INFORMATION TECHNOLOGY FOR DEVELOPMENT, 2017

VOL. 23, NO. 1, 127–152

http://dx.doi.org/10.1080/02681102.2016.1233855

An exploratory study on mobile banking adoption in Indian

metropolitan and urban areas: a scenario-based experiment
Sumeet Guptaa, Haejung Yunb, Heng Xuc and Hee-Woong Kimd
a
Department of Operations and Systems, Indian Institute of Management Raipur, Raipur, India; bDepartment
of International Office Administration, College of Science & Industry Convergence, Ewha Womans University,
Seoul, Korea; cCollege of Information Sciences and Technology, The Pennsylvania State University, University
Park, PA, USA; dGraduate School of Information, Yonsei University, Seoul, Korea

ABSTRACT KEYWORDS
Security concerns have thwarted the widespread adoption of Mobile banking; India;
mobile banking in India. To respond to the concerns of Indian metropolitan and urban; level
banks and their customers, we present in this paper our of security; perceived risk;
exploratory attempts to understand how the levels of security perceived control
affect perceived risk and control and ultimately, adoption of
mobile banking by Indian customers. This study also examines the
moderating influence of the type of city on the relationship
between security levels and risk/control perceptions associated
with mobile banking. Using a scenario-based experiment, we
classified security-enhancing approaches into three categories and
examined their effectiveness in decreasing Indian customers’
perceived risk, increasing their perceived control, and then in turn,
facilitating mobile banking adoption. Our findings reveal the
important role of perceived risk and control in influencing
customers’ intention to adopt mobile banking. Moreover,
perceived risk and control significantly influenced mobile banking
adoption by customers in urban areas, but only perceived control
significantly influenced mobile banking adoption by metropolitan
customers. Additional analyses show that customers’ risk and
control perceptions differ according to the level of security;
however, these perceptions do not have a significant influence on
risk and control.

1. Introduction
Active adoption of information technology (IT) over the last few decades has changed the
Indian banking industry (Kannabiran & Narayan, 2005). Indian banks have been offering
mobile banking services since 2009 as a way to give their customers, especially those in
rural areas, seamless access to banking services. However, widespread implementation
of mobile banking has been difficult because of insufficient infrastructure and because
of India’s many poor citizens in rural areas and urban slums (Pick, Gollakota, & Singh,
2014 ).

CONTACT Hee-Woong Kim kimhw@yonsei.ac.kr Graduate School of Information, Yonsei University, 50, Yonsei-ro
Seodaemun-gu, Seoul 03722, Korea
James Pick is the accepting Associate Editor for this article.
© 2017 Commonwealth Secretariat
128 S. GUPTA ET AL.

Mobile banking refers to the conduct of banking activities using a mobile device
whereby customers can access their accounts to verify balances, transfer funds, pay
bills, and perform various other transactions (Birch, 1999; Gefen, Straub, & Boudreau,
2000). During the last few years, mobile banking has produced a surge in banking trans-
actions in developing countries such as India through the increased use of smartphones.1
As a result, India and China have had some of the world’s highest rates of adoption of
mobile banking (KPMG, 2015).
Nevertheless, despite this promising potential of mobile banking, the extent of adop-
tion has so far been dismal (Funk, 2009; Godoe & Hansen, 2009). Several studies have
shown that security concerns are the greatest barrier to its adoption (e.g. Bamoriya &
Singh, 2012; Chen & Barnes, 2007; Hamlet & Strube, 2000; Hernandez & Mazzon, 2007;
Howcroft, Hamilton, & Hewer, 2002; Jo Black, Lockett, Ennew, Winklhofer, & McKechnie,
2002; Mishra & Singh Bisht, 2013; Nui Polatoglu & Ekin, 2001; Sathye, 1999; Tan & Teo,
2000). However, researchers have noted that despite the knowledge gap about mobile
banking adoption that exists in countries such as India, many, if not most, of the studies
on barriers to adoption have been conducted in the context of developed countries
(Mwangi & Brown, 2015).
Indian banks have undertaken a number of measures to alleviate users’ concerns about
security. In addition, the Indian government has passed legislation covering mobile
banking practices. Despite these efforts, security concerns remain a major cause for
poor adoption of mobile banking in India. In response to these concerns there, we
present in this paper our attempts to explore how the levels of security affect perceived
risk and control and ultimately, adoption of mobile banking by Indian customers. We
apply a scenario-based experimental method to examine the role of security by sequen-
tially providing three scenarios describing different security conditions.
Because the pace of development and adoption of new technologies varies between
metropolitan and other areas, the type of city is likely to influence the extent of mobile
banking adoption. Therefore, we also examined the moderating influence of the type of
city on the relationship between the level of security and the risk/control perceptions of
adoption of mobile banking.
In the following sections, we discuss mobile banking operations in India, briefly review
the related literature, and outline the theoretical foundation of this study. We then discuss
our research methodology, evaluation results, and the implications of our findings.

2. Literature review and research hypothesis

2.1. Mobile banking in India
Mobile banking can be defined as “activities that result in an entity’s access to the range of
banking products (related to savings or credit) by using mobile devices such as cell
phones” (Porteous, 2007). Depending upon the situation, this may also include mobile
payments (Mishra & Singh Bisht, 2013). In developed countries, the rapid proliferation of
smartphones and other mobile devices has resulted in the extensive diffusion of mobile
banking. Juniper Research reported that the total number of mobile banking users
exceeds 0.8 billion worldwide and is expected to reach 1.8 billion people by 2019
(KPMG, 2015).
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 129

In many developing countries, mobile technology has been used to address socio-
economic problems such as urban poverty (Omole, 2013; Rangaswamy & Nair, 2012).
The banking industry in India also faces changing market conditions and is leveraging
IT for competitive advantage (Kannabiran & Narayan, 2005). Banks there have been
equipped for several years with the technology to offer mobile banking services.
However, the growth of such services has been hampered by the digital divide that per-
sists within various demographic groups in India just as it does in other developing
countries (Ochara & Mawela, 2015); therefore, the Indian government and banks are tar-
geting urban populations as well as the yet untouched rural markets where Internet pen-
etration is low.
McDowell and Lee (2003) argued that simultaneous coverage of rural and urban areas
helps increase penetration and achieve universal coverage (Gao & Rafiq, 2009). Moreover,
mobile banking technology can be useful and inexpensive in rural markets because it does
not require a physical banking facility. However, low literacy levels preclude the possibility
of “rapid widespread” mobile banking adoption in rural India.
Mobile telephony in India has a huge potential with 873 million mobile connections as
of 30 June 2013; approximately 350 million of these are in rural areas. The number of sub-
scribers who access the Internet via mobile phones has grown to approximately 143
million. With a sizeable proportion of households without a bank account (41.3%), and
large numbers of these unbanked residing in villages (as of the 2011 census, only 54.4%
of rural households had access to banking services), mobile banking offers a significant
opportunity for the banking industry to leverage this mobile density.2
According to KPMG (2015), India ranks fifth in the world in terms of its rate of adoption
of mobile banking services, a rate that currently exceeds 50%. In recent years, Indian
mobile banking has reflected a growing trend (albeit in low volume). According to esti-
mates by the Reserve Bank of India (RBI), volume has increased 108.5% (USD 0.88
million in 2012–2013 vis-à-vis USD 0.43 million in 2011–2012). According to the same esti-
mates, value has increased 228.9% (USD 1 billion in 2012–2013 vis-à-vis USD 0.30 billion in
2011–2012). Most Indian banks (such as the State Bank of India, ICICI Bank, and the Indus-
trial Development Bank of India) offer mobile banking services. Customers can now trans-
fer funds to other accounts (within the same bank and to other banks) with a click on their
mobile devices. Banks currently offer this function free of charge. However, customers
must bear any data-related charges. Estimates by RBI showed a significant rise in 2013
in the value of transactions conducted over mobile phones. Almost all major banks
showed a multifold rise in transactions (ICICI Bank: USD 0.55 to USD1.7 billion; HDFC
Bank: USD 0.44 to USD 1.3 billion; Axis Bank: USD 0.19 to USD 0.98 billion; State Bank of
India: USD 0.35 to USD 0.91 billion). However, in terms of number of transactions, the
State Bank of India has emerged as the leader because it accounts for half of all mobile
transactions in the country.3

