank, Indian Bank, Jammu and Kashmir Bank, Karnataka bank, State Bank Of India, State Bank Of Travancore, Union Bank of India, Vijaya Bank, etc. 3.
2 PILOT STUDYData collection with the above procedure to conduct a pilot study to ensure that the survey materials are clear and did not provoke any confusion or problems for banking customers. The draft questionnaire was eventually subjected to pilot testing with a total of 200 banking customers working in different concerns within trichy. 3. 3 CONSTRUCT MEASURES AND DATA COLLECTION Data were collected by means of a structured questionnaire comprising seven sections namely A, B, C, D, E, F & G (see Appendix). Section A consists of two questions pertaining to Technology Awareness (TA). Section B consists of two questions pertaining to Security (S).
Section C consists of two questions pertaining to Technological Services (TS). Section D, E and F consists of four questions related to the Age, Education and Technology Analysis. Finally in the part G thirteen questions pertaining to customers Observability, Relative advantage, Compatibility, Trialability and Simplicity in Technology Adoption were given. All the items in Sections A to G were presented as statements on the questionnaire, with the same rating scale used throughout, and measured on a seven- point, Likert-type scale that varied from 1 highly dissatisfied to 7 highly satisfied.For conducting an empirical study, data were collected from different banking sectors, who are inexperienced or one time users of Internet banking.
The reason for collecting data from them is to know about their adoption level in using of new technologies in banking sectors. Assurance was given to the respondents that the information collected from them will be kept confidential and will be used only for academic research purposes. 3. 4 PROCEDURE FOR DATA ANALYSIS The data collected were analyzed for the entire sample.Data analyses were performed with Statistical Package for Social Sciences (SPSS) using techniques that included descriptive statistics, Correlation analysis and AMOS package for Structural Equation Modeling and Bayesian estimation and testing.
3. 5 STRUCTURAL EQUATION MODELING The main study used Structural Equation Modeling (SEM) because of two advantages: “(1) estimation of multiple and interrelated dependence relationships, and (2) the ability to represent unobserved concepts in these relationships and account for measurement error in the estimation process” (Hair et al. 1998, p. 584). In other words, a series of split but independent multiple regressions were simultaneously estimated by SEM.
Therefore, the direct and indirect effects were identified (Tate, 1998). AMOS 7. 0 (Arbuckle and Wothke, 2006), a computer program for formulating, fitting and testing Structural Equation Models (SEM) to observed data was used for SEM and the data preparation was conducted with SPSS 13. 0. Linear Structural Equation Models (SEMs) are widely used in sociology, econometrics, management, biology, and other sciences.
3. 6 SOURCES OF DATA DATA COLLECTION The process of gathering and measuring information on variables of interest, in an established systematic fashion that enables one to answer stated research questions, test hypotheses, and evaluate outcomes”. “The act or process of capturing raw or primary data from a single source or from multiple sources” 3. 6. 1 Primary data A primary data is a data, which is collected for the first time for a particular interest to have more information. Here the primary data was collected using a structured questionnaire from the bank customers.
Research instrument The research instrument used is the questionnaire.Questionnaire is the sheet containing questions relating to certain aspects regarding which researcher has to collect data. The questionnaire used in the research consists of close-ended and open-ended questions to obtain the views of respondents. The primary data was collected from the respondents through the questionnaire method: A type of measurement instrument that yields a single score by arithmetically combining responses to a number of items (statements/questions with several possible responses represented on some form of scale), where each item attempts to measure one aspect of the factor being measured. . 6.
2 Secondary data The secondary data was collected from the various magazines, journals, and various web sites. 3. 7 DATA SOURCE The data was collected through both primary and secondary data sources. Primary data was collected through a questionnaire. The research was done in the form of Mail.
3. 8 A PROPOSED CONCEPTUAL MODEL Mediation refers to a process or mechanism through which one variable (i. e. , exogenous) causes variation in another variable (i. e.
, endogenous).Studies designed to test for moderation may provide stronger tests of mediation than the partial and whole covariance approaches typically used. It is useful to distinguish between moderation and mediation. Moderation carries with it no connotation of causality, unlike mediation which implies a causal order. Based on these arguments the following hypotheses are formulated. Hypothesis 1: There is positively related security and technology adoption Relative Advantage Hypothesis 2: There is positively related technology demography related to technology adoption Relative AdvantageHypothesis 3: There is positively related technology services related to technology adoption Relative Advantage Hypothesis 4: There is positively related technology adoption Observability and technology adoption Relative Advantage Hypothesis 5: There is positively mediated technology awareness and technology adoption Relative Advantage Hypothesis 6: There is positively related technology adoption compatibility and technology adoption Relative Advantage Hypothesis 7: There is positively related technology adoption simplicity and technology adoption Relative AdvantageHypothesis 8: There is positively related technology adoption Trialability and technology adoption Relative Advantage Figure: 3.
1 Proposed conceptual model of mediating factors for adopting technology in internet banking Dimensions of the study ?TA – Technology Awareness ?S – Security ?TS – Technological Services ?TD – Technology Demography (Age, Education, Technology analysis) ? TAO – Technology Adoption Observability ?TAR – Technology Adoption Relative Advantage ?TAC – Technology Adoption Compatibility ?TAT – Technology Adoption Trialability ?TAS – Technology Adoption SimplicityThe above dimensions are used in this study which discusses about the awareness of new technologies to customers, security system in using it, and their adoption level through Observability, relative advantage, compatibility, Trialability and Simplicity. CHAPTER 4 ANALYSIS AND INTERPRETATION 4. 1 REGRESSION MEDIATED MODEL OF THE INTERNET BANKING ADOPTION MEDIATED STRUCTURAL EQUATION MODEL In hierarchical regression, the predictor variables are entered in sets of variables according to a pre-determined order that may infer some casual or potentially mediating relationships between the predictors and the dependent variable (Francis, 2003).Such situations are frequently of interest in the social sciences. The logic involved in hypothesizing mediating relationships is that “the independent variable influences the mediator which, in turn, influences the outcome” (Holmbeck, 1997).
However, an important pre-condition for examining mediated relationships is that the independent variable is significantly associated with the dependent variable prior to testing any model for mediating variables (Holmbeck, 1997).Of interest is the extent to which the introduction of the mediating variable reduces the magnitude of any direct influence of the independent variable on the dependent variable. Hence the researcher empirically tested the hierarchical regression for the model conceptualized in the figure 4. 1 with in the AMOS graphics environment. Figure: 4.
1 Internet banking adoption mediating model Above regression model reveals that all hypothesis are accepted, since adopting new technology depends upon Technology Adoption Relative Advantage.The analyses conducted, the parameter estimates are then viewed within AMOS graphics and it displays the standardized parameter estimates. The regression analysis revealed that the customers adoption on the various dimensions of technologies in banks. The visual representation of results suggest that the relationships between the dimensions of customers adoption. ‘Technology Adoption Relative Advantage’ results a significant impact on the mediating factor ‘Technology Awareness’.
