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Factors Influencing the User Acceptance of E-Banking in Bangladesh: An Empirical Study

By Syeda Rifat Ara

Institution of Business Administration Jahangirnagar University

ABSTRACT

The primary objective of this research is to find out the influence of perceived usefulness (PU) and perceived ease of use (PEOU) on the user acceptance of e-banking in Bangladesh. E-banking has a huge expansion opportunity in Bangladesh. So, it is important to know what factors influence the user acceptance of e-banking in Bangladesh. Theoretical framework is based on the widely used Technology Adoption Model (TAM), which was proposed by Davis in 1989 in his doctoral thesis. A structured online questionnaire is developed to collect data using Google doc. Random sampling method was used with a final sample of 120 respondents. Cronbach's Alpha values of independent variables (0.857 and 0.867) show the reliability of the data. In the KMO test, value of 0.874 indicates the validity. Correlation matrix of PU shows strong correlation among the items of PU, while in the correlation matrix of PEOU, correlations are moderate. In the regression analysis, it was found that perceived usefulness influences the user acceptance by 31%. It is also found that perceived ease of use has no influence. It means that 27 years old TAM model is partially relevant in Bangladesh. Implications are drawn for future research on user acceptance of e-banking in Bangladesh.

Keywords: Technology Acceptance Model (TAM), Perceived Usefulness, Perceived Ease of Use, E- Banking, Bangladesh

Introduction

E-banking is becoming more widespread and popular in Bangladesh. As on October 31, 2015, number of internet banking customers was 1.5 million. In addition, the number of daily online transaction stood at more than 19,000 amounting to Tk. 590 million. Now, the total number of internet users in Bangladesh stands at around 40 million (Thedailystar.net, 2016). As the number of internet users is quite high and the number of e-banking user is relatively low and as Bangladesh government is encouraging people to use internet more, e-banking has a huge expansion opportunity in Bangladesh. E-banking is important for the commercial banks because by combining technology with banking, they can generate more profit and can give tough competitions to the competitors. Among the 64 banks, currently 22 banks offer e-banking facilities (Bankerbd.com, 2015). In the recent future, other banks will start providing e-banking facilities to retain existing customers and grab new customers. To stay in the competition; to reduce cost and to meet global standard, commercial banks need to know what are the reasons for which people accept e-banking, so that they can offer better service than their competitors.

Many researches showed that there are several factors that influence a customer to accept e- banking. For example - perceived usefulness, perceived ease of use, perceived risk, customer attitude etc. It is very important for the commercial banks to identify what are the influential factors, so that they stay in competition and provide better service to the customers as well as attract prospects. Many research works were conducted throughout the world but no research was conducted in Bangladesh to find out which factors influence Bangladeshi consumers.

The objective of this research is to find out whether the selected factors have influence on the user acceptance of e-banking in Bangladesh or not. Specifically, the research takes two factors as independent variables and performs tests to find out if these factors have impact on the user acceptance, which is the dependent variable. The independent variables are - perceived usefulness and perceived ease of use. Perceived usefulness and perceived ease of use were identified by Davis in 1989, which is popularly known as Technology Adoption Model (TAM). To find out the impact of independent variables on dependant variable, two hypotheses are developed and test.

In the 'Technology Adoption Model' section, theoretical background of this research is briefly discussed. This section also contains the reasons of choosing this model and its importance in Bangladeshi context. The following section, titled as Methodology, covers the methods of selecting the sampling unit and sample size; structuring the questionnaire, collection of data and describes the reasons of selecting specific data analysis techniques. 'Findings' section contains result of tests and interpretation. Detail result is discussed in the 'Discussion' section. Conclusion is drawn providing a

brief summary of the paper, the only limitation of the research and suggesting scopes of future researches.