2.2. Antecedents of mobile banking adoption

Studies in the related literature have proposed various enablers for the adoption of mobile
banking technology, governance, and utility of services to consumers. From the technol-
ogy perspective, advances in mobile technology (i.e. handsets and network components)
are enablers of mobile banking. From the governance perspective, proper legislation
130 S. GUPTA ET AL.

governing mobile transactions enhances the security of transactions conducted over

mobile networks and thus drives adoption. The Indian government supports mobile
banking. According to an RBI directive, however, third parties are not allowed to offer
mobile banking; only banks can offer this service.
The findings in the previous literature on mobile banking indicate that its drivers and
inhibitors are fragmented, although they are commonly based on the technology accep-
tance model and its extensions (Shaikh & Karjaluoto, 2015). From a consumer’s perspec-
tive, the most important driver of adoption of mobile banking relates to its ubiquity
(Clarke, 2001; Frolick & Chen, 2004) and to the personal nature (Jarvenpaa & Lang,
2005) of the devices and services involved (Mallat & Tuunainen, 2008). The ubiquity of
mobile banking, as compared with Internet banking (Clarke, 2001), is the one of the
main reasons behind its superior value. Mobile banking adds value for both consumers
and merchants by facilitating payments in remote and nearby transactions.
Inhibitors, as well as drivers, of mobile banking adoption have been frequently studied
to gain understanding of why customers do not adopt mobile banking (Bamoriya & Singh,
2012). RBI’s 2014 report identified two potential challenges to getting mobile banking pen-
etration to the desired level. The first challenge is related to the enrollment procedure such
as mobile number registration, the m-pin (mobile personal indentification number) gener-
ation process, security concerns, and bank staff and customer training. The second chal-
lenge is related to technical issues (access channels for transactions, cumbersome
transaction processes, and coordination with mobile network operators in the mobile
banking ecosystem). Mobile number registration and m-pin generation requires that a cus-
tomer personally and physically visit a bank, which inhibits adoption. The mobile banking
application is an end-to-end encrypted channel, but the short message service (SMS),
unstructured supplementary service data (USSD), and interactive voice response-based
(IVR) channels are not encrypted end-to-end. This shortcoming inhibits adoption in rural
areas, where mobile banking relies primarily on SMS and USSD features. Other issues
relate to the generation of awareness among customers and training of bank staffs. More-
over, the transaction process is cumbersome and requires various authentication input
from customers. Finally, the current system does not incorporate coordination between
mobile network operators and banks to permit customers a hassle-free experience.
Table 1 contains a brief review of various inhibitors of mobile banking adoption. From a
consumer’s perspective, the barriers to mobile technology adoption can be divided into

Table 1. Representative inhibitors of mobile banking adoption.

Inhibitors
Lack of ease of use
Lack of usefulness of services (traditional
banking services)
Inconvenience of devices
Security and privacy concerns (perceived
risk)
Affordability (high price)
Lack of personalization
Lack of knowledge (awareness)
Sources
Bamoriya and Singh (2012), Heres, Mante-Meijer, and Pires (2004), Massoud
and Gupta (2003), Pagani (2004), Safeena et al. (2012) and Vrechoupoulos,
Constantiou, Sideris, Doukidis, and Mylonopoulos (2003)
Heres et al. (2004), Luo, Lee, Mattila, and Liu (2012), Massoud and Gupta (2003)
and Safeena et al. (2012)
Pagani (2004); Vrechoupoulos et al. (2003)
Bamoriya and Singh (2012), Kleijnen, de Ruyter, and Wetzels (2004), Massoud
and Gupta (2003), Safeena et al. (2012) and Vrechoupoulos et al. (2003)
Bamoriya and Singh (2012), Heres et al. (2004), Massoud and Gupta (2003) and
Vrechoupoulos et al. (2003)
Vrechoupoulos et al. (2003)
Luo et al. (2012) and Safeena et al. (2012)
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 131

six more categories. These additional barriers are physical (whether mobile phones are
accessible), cognitive (effort is required to master the use of mobile banking), affective
(attitudes and motivation with regard to the use of systems, such as confidence, efficacy,
and trust), economic (benefits and cost), social (cultural norms), and political (relating to
power and knowledge gaps) (Bouwman, Carlsson, Molina-Castillo, & Walden, 2007).
It should be noted that among the Indian urban population, automated teller machines
(ATMs) and the Internet are easily accessible. Instead of inquiring about the use of mobile
phones for banking transactions, many urban Indians ask if such a thing is really necessary.
Although bill payments are easily made through mobile banking, the average Indian cus-
tomer still pays electric and phone bills offline. In India, the older generation is less tech-
nologically savvy than the younger generation and therefore, reluctant to learn and use
new technology, such as mobile banking. Remembering the publicity surrounding
many fraud cases, these individuals believe that it is easier to conduct transactions on
ATMs or through offline banking services. Therefore, the young metropolitan and urban
populations who are sufficiently technologically savvy are the largest target group for
adoption of mobile banking.
The general argument for using mobile banking is its ubiquity. If a customer runs out of
cash during a transaction, payment can be made through mobile banking. However, to
pay a bill using a mobile phone (and even in Internet banking), a bank account with an
Indian Financial System Code (IFSC) is required. Many potential customers do not even
know such a code exists; furthermore, even if they are knowledgeable and have such a
code, most of them are reluctant to divulge their bank account number out of fear it
will be misused.
As the data in table reveals, most of the barriers to the adoption of mobile banking are
related to difficulty of use and concerns about security. However, the investment in tech-
nological infrastructure has removed a number of technological barriers. In addition,
bankers are addressing the technical complexity problems by educating their customers
and reducing technological hassles. Nevertheless, barriers such as perceived risk and
security concerns persist. Several studies on online banking adoption (e.g. Chen &
Barnes, 2007; Hamlet & Strube, 2000; Hernandez & Mazzon, 2007; Howcroft et al., 2002;
Jo Black et al., 2002; Nui Polatoglu & Ekin, 2001; Sathye, 1999; Tan & Teo, 2000) have reiter-
ated the importance of security risks. They determined that the lack of security is a signifi-
cant obstacle to the adoption of online banking (Safeena, Date, Kammani, & Hundewale,
2012).

