Академический Документы
Профессиональный Документы
Культура Документы
1, 2013
Nida Hanif
IQRA University,
Karachi-75300, Pakistan
E-mail: nida_hanif25@yahoo.com
Abstract: This study investigates the determinants which attract the customers
to adopt internet banking in Pakistan by employing internal and external
customers, on the sample size of 210 for internal and 151 for external
respondents through using the survey research instrument questionnaire. The
confirmatory factor analysis with multiple regressions technique has been
applied. The result of regression analysis shows that perceived usefulness (PU),
information of internet banking (INF), perceived risk (PR), security and privacy
(SP) shows more influence to increase the intention of external customers to
adopt internet banking services while government support (GS) provide more
influence for the internal customers in adoption of internet banking services.
This study proves that external customers can be more emphasised, if they
believe in convenience in adopting the services. It is recommended that banks
should take some consideration to apply internet banking by delivering the
information in an easiest way, provide more usefulness and benefits and also
minimise the fraud as providing more security and privacy. This will help the
bank to increase their profit by reducing its cost, time saving and retain more
potential users.
Reference to this paper should be made as follows: Raza, S.A. and Hanif, N.
(2013) ‘Factors affecting internet banking adoption among internal and
external customers: a case of Pakistan’, Int. J. Electronic Finance, Vol. 7,
No. 1, pp.82–96.
did his MBA in Finance from Iqra University. He brings an experience of more
than eight years of corporate world working at various management positions.
His areas of interest include quantitative methods in research, cost and
management accounting, financial management, enterprise management and
financial markets.
1 Introduction
Banking is the only sector in which every deal they performed or activities done are
beneficial for its own development and for the country economy as well. Nowadays, the
revolution of information technology has influenced almost every part of life. Among
them is the banking sector. Today, introduction of electronic banking has been more
revolutionised and contribution of technology is considered to be the main reason for the
organisation’s success and for their core competency.
Electronic banking, e-finance or e-commerce (Nazir et al., 2011), is the application of
information technology (IT) which helps to facilitate the information and services over
public standards-based networks (Khalid, 2010). There are different forms of electronic
banking which include online/internet banking, mobile banking and telephone banking.
Internet banking service is a wider part of electronic banking services.
Kesseven et al. (2008) explain internet banking as a system which allows the
individuals to perform banking activities at home, via the internet. As internet banking is
one of the key routes to increase financial transaction market shares and make long term
relationship with the customer’s. The internet banking was initiated first in the 80s, but its
growth across the globe took place in the 90s and Europe has become a leader in the
usage of internet banking services (Schneider, 2001).
IB offers many services which are beneficial for the customers after getting the IB
facilities which includes; carry out information, online payments, balance inquiry, utility
bills payment, ticket booking, shopping through cards, prepaid mobile recharge,
investment services, market watch, online transfer of fund, request check book and
credit\debit of accounts through IB etc. (Daniel, 1999; Mols, 1998; Sathye, 1999), and
allow customers to perform banking transactions anytime at 24/7. As well as IB also
eliminates unnecessary waste of money that an organisation incurs in a form of human
resources and office supplies.
As Polatoglu and Ekin (2001), Black et al. (2002), Howcroft (2001) and Khan
(2007–2009) argued, in Pakistan, most of the banks introduce IB and turning towards
more competitiveness by upgrading their technologies and services. This system can be
adopted by most of the international as well as local banks in Pakistan because of
associated vital benefits like time and cost effectiveness. In the year of 2006, many
commercial banks were opening online branches in the second quarter of the fiscal year.
Now, total existing bank branches are 9,483 out of which 7,036 bank branches is now
84 S.A. Raza and N. Hanif
offering the real time online banking (RTOB) services and through internet Rs 44.75
billion were transacted (SBP, 2011).
Most studies have been conducted to analyse the determinants which influence to
adopt IB on the basis of customer’s (end users) perspective independently. But the studies
have not been analysed separately in a way by considering both the views of internal
customers (bank employee) and external customers towards the acceptance of IB.
Because internal customers have more awareness about transactions, information and the
services offered by the banks, that external customers are unaware, the objective of this
study is conducted individually for identifying the main factors which influence the
internal and external customers to adopt IB.