Technology Adoption Model

Technology Adoption Model is a famous model by Fred D. Davis (Davis, 1989). It is a widely accepted and widely used model that suggests that whenever a new technology is presented before the users, two factors determine how and when they will use that technology. TAM shows that the determinants are perceived usefulness (PU) and perceived ease of use (PEOU). According to Davis, perceived usefulness is "the degree to which a person believes that using a particular system would enhance his or her job performance". The definition of Davis can be modified in the context of e-banking. A person will use e-banking when he/she will find it more useful than traditional banking system. Again, perceived ease of use is defined as the "degree to which a person believes that using a particular system would be free of effort". In e-banking context, that can be described as how easily a customer can use e-banking service of a bank, whether he/she is a tech savvy or novice. This model was used by many researchers from many countries. Researches were conducted in Pakistan, Malaysia and Turkey to apply this model to describe the user acceptance of e-banking. Two of the three researches show that user acceptance has positive relationship with perceived usefulness and perceived ease of use (Poon, 2008; Polatoglu et al., 2001). However, In Pakistan, it was found that perceived ease of use has no significant impact on the user acceptance (Kazi, 2013). In another study, it was found that along with these two variables, self-efficacy also a variable that matters to the consumers to adopt e-banking (Wang et al., 2003). Till now, some more studies have found that there are some other factors that influence the user acceptance, but PU and PEOU still play a 2 most important roles (Ying et al., 2010; Tan and Teo, 2000).

No such research to find out the factors was conducted in Bangladesh. However, a research was conducted in the year when e-banking started its journey in Bangladesh. Purpose of that research was to find out the satisfaction level of the customer who use e-banking. It was found that they were somewhat satisfied with the newly introduced system (Nupur, 2010). At that time, a very few commercial banks offered e-banking service. Switching options to other banks were limited. Now customers are being provided with lots of options. Competition is increasing as well as complications. Customers are being provided with customized service. Satisfaction level does not show that he/she will not switch from a particular bank. If he/she is provided with better option with less hassle, he/she might switch. For this reason, now it is important to know what are the factors that influence the acceptance of e-banking. This research paper aims to find out if the factors that were proposed about 27 years back by Davis have influence in Bangladeshi customers or not.

Methodology

As this research paper is aimed at determining whether the TAM is also applicable in Bangladesh or not, quantitative data is used for testing the hypotheses. Research objectives of this research paper suggest that sample should be the persons who use e-banking. So, population of this research paper is the Bangladeshi citizens who use e-banking. As bank accounts are confidential, only the account holder/s has/have access to e-banking of their individual accounts. The sampling unit of this research is the owners of the bank accounts who use e-banking. The sample size of this research paper is 120. An online consumer survey was conducted to collect data. Random sampling method is adopted to collect the data.

A single page questionnaire was prepared using Google Doc. The questionnaire contains twelve likert-scale questions and 2 demographic questions and a question on the usage pattern. First twelve likert-scale questions were adopted from the paper of Davis and modified according to the objectives of this research paper and in the context of e-banking. First five questions represent the perceived usefulness and next five questions represent perceived ease of use. Next two represent the user acceptance. PU and PEOU are the independent variables. UA is the dependant variable.

Table 1: Scale Items for Variables

Factor

Items

 

E-banking gives me greater control over my account (PU1)

Perceived

The e-banking system provides me with all the banking facilities I want (PU2)

Usefulness

  • I can accomplish banking tasks more quickly using e-banking (PU3)

(PU)

Using e-banking saves my time (PU4)

E-banking improves the quality of my work (PU5)

 

The e-banking system is often confusing to me (PEOU1)

  • I make errors frequently when using e-banking system (PEOU2)

Perceived Ease

  • I need to give a lot of effort to operate the e-banking system (PEOU3)

of Use (PEOU)

  • I often encounter error while using e-banking system (PEOU4)

 
  • I find the e-banking system tough to operate (PEOU5)

User

  • I find the e-banking system useful (UA1)

Acceptance

  • I find the e-banking system easy to use (UA2)

Link of the online questionnaire was posted in various Facebook and LinkedIn groups, which are related to internet banking. Posts were given once in a week to remind the respondents about the survey. One and half months were needed to collect the data.

To analyze the data, Statistical