2.3. Research model and hypotheses

In light of these previous findings, this study aimed to examine the role of different levels
of security in reducing customers’ perceived risk and control and consequently increasing
their intention to adopt mobile banking. Type of city could be metropolitan or urban
depending upon the area where the respondents currently reside. Level of security is oper-
ationalized as three different hypothetical profiles describing each security assuring
method, namely technological controls, transaction limits, and legislation. After reading
each hypothetical profiles, the respondents provide their perceptions about perceived
risk, perceived control, and intention to adopt. Figure 1 presents the research model of
this study.
132 S. GUPTA ET AL.

Figure 1. Research model.

2.3.1. Perceived risk and control

Yates and Stone (1992, p. 4) defined risk as the possibility of loss, which may arise out of
uncertainty caused by the possibility of a seller’s opportunistic behavior (Ganesan, 1994).
Havlena and DeSarbo (1991) defined perceived risk as the uncertainty resulting from the
potential for a negative outcome. An individual’s calculation of risk involves an assessment
of the likelihood of negative consequences as well as the perceived severity of these con-
sequences (Peter & Tarpey, 1975). Negative perceptions related to risk may affect an indi-
vidual emotionally, materially, and physically (Moon, 2000). Consumers are usually risk-
conscious, especially with regard to adopting innovative high-tech products. They
become reluctant to adopt them if they view the new products or services as risky (Kim,
Yuan, Kim, & Lee, 2014).
In traditional transactions, such risk arises because of uncertainty about the quality or
the durability of the product purchased. In an online transaction, such risk arises not
only because of quality but also because of uncertainty involved in payment for a
product as well as uncertainty about its delivery. Privacy assurance (Milne & Culnan,
2004), trust seals, cash-on-delivery options, etc., tend to mitigate the risk involved in an
online transaction. In most studies (e.g. Jarvenpaa, Tractinsky, & Vitale, 2000), risk has
been measured in general terms as the possibility of economic loss. Jarvenpaa et al.
(2000) assessed risk perceptions in terms of the potential for economic loss in their
study of specific bookstore and travel websites. Similarly, Pavlou and Gefen (2004)
assessed risk in terms of economic loss in the context of a community of sellers in an
online auction and again found a negative relationship with intention to transact.
Recent studies also have included the possibility of loss of privacy as one of the perceived
risks in an online transaction (Dinev & Hart, 2004; Malhotra, Kim, & Agarwal, 2004;
McKnight, Choudhury, & Kacmar, 2002).
Risk is another important nonmonetary aspect of Internet shopping (Grewal, Iyer, Krish-
nan, & Sharma, 2003) because customer deception by Internet vendors is becoming
increasingly common. In the context of mobile banking, perceived risk represents the sub-
jective expectation of a loss or sacrifice in conducting transactions over a mobile phone
(Sweeney, Soutar, & Johnson, 1999). As in previous research (e.g. Featherman & Pavlou,
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 133

2003), the present research defines perceived risk as “the expectation of losses associated
with conducting banking transactions over a mobile phone.”
Any transaction conducted over a mobile phone entails various inherent risks. Chen
(2013) suggested that the perceived risk of using mobile banking is composed of financial,
performance, time, psychological, and privacy risks. As the previous discussion of concerns
demonstrated, most Indians are risk averse when it comes to mobile transactions. There is
a general fear that something may go wrong with the transaction, such as errors or mis-
takes while transferring money or the data-services getting lost in the middle of the trans-
action, and so on. This fear arises from inexperience with online transactions. A fear that a
malevolent person will obtain one’s password also prevails among Indians. A number of e-
commerce studies empirically verified the negative effects of perceived risk on behavioral
intentions to conduct transactions (Budnitz, 1998; Jarvenpaa & Leidner, 1999; Pavlou, 2003;
Pavlou & Gefen, 2004). Consistent with the prior literature, we argue that individuals will be
less likely to adopt mobile banking if they perceive that such transactions involve risks.
Hence, we hypothesize:
H1: Perceived risk negatively affects intention to adopt mobile banking.

Although perceived risk regarding a certain technology may be high, the rate of adoption
can increase if customers feel that they are in control when they use the technology
(Dinev & Hart, 2006; Wang, Lin, & Luarn, 2006; Xu, 2007). Control is considered one of
the factors that determines a privacy state (Dinev & Hart, 2004). Dinev and Hart (2006)
presented control as a condition of the right to withhold information from being
disclosed without one’s consent. The consent requirement gives users control over infor-
mation disclosure. According to Derlega and Chaikin (1977), control is possible by limiting
self-disclosure. Similarly, Stone and Stone (1990) also argued that determining how any
information disclosed will be used gives some control to the person who needs to disclose
the information. Thus, the notion of control is built in whenever one needs to disclose his
or her private information. Moreover, in mobile banking, information regarding bank
accounts, user IDs, and passwords must be disclosed over secure communication net-
works. If there is a lack of control or a perceived lack of control on the disclosure of sensi-
tive information, individuals will refuse to disclose it. Ability to control information is a
concern for both offline and online consumers. Consumers do not like it when their infor-
mation is collected without their consent (Nowak & Phelps, 1995) or when marketers sell
information about them (Nowak & Phelps 1992; Milne, 2000).
Recent studies on privacy have examined control as a construct (e.g. Dinev & Hart, 2006;
Gupta, Xu, & Zhang, 2011; Xu & Gupta, 2009). Dinev and Hart (2004) argued that people
perceive information disclosure as less privacy-intrusive when they believe they will be
able to control future use of their information (Culnan & Armstrong, 1999). Similarly, Xu
and Gupta (2009) argued that those who perceive that they have greater control over
their personal information have more confidence in the performance of the technology.
In applying the concept of control to our study, we defined it as “the perception of an
individual about the possibility of managing his/her own banking transactions through
mobile devices.” In other words, although perceived risk regarding mobile banking may
be high, the rate of adoption will increase if customers feel that they are in control
when using a mobile device (Dinev & Hart, 2006; Wang et al., 2006; Xu, 2007).
134 S. GUPTA ET AL.

According to Pavlou and Fygenson (2006), perceived control is a co-determinant of

intention, along with attitude, in the theory of planned behavior. Mathieson (1991) and
Taylor and Todd (1995) supported the role of perceived control in predicting intention
to use information systems. Therefore, perceived control is also considered in this study
as an important factor in the adoption of mobile banking. According to Koller (1988), cus-
tomers prefer control over their transactions so as to minimize their losses from security
breaches. In general, consumers find it difficult to conduct transactions unless they
have some assurance that their transactions are safe (Xu, 2007). Indian banks provide
several control measures (e.g. mobile pins, transaction limits, and account locks after
more than three login attempts) to ensure that a transaction is secure. Accordingly, we
propose that perceived control over transactions conducted over a mobile phone is
strongly related to an individual’s intention to adopt mobile banking. Hence, we
hypothesize:
H2: Perceived control positively affects intention to adopt mobile banking.

Prior research has shown that in general, individuals perceive less risk when they perceive
a higher degree of control (Koller, 1988). Individuals who perceive a higher degree of
control report less perceived risk than those who think they have a lesser degree of
control (Fusilier & Hoyer, 1980). Therefore, in the context of mobile banking, we argue
that individuals perceive mobile banking as less risky when they believe that they have
control over a transaction. In other words, perception of control in a mobile banking trans-
action alleviates individuals’ perceived risk in conducting a transaction. Hence, we
hypothesize:
H3: Perceived control negatively influences perceived risk in conducting transactions over a
mobile phone.