2 Literature review
In this section after summarising the theoretical background, empirical studies are
reviewed.
3 Methodology
After reviewing the theoretical and empirical studies, the model to examine the factors
that influence the bank customers to adopt internet banking in Pakistan is given below:
IB =∝ + β1 (Con) + β 2 ( PU ) + β 3 ( Inf .IB) + β 4 ( PR ) + β 5 ( SP ) + β 6 (GS ) + ε
4 Data analysis
In this study section we analyse the main factors throughout getting the perspective of
internal and external bank customers through factor analysis. Factor analysis assists in
reducing a large set of data into a smaller number of components that involve some
associated variables (Pallant, 2005).
A confirmatory factor analysis can be performed on the basis of principle component
matrix with varimax method. The Kaiser Meyer Olkin value was 0.901 for internal and
0.899 for external, which is higher than the recommended value of 0.8 which shows, data
sampling adequacy is good because it’s value is greater than 0.5. The result of Bartlett’s
(1954) test of sphericity is significant which support that; the data is appropriate for
making factor through correlation matrix. The loading factor values which are higher
than 0.4 indicates it is important and those loading values which are higher than 0.5
considered that those factors are practically significant (Kaiser, 1974); apart; the loading
Factors affecting internet banking 89
factors result of this study, shows significant because the values of all getting factors are
higher than 0.5. Chronbach’s coefficient alpha (α) was used to measure the internal
consistency of the data items. The alpha result of all items show high consistency and
load considerably well on its factor. The factors result of both data can be seen in Table 2
and Table 3.
Then multiple regression technique was applied on internal and external data after
factor analysis. The multiple regression technique helps to analyse the influence of
considered variables in the adoption of internet banking in Pakistan. Table 4 present the
regression result of internal respondents and Table 5 shows the regression results of
external respondents.
5 Conclusions
In this empirical research study, we analyse the main impacting factors which influence
the bank customer’s include (internal and external) to adopt IB services in Pakistan.
Design questionnaire helps to analyse the right perception. As regression analysis result
proves that all variables shows positive relationship on the intention but GS shows more
significant impact to increase the intention of internal customers rather than external
customers. While PU and information of IB (INF), PR and SP shows more significant
impact to increase the intention of external customers rather than internal customers. As
per external result, the customer’s intention is just like convenience. It is found that
usefulness and convenience of internet banking services are the most influential factors
for external customers to adopt internet banking in Pakistan.
In view of the above, it is recommended that the banks should focus on to increase the
usefulness and convenience of internet banking services to encourage the internal and
external customers of banks to adopt internet banking. The results of external customers’
model also suggest that the banks should focus more on increasing the levels of security
and privacy to encourage the external customers to use the internet banking services. This
technology helps the bank to increase the efficiency of work and minimise the error in the
banking activities. By getting all the facts and figures we have no doubt that the use of IB
in Pakistan will be enlarged and expanded and their importance can be seen by their
adoption.
First, the time available to complete this project was limited; therefore, I have not
covered all the cities and focused on the urban area only, as well as attempt had been
94 S.A. Raza and N. Hanif
made to narrow down the topic and to focus on the main city, Karachi, only, because the
people of this city are well educated, literate and understand the importance of e-banking
facility. Further public and employees of the banks are well knowledgeable. But the
actual results could be different if this research covered the rural and urban areas also.
Secondly, this research found four factors which influence the people to adopt IB but
there are many other factors found in the environment that impact among the customers
to adopt IB services.
8 Future research
The main motive of this study is to find those factors which influence the people to adopt
IB but there are still rooms for further investigations which remain unnoticed. In this
study, we have focused on only six variables which influence the customers of banks
to adopt internet banking in Pakistan. The future researchers may include more or other
variables in their research to understand the influence of such variables on internet
banking adoption. Second, increase the sample size of both customers which can show
more appropriate results. Third, to conduct the research through focus on both rural and
urban areas because nowadays rural areas also willing to get the IB services in terms of
transfer of fund and withdrawing money through ATM.
Acknowledgements
The authors would like to thank Syed Tehseen Jawaid (Assistant Professor, IQRA
University) for his helpful comments and stimulating suggestions.
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