2.3.2. Role of security levels

Security is one of the most important aspects of any online transaction. According to Chen
& Zahedi, 2016), the behavioral aspect of security in both work and personal settings has
recently drawn attention from IS researchers because of the dramatic increase in Internet
users worldwide, the pervasiveness of the Internet in all aspects of life, and the fact that
individual users “represent a significant point of weakness in achieving the security of
the cyber infrastructure” (Anderson & Agarwal, 2010, p. 613). Most online transactions
stand vulnerable to various attacks (such as denial of service or distributed denial of
service), phishing, virus, malwares, adware, and so on, that preclude one’s performing
online transactions. ISO/IEC (2014, p. 13) includes three main dimensions of security,
namely confidentiality (protection against unauthorized data disclosure), availability (pre-
vention of data delays and removal), and integrity (prevention of unauthorized data modi-
fication). However, RBI guidelines4 also include nonrepudiation (prevention of any one
party’s denial of an agreement after the fact), authenticity (authentication of data
sources), and privacy (provision of data control and disclosure) apart from these dimen-
sions. Information security aims to ensure that information is made available or disclosed
to authorized individuals, entities, systems, or processes. According to Bansal and Zahedi
(2014), security concerns are about the unwillingness and inability of the technology to
protect a user’s information during transmission and/or storage; therefore, in this study,
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 135

security can be defined as “the degree of assuring authentication, nonrepudiation, confi-

dentiality, and integrity of data when using mobile banking.”
Mobile banking is quite vulnerable to security threats in the absence of proper security
measures. Hackers work around the clock to break into people’s systems and access sen-
sitive information that may jeopardize one’s position through financial loss or other
damages. Mobile banking frauds have become common and can happen in numerous
ways. The stored m-pin or sent messages on a lost smartphone can be easily misused.
Adware operating in the background, may pass on information about text keyed into a
mobile phone without one’s knowledge. Although mobile banking has emerged as the
most promising front-end technology for broadening access to finance in the country
and increasing financial inclusion of rural poor, people must worry about fraud in their
accounts because they think mobile banking has weaker security than personal
banking. Furthermore, mobile banking lacks a set of common technology standards for
mobile banking. Many protocols are being used for mobile banking — HTML (hypertext
markup language), WAP (wireless application protocol), SOAP (simple object access proto-
col), XML (extensive markup language) — to name only a few. It would be wise for a
vendor to develop a mobile banking application capable of connecting multiple banks.
It would require the application either to support multiple protocols or use a common
and widely acceptable set of protocols for data exchange. There are a large number of
different mobile phone devices, and it is a big challenge for banks to offer a mobile
banking solution on all types of devices. Some of these devices support J2ME (Java 2 Plat-
form, Micro Edition), and others support a WAP browser or only SMS.
Security can be achieved by implementing suitable access controls, such as password
systems, encryption and authentication, CAPTCHA (Completely Automated Public Turing
test to tell Computers and Humans Apart), etc. RBI issued safety guidelines and guidelines
for transaction limits for mobile banking in 2008 and later updated them in 2014. Some of
the measures included: Risk mitigation measures such as authentication (m-pin, OTP,
CAPTCHA, etc.), encryption (end-to-end encryption of text transmitted online), fraud
checks to ensure safety of mobile transactions; transaction limits as a risk mitigation
measures; and provision of legal protections to safeguard the interests of customers in
case of fraud.
Indian banks have worked with the developers of mobile technology to incorporate
appropriate technological features in mobile banking apps to ensure security. Electronic
commerce sites incorporate authentication and encryption technology to ensure end-
to-end security of information traveling over the Internet. Mobile users are also concerned
about the reliability of user authentication and want to be assured that they are not
charged for any transactions other than their own (Ratha, Connell, & Bolle, 2001). Accord-
ing to Ratha et al. (2001), reliable user authentication is critical in preventing the loss of
confidential information, denial of service, and compromised data integrity. RBI has
issued guidelines to banks to ensure proper authentication and encryption. Providing
proper means of authentication and encryption empowers individuals to control their
information (Xu, 2007). That is, when technology assures them that proper security is in
place, individuals feel more in control of transactions and perceive less risk from possible
losses during transactions. Indian banks provide their mobile banking users with unique
IDs and m-pins. A transaction cannot take place until a user enters the m-pin. If the
136 S. GUPTA ET AL.

wrong m-pin is entered more than three times, the user ID is locked. This ensures security
against unscrupulous people.
Another way to limit security breaches is to set an upper limit on the transaction amount
that can be transferred over a mobile device. Banks worldwide allow consumers to set a
maximum transaction amount that can be conducted online or through some other
method without face-to-face interaction. For example, banks have set an upper limit on
withdrawals from ATMs to ensure the safety of an account by limiting its vulnerability.
Apart from the limit set by the bank, customers can also set their own transaction limit,
which further ensures the security of transactions. The transaction limit makes consumers
feel secure in conducting transactions using their mobile phones. Thus, transaction limits
increase customers’ perceptions of control and also alleviate their perceived risk of losses
in mobile transactions.
Security can also be ensured by enacting proper legislation that protects consumers in
case transactions are erratic. In India, the Consumer Protection Act of 1986 and Information
Technology Act of 2000 cover transactions conducted over a mobile phone. The former
legislation defined the rights of consumers and is applicable to banking services as well.
The Information Technology Act 2000 requires all electronic documents to be properly auth-
enticated (using a specific technology, in place of a signature). Moreover, any other measure
taken by banks to authenticate users should be approved by law. This would provide
support for a legal redressal to consumers, in case there is a need. With such relevant legis-
lation in place, consumers can seek legal redress for their complaints. Thus, consumers per-
ceive that legislation safeguards them from potential risks in transactions. This in turn
increases their perception of control over their mobile phone transactions.
In summary, each of the above-mentioned security levels (technology controls, trans-
action limits, and legislation) can increase a consumer’s ability to control a transaction
and reduce his or her perceived risk. However, the degrees of perceived risk and
control in the above three approaches differ. The first level of security – i.e. technological
controls, such as authentication and encryption – is most secure because customers
control their authentication details. Without proper authentication and encryption, one
cannot conduct transactions over the Internet or mobile network; therefore, technological
controls are mandatory. However, they are insufficient sometimes because, despite tech-
nological controls being in place, security breaches have occurred through phishing
attacks, malicious hacking, and stolen passwords. The second level of security is defined
by augmenting this first level of security (technological controls) by establishing trans-
action limits. These limits reduce the risk to an amount specified by the customer, bank,
or governing agency. However, this method may likewise be insufficient because to a cus-
tomer, any amount of loss is still a loss. The third level of security occurs through augment-
ing the second level of security – technological controls, plus transaction limits — with
legislative action against security breaches. In case of fraud, a customer can be assured
of legal redress to recover his or her losses. Customers may differ in their perceptions of
the level of risk and control in mobile banking, but ideally, the third level will be seen
as the most secure.
H4: The security level of mobile Internet banking is negatively associated with perceived risk.

H5: The security level of mobile Internet banking is positively associated with perceived
control.
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 137

2.3.3. The effect of city type: comparison of metropolitan and urban customers
India is a large country with varying cultural beliefs. Although the mass media have fos-
tered a convergence of beliefs throughout the country, there are still cultural differences
among cities. Metropolitan cities are the early adopters of new ideas and services, which
later percolate to smaller cities. Moreover, people in small cities are not as technologically
savvy as those in large cities; therefore, the pace of technology adoption is slower in small
cities.
The proportion of the population that is urban is an important parameter of the degree
of national development (Skaletsky, Soremekun, & Galliers, 2014 ). The government of
India classifies Indian cities based on population (Omole, 2013). However, this basis of
classification may be inappropriate for the present study because small cities near metro-
polises are also affected by metropolitan culture.
We followed the Goverment of India’s classification of Cities based on 2011 census.5
This classification categorizes cities (urban agglomerations) into mega cities (more than
10 million population), million plus urban agglomerations (1–10 million population), and
Class I urban agglomerations (0.1–1.0 million population). We termed mega cities and
million plus cities as “metropolitan cities” and Class I urban agglomerations as “urban
cities.” Thus, Ahmedabad, Bangalore, Bhopal, Delhi, Chennai, Ahmedabad, Indore, Pune,
Nagpur, Mangalore, Lucknow, Mumbai, and Noida were classified into Metropolitan
Cities and Bhilai, Bilaspur, Raipur, Raigarh, Rajnandgaon, and Raniganj were classified
into Urban cities.
The impact of IT in these city types varies. In metropolitan cities, Internet banking has
deeper penetration and is in a growth phase, but in urban areas, it remains in a nascent
phase. In rural markets, it is still a distant goal because of the lack of information on tech-
nology infrastructure and also because of illiteracy and ignorance of the people regarding
its usefulness. Similarly, mobile banking services are no longer an innovation in metropo-
litan cities, where their diffusion has reached the early adoption stage. However, the adop-
tion of these services still remain at a relatively beginning level in urban areas.
Nevertheless, mobile banking adoption is favorably regarded in these urban markets.
Literature on the effect of demographics for a study such as ours is sparse. A few pio-
neering attempts have been made by demonstrating that the nature and extent of secur-
ity-related perceptions differ across countries or cultures (Dinev et al., 2006a, 2006b; Dinev
& Hart, 2004; Xu & Gupta, 2009). Forman, Ghose, and Goldfarb (2009) examined the effect
of type of city on the benefits of purchasing online, with books as the product. They
argued that offline distance from a store matters and that people veer from online pur-
chasing when a store opens nearby. Forman et al.’s (2009) research has important impli-
cations for our study. In the case of bookstores, people may indeed switch to offline
purchasing if a store opens nearby; however, this behavior may not be the same for
mobile banking. For online bookstores, delivery time is greater than when purchasing
offline, particularly when the store is nearby. However, with mobile banking, product deliv-
ery occurs on the mobile device, and the customer benefits from convenience of place and
time. Despite this convenience, security plays a greater role in the adoption of mobile
banking than in buying books offline. People resist mobile banking because of security
concerns. In large cities, people are more technologically savvy than people in small
cities and are quicker to adopt such services. Moreover, people in large cities have less
138 S. GUPTA ET AL.

discretionary time than residents of small cities, and the convenience of mobile banking
makes them more likely to use it.
Festinger, Schachter, and Back (1950) argued that geography is a natural basis for a
social community and that members of the community from the same geographic
region may share a community identity. According to Wiesenfeld, Raghuram, and Garud
(1999), common geography lowers perceived differences in space and time; it serves as
a major basis for feelings of similarity with other members of the group. In India,
culture varies between large and small cities; the latter have a low rate of penetration
by mobile and Internet commerce. Because customers in large cities are well aware of
the perceived benefits of using the Internet and mobile technology, they are likely to per-
ceive less risk and more control in performing their transactions.
Owing to geographical differences, the various levels of security might be perceived dif-
ferently in their effectiveness at reducing perceived risk and enhancing perceived control.
Thus, type of city serves as a control variable. In metropolitan cities, where technological
savviness and fraud are both common, the different levels of security would apparently be
important for reducing security risk and increasing perceived control. However, in urban
areas, where adoption is less frequent and fraud is less common, people might not per-
ceive transaction limits and legislation as very important to reducing their security risk
and enhancing perceived control. Hence, we hypothesize:
H6: The influence of security levels on perceived risk differs by city type.

H7: The influence of security levels on perceived control differs by city type.

3. Research methodology
The proposed approach supports the testing of causal relationships between constructs
experimentally manipulated by a given scenario and theoretical constructs with
minimal interference from extraneous variables. Accordingly, to test the proposed
research model, we conducted a scenario-based experiment combined with a survey; in
this method, respondents are answering questions based on hypothetical situations
described in each scenario profile. Scenario-based experimentation makes it easier to
operationalize manipulations and permits great control over variables that otherwise
are hard to control (Dong, Evans, & Zou, 2008; Gupta et al., 2011; Kim & Jang, 2014).
Whenever possible, we adapted constructs from measurement scales used in prior
studies to fit the context of this study. Perceived risk was measured by adapting four
items from Dinev and Hart (2006). Items for perceived control (Ajzen, 1991) were
adapted from Xu (2007). Items for intention to adopt were adapted from Dodds,
Monroe, and Grewal (1991). The survey instrument and design is shown in the appendix.
An online survey was used for data collection. For efficiency in data collection, we
adopted snowball sampling (i.e. a sampling procedure in which a researcher selects the
initial respondents, and additional respondents are then obtained from information pro-
vided by the initial respondents) as a type of convenience sampling method (Zikmund,
2003). A separate website was created online, and respondents in the metropolitan and non-
metropolitan (urban) cities of India were invited via email to respond to the survey. The
respondents were reached through the contacts of those who were collecting the data,
and these contacts were further asked to propagate the survey to their friends. Because
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 139

the data collectors were young students, the respondents to this survey were primarily
young.
We sought to determine how the progression of the three security levels affects custo-
mer perception and adoption intention. Therefore, we developed three experimental
scenarios about security enhancements – technological controls, transaction limits, and
legislation – that Indian banks are actually implementing. As mentioned earlier during dis-
cussion in the section on the
Role of Security Levels’, RBI requires Indian Banks to ensure appropriate security measures in
banking transactions. Such measures include, ensuring security of transaction channels (such
as using authentication and encryption technologies), taking risk mitigation measures (such as
imposing transaction limits) in case of fraud, and providing legal protection (such as through
legislation) to a fraud victim.

We operationalize security level in our study corresponding to the security measures

identified by the RBI. Thus, we have three security profiles, namely ensuring security
through technological controls, ensuring security through transaction limits, and ensuring
security through legislation.
These scenarios were provided to the subjects sequentially; therefore, the respondents
were exposed to four different levels of security: Level 0 (no approaches); Level 2 (technol-
ogy only); Level 3 (technology plus transaction limits); and Level 4 (technology, transaction
limits, and plus legislation). Questions about intention to adopt, perceived risk, and per-
ceived control were posed to respondents after their exposure to each scenario. To test
for differences by the type of city, the survey was administered in various metropolitan
and urban areas.
The data obtained were screened for missing and incomplete responses. This screening
also included insincere responses that indicated the respondent had not carefully read the
questionnaire and/or was not making judgments. The final dataset consisted of 176
responses (metropolitan, 70; urban, 106). We evaluated nonresponse bias by comparing
the responses of early and late respondents (Armstrong & Overton, 1977). T-tests demon-
strated that the early and late respondents did not differ significantly in terms of age.
Mann–Whitney tests also showed no significant differences in gender, city type, and occu-
pational ratios among the two groups of respondents. The test results indicated that our
data were unlikely to suffer from nonresponse bias.
Table 2 shows the demographic characteristics of respondents. Female respondents
were only 21.6% of our sample. This proves that our sample reflects the characteristics
of real mobile banking users in India because, compared with men, fewer women
there have their own bank accounts and they tend to use their accounts less often
(Grameen Foundation, 2013). Furthermore, these sample characteristics are consistent
with that of recent studies on mobile banking adoption in India (Jain, 2013; Safeena
et al., 2012).

4. Data analysis and results

4.1. Measurement model analyses
We first assessed the reliability and validity of the constructs by conducting Exploratory
Factor Analysis (VARIMAX Rotation). This factor analysis is given in Table 3. All items
140 S. GUPTA ET AL.

Table 2. Descriptive statistics of respondent characteristics.

Item Measure Frequency %
Age <20 13 7.4
20–29 79 44.9
30–39 50 28.4
≥40 34 19.3
Gender Female 38 21.6
Male 138 78.4
City type Metropolitan 70 39.8
Urban 106 60.2
Income < 1600 USD 33 18.8
(1600–4800 USD) 34 19.3
3–4.99 lakh (4800–8000 USD) 71 40.3
>8000 USD 38 21.6
Profession Student 31 17.6
Housewife 4 2.3
Employed 101 57.4
Self-employed 29 16.5
Others 11 6.2
Total 176 100

were loaded on the constructs that they were intended to measure. The total variance
explained by perceived risk, perceived control, and intention to adopt was 85.98%. Cron-
bach’s alpha was greater than 0.7 for all constructs. Hence, the reliability and validity of the
constructs were confirmed.
Confirmatory factor analysis was then conducted using linear structural relations
(LISREL). The constructs were first assessed for convergent and discriminant validity by
using the confirmatory factor analysis (Anderson & Gerbing, 1988). As shown in Table 3,
the standardized path loadings for all questions were statistically significant for both data-
sets. The composite reliability and Cronbach’s α for all constructs exceeded 0.7 for both
datasets. Additionally, the average variance extracted for all constructs exceeded 0.5 for
both datasets. Hence, convergent validity for the constructs was established. The measure-
ment items significantly loaded (t-value > 2.0) on the intended construct, which thus
demonstrated convergent validity.
Discriminant validity was established if the square root of the construct’s average var-
iance extracted (AVE) exceeded its correlation with any other construct (Fornell & Larcker,

Table 3. Results of exploratory and confirmatory factor analysis.

Confirmatory factor analysis Exploratory factor analysis
Std. path loading t-Value AVE CR 1 2 3 Cronbach’s alpha
INT1 0.89 14.94 0.848 0.943 0.027 0.901 0.249 0.940
INT2 0.97 17.34 0.046 0.937 0.223
INT3 0.90 15.009 0.046 0.901 0.249
RISK1 0.92 15.84 0.848 0.956 0.922 0.063 −0.094 0.942
RISK2 0.96 17.04 0.939 0.033 −0.101
RISK3 0.94 16.36 0.928 0.024 −0.098
RISK4 0.86 14.20 0.888 −0.001 −0.032
CTRL1 0.91 15.50 0.853 0.945 −0.076 0.303 0.855 0.917
CTRL2 0.96 16.94 −0.09 0.2 0.913
CTRL3 0.90 15.21 −0.131 0.233 0.895
Eigen value 4.056 3.400 1.222
% Variance 40.561 34.001 12.219
Cumulative variance 40.561 74.562 86.781
Note: AVE, average variance extracted; CR, composite reliability.
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 141

Table 4. Correlations between latent variables.

Mean (SD) Adoption Intention Perceived Risk Perceived Control
Adoption intention 5.09 (1.43) 0.921
Perceived risk 3.81 (1.52) −0.049 0.921
Perceived control 4.73 (1.31) 0.524*** −0.179* 0.923
Notes: SD, standard deviation.
Leading diagonal in boldface shows the squared root of AVE of each construct.
*p < .05, **p < .01, and ***p < .001.

1981). As shown in Table 4, the square root of AVE for each construct exceeded the cor-
relation between that construct and other constructs. Hence, discriminant validity was
established.

4.2. Hypotheses testing

To test H1, H2, and H3, we used LISREL 8.54 to conduct structural equation modeling
analysis. The results are shown in Figure 2. The fit indices show that the model fit is
good and the indices are within acceptable limits6 (Gefen et al., 2000). This reveals that
intention to adopt mobile banking is positively associated with a customer’s perception
of control and negatively associated with perceived risk. Perceived control also had a sig-
nificant negative influence on perceived risk.
Two-way ANOVA was conducted to test H4–H7. Two-way ANOVA is useful to identify
differences in the means of two independent categorical variables with one dependent
continuous (interval) variable. In this analysis, perceived risk and perceived control
served as dependent variables in each ANOVA analysis; level of security and type of city
served as independent variables. Table 5 shows the results of the two-way ANOVA analy-
sis. The results show that different security levels did not significantly affect perceived risk
(F-value = 2.131; p-value = 0.120) or perceived control (F-value = 1.679; p-value = 0.188).
Thus, H4 and H5 were not supported. The results also reveal that type of city had a differ-
ent effect on perceived risk (F-value = 29.139; p-value = 0.000) and perceived control (F-
value = 5.911; p-value = 0.015). This implies that customers in metropolitan cities differ

Figure 2. Standardized LISREL solution.

Note: Normed χ 2 = χ 2//degree of freedom, RMSEA = Root-mean-square error of approximation, AGFI = Adjusted Goodness-
of-fit Index, GFI = Goodness-of-fit Index, CFI = Comparative Fit Index, NNFI = Non-normed Fit Index, NFI = Normed Fit
Index. *p < .05, **p < 0.01, ***p < .001. Normed χ 2 = 2.26, RMSEA = 0.085, AGFI = 0.87, GFI = 0.92, CFI = 0.98, NNFI =
0.97, and NFI = 0.96.
142 S. GUPTA ET AL.

Table 5. Tests between-subject effects.

Dependent variable Independent variable F-value p-Value
Perceived risk Level of security 2.131 0.120
Type of city 29.139 0.000
Level of security*Type of city 0.282 0.838
Perceived control Level of security 1.679 0.188
Type of city 5.911 0.015
Level of security*Type of city 0.533 0.660

in their perception of risk and control in using mobile banking from customers in urban
cities. The interaction effects were also not significant, which means that H6 and H7
were not supported. In other words, the influence of security levels on perceived risk
and control did not vary with city type.

4.3. Post hoc analyses

The perception of risk and control may differ between metropolitan and urban areas
because of differences in exposure to technology and its usage. Therefore, we conducted
a post hoc analysis by the type of city to understand the influence of risk and control on
intention to adopt. As you can see in Figure 3, the structural models have been run based
on the city types. Among urban customers, all the hypothesized paths are significant while
the only path from perceived control to intention to adopt was found to be significant
among metropolitan customers.

5. Discussion and implications

5.1. Research findings and discussion
The results of this study show that levels of security enhancement do not differ signifi-
cantly in influencing perceived risk and control. However, the influence of perceived
risk and perceived control on adoption intention differs among city types. For

Figure 3. LISREL results by city type.

Note: SRMR = standardized root mean residual.
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 143

metropolitan customers, the results reveal that the degree to which they are in control of
their transactions is all that matters; urban customers’ intention to adopt mobile banking is
influenced by both risk and control. These findings are somewhat intuitive because India’s
metropolitan customers are accustomed to working with risky technologies, such as Inter-
net banking. Because of their experience with such technology, they do not mind adopt-
ing mobile banking as long as they can be assured that they have control over their
transactions. Conversely, customers in urban areas have not been exposed to risky tech-
nologies, such as Internet banking, to the extent that customers in metropolitan areas
have. Therefore, in urban areas, the perceived risks of mobile banking remain a significant
barrier to its adoption.
Means plot graphs can be used to further analyze the results of this research and derive
more productive implications from it. An examination of means (Figure 4) reveals that the
means of perceived risk are high when the respondent is unaware of any security levels; it
decreases as security levels increase. Moreover, the means of perceived risk are higher for
metropolitan residents than for residents of urban areas.
Figure 5 shows the means plot for perceived control. Perceived control is low when the
respondent is unaware of any security level; it increases as the respondent becomes aware

Figure 4. Means plot for perceived risk with level of security and type of city.
Note: Level of security (0 – none, 1 – technological controls, 2 – technological controls and transaction limits, 3 – techno-
logical controls, transaction limits, and legislation), type of city (1 – metropolitan, 2 – urban).

Figure 5. Means plot for perceived control with level of security and type of city.
Note: Level of security (0 – none, 1 – technological controls, 2 – technological controls and transaction limits, 3 – techno-
logical controls, transaction limits, and legislation), type of city (1 – metropolitan, 2 – urban).
144 S. GUPTA ET AL.

of the security levels. The influence of type of city on perceived control reveals a different
pattern. Although the difference between them is minor, respondents in urban areas felt
less in control of their transactions than respondents in metropolitan cities did.

5.2. Implications for extending mobile banking usage in India

India presents a unique situation for the adoption of mobile banking. Most Indian custo-
mers are not so busy that they must perform their banking activities on their mobile
phones. Occasions rarely require someone to consider making payments through his or
her mobile phone. Moreover, even if one has mobile banking function, making such a
payment requires an IFSC code and the bank account details of the recipient. Divulging
such account details is uncommon in India and perceived as risky. However, practices
differ in other countries, where payments via mobile devices are common. For example,
unlike India, South Korea and the US are well equipped with 3G and 4G long-term evol-
ution (LTE) networks for high-speed mobile banking. Thus, several developed countries
are enjoying the inherent advantages of adoption of mobile banking. India does not yet
have these advantages, although its potential market for mobile banking is one of the
fastest growing in the world. Therefore, we attempted to determine the reason for the
country’s relatively slow diffusion of mobile banking adoption.
Based on our research findings, we determined some useful implications for extending
mobile banking adoption and its usage in India. First, because awareness of security levels
brings about a moderate, but gradual, increase in customers’ perceptions of control and a
decrease in their perception of risks, banks and government must adopt various security-
enhancing approaches to mitigate customers’ security concerns. Security concerns are
based on concerns about authentication, nonrepudiation, confidentiality, and integrity
(Bansal & Zahedi, 2014). When banks introduce and educate their customers about
mobile banking services, and governments enact policies related to mobile banking,
they should strive to convince customers that mobile banking is secure in terms of
these four dimensions.
Second, banks have launched this service in metropolitan and urban areas. However, in
urban areas, control is perceived as low. Compared to metropolitan customers, residents in
urban areas usually are late adopters; this may be because they are less tech savvy and
have lower self-efficacy than metropolitan residents. Therefore, to increase perceived
control among these potential customers, banks must organize various awareness cam-
paigns such as distributing leaflets and manuals and sending emails promoting the con-
venience and ease of use of mobile banking.
Third, considering that among metropolitan customers perceived control is related to
intention to adopt but perceived risk is not, business people in metropolitan cities
whose normal transactions exceed the prescribed limit (50,000 Indian Rupees) may
object to current transaction limits that are less than this limit. To offset such objections
and to enhance perceived control, banks may want to consider a separate program that
allows higher transaction limits for different people, based on their needs. Within the
upper limit specified by the RBI, people can flexibly set their own limits. For example,
some business people may want to set up higher limits, but those who prefer small trans-
actions and do not want to be exposed to higher risk may set lower limits for their mobile
transactions.
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 145

5.3. Limitations and directions for future research

We recognize that our exploratory study has some limitations. It was conducted using a
3 × 2 experimental design. Experimental designs, although high in precision and accuracy,
are a difficult basis for generalizations (Dennis & Valacich, 2001). Therefore, the results of
this study are limited in generalizability by the limits of the experiments and also by the
small sample size of 176 and an insufficient number of survey questions. And the respon-
dents answered the questions based on the hypothetical scenarios, not an actual situation,
which may result in relatively low external validity.
In this study, we compared only urban and metropolitan cities. As mentioned earlier,
the rural market is hardly aware of mobile banking and unprepared for its adoption; more-
over, elderly people are not eager to understand the technology involved in mobile
banking. Therefore, the target market is the young population in metropolitan and
urban areas. We found it difficult to establish contact with members of this population
in metropolitan areas; therefore, the only method that we could rely on was the circulation
of the online survey link through contacts and contacts of contacts (the snowball sampling
method). For this reason, the data may not accurately represent the metropolitan popu-
lation. Therefore, a further study with a large sample size and an accurate sampling
plan is warranted to improve upon this study. Furthermore, the environment in different
countries may differ in terms of mobile banking adoption. A comparative study of mobile
banking between India and other countries might reveal other important factors at play in
the adoption of mobile banking.
Lastly, future studies should examine the role of other inhibitors and drivers instead of
perceived risk and perceived control alone. And these future studies can derive more fruit-
ful implications by including objective data to measure actual mobile banking adoption
rather than behavioral intention.

5.4 Concluding remarks

Security concerns about any technology hinder its adoption. Because mobile banking
technology involves various levels of risk, banks are devising various security-enhancing
strategies to reduce risk perception and increase control perception. As an exploratory
study, this study attempted to examine the role of security levels in mobile banking adop-
tion by using a scenario-based experimental method. Its findings show that levels of secur-
ity enhancement did not differ significantly in influencing perceptions of risk and control;
however, there were gradual increases in perceived control and a decrease in perceived
risk as customers were exposed to increasing levels of security. The results also revealed
how metropolitan and urban customers differ in their perceptions of mobile banking. Per-
ceived risk and perceived control significantly affected mobile banking adoption by cus-
tomers in urban areas, but for metropolitan customers, perceived control was the only
significant factor in mobile banking adoption.
Our research findings have insightful implications for expansion of Indian mobile
banking markets. The primary finding is the need to increase awareness about the
measures banks are taking to increase security and to alleviate the risks involved in
mobile banking transactions. For customers in metropolitan cities, it is important that
banks allow them to set their own transaction limits so that they can easily conduct
146 S. GUPTA ET AL.

their transactions over mobile phones. For customers in urban areas, increased awareness
will lead to adoption of mobile banking percolating downward to smaller cities and ulti-
mately to the rural areas of Indian society. However, as things stand now, people in
urban areas regard mobile banking as risky, which impedes the spread of mobile
banking to villages and rural areas.
As discussed earlier, one widely cited reason for launching mobile banking has been
financial inclusion, particularly of the rural population. Having a branch bank in a rural
area is expensive, and the prospective business volume makes it hard to justify opening
rural branches. Mobile banking is an alternative, but only after a person takes the initiative
to open a bank account to use in mobile banking. Although an average customer in a city
might not perform large number of mobile transactions, mobile banking access would be
very useful for people in rural areas who could use it to obtain bank loans, transferring
sums of money to others’ account, or even receiving money from the government
through the Direct Benefits transfer system (whereby money is transferred into a
person’s bank account). Rural areas are weak in both the awareness and the infrastructure
necessary for mobile banking.
Another area in which mobile banking would be useful is in micro financing. Rural money-
lenders charge high interest rates (sometimes even up to 40%) for small cash loans to the
rural poor. With widespread adoption of mobile banking in rural India, bankers could
easily move into this lending segment to the benefit of both banks and borrowers.
Bankers prefer mobile banking because it transfers the workload from the bank to the
customer and lets the bankers focus on other banking products. Fraud prevention and
tracking serve as additional motives for bankers to promote adoption of mobile
banking. The personal information transmitted in the course of a mobile transaction
makes tracking any fraud cases easier than is the case with online banking.
As the smartphone usage grows in India, mobile banking will penetrate from Tier I to
Tier II and Tier III cities and further into rural areas. The results of this study show that
as individuals become aware of the different levels of security, their perception of risk
decreases and their perception of control increases. The result is an increased acceptance
of mobile banking. Therefore, banks may include these features in their awareness cam-
paigns and promotional brochures.

Notes
1. http://www.business-standard.com/article/finance/mobile-banking-zooms-as-india-gets-
smarter-114081100826_1.html
2. http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=760
3. http://timesofindia.indiatimes.com/business/india-business/SBI-has-50-share-in-mobile-
banking/articleshow/42477088.cms
4. https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=8992#3
5. http://censusindia.gov.in/2011-prov-results/paper2/data_files/India2/1.%20Data%
20Highlight.pdf
6. Indication of good fits is as follows: Normed χ 2 < 3.0, RMSEA < 0.08, AGFI > 0.8, GFI > 0.9, CFI >
0.9, NNFI > 0.9, NFI > 0.9, SRMR < 0.1 (Gefen et al., 2000).

Disclosure statement
No potential conflict of interest was reported by the authors.
 INFORMATION TECHNOLOGY FOR DEVELOPMENT 147

Notes on contributors
Sumeet Gupta is currently affiliated to Indian Institute of Management Raipur, India. He received PhD
(Information systems) as well as MBA from National University of Singapore, Singapore. He has
around 10 years of work experience in Industry, Teaching, and Research. He worked as a research
fellow with the Logistics Institute – Asia Pacific, Singapore, on several consultancy projects on
Supply Chain with SAP A.G., DFS Gallerias, ASEAN secretariat, and EDB Singapore. He has also
worked on Government Sponsored Consultancy and Research projects. He has also worked with
reputed firms like Larsen and Toubro Limited. He has been accredited by All India Management
Association as an Accredited Management Teacher. He has published more than 70 papers in
various reputed International journals such as the Decision Support Systems, European Journal of Oper-
ations Research, OMEGA-© – An International Journal of Marketing Science, Psychology and Marketing,
Information, and Management. He has also presented his work in various international conferences
such as ICIS, AMCIS, and AOM. He has also edited a book on Cases in supply chain and distribution
management with IGI Global, Hershey USA. His research interests include information security, elec-
tronic and mobile commerce, RFID and supply chain design, Enterprise Systems adoption and
business analytics.
Haejung Yun is an assistant professor at College of Science & Industry Convergence, Ewha Womans
University, Seoul, Korea. She received her Ph.D. degree in information systems from Graduate School
of Information, Yonsei University. She previous worked for Yonsei University as a research professor
and American University, Washington, DC, as a post-doctoral researcher. Her research interests
include IT service management, information privacy, and mobile business. She has published
papers in International Journal of Electronic Commerce, Journal of Electronic Commerce and Research,
and other international and domestic journals.
Heng Xu is a tenured associate professor of Information Sciences and Technology at the Pennsylva-
nia State University. She received Ph.D. in Information Systems from National University of Singa-
pore. She has authored over 80 research papers on information privacy, security management,
human–computer interaction, and technology innovation adoption. Her award-winning work has
been published in premier outlets across various fields, such as information systems, law, computer
science, and human–computer interaction, including MIS Quarterly, Information Systems Research,
Journal of Management Information Systems, Decision Support Systems, University of Pennsylvania
Journal of Constitutional Law, Proceedings of the International World Wide Web Conference (WWW),
Proceedings of the ACM Conference on Human Factors in Computing Systems (CHI), Proceedings of
the ACM Conference on Computer Supported Cooperative Work and Social Computing (CSCW), and
many others. She has been a recipient of an NSF Career award (2010) and the endowed PNC Tech-
nologies Career Development Professorship (2010–2013). She leads the Privacy Assurance Lab (PAL),
an inter-disciplinary research group working on a diverse set of projects related to understanding
and assuring information privacy. She is also the associate director of the Center for Cyber-Security,
Information Privacy and Trust (LIONS Center) at Penn State. Dr Xu is currently on a temporary rotation
as a Program Director at the US National Science Foundation for Secure and Trustworthy Cyberspace
(SaTC) Program in the Directorate for Social, Behavioral, and Economic Sciences.
Hee-Woong Kim is Associate Professor in the Graduate School of Information at Yonsei University,
Seoul Korea. Before joining Yonsei University, he was a faculty member at the National University of
Singapore after spending several years as a senior IS consultant in the banking industry. He has
served on the editorial boards of the Journal of the Association for Information Systems and IEEE Trans-
actions on Engineering Management. His research work has been published in the IEEE Transactions on
Engineering Management, Information Systems Research, Journal of the Association for Information
Systems, Journal of Management Information Systems, Journal of Retailing, and MIS Quarterly.

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Appendix. Scenario-based experiment design and instrument

Survey design

Survey instrument

Construct Item Source

Intention to adopt INT1 I plan to subscribe to a mobile banking service in the near future Dodds et al.
mobile banking (within the next six months) (1991)
INT2 I intend to subscribe to a mobile banking service in the near future
(within the next six months)
INT3 I predict I will subscribe to a mobile banking service in the near future
(within the next six months)
Perceived control CTRL1 How much control do you believe you have over the transactions Xu (2007)
conducted using a mobile banking service?
CTRL2 How much control do you believe you have over preventing misuse
of your account information that might take place as a result of
using a mobile banking service?
CTRL3 Generally speaking, regarding your accounting information, how
much control do you believe you have in using a mobile banking
service?
Perceived risk RISK1 It is risky to use a mobile banking service. Dinev and Hart
RISK2 There is high potential for security loss associated with using a mobile (2006)
banking service
RISK3 Using a mobile banking service may involve many unexpected
problems
RISK4 My savings would be in jeopardy if I used a mobile banking service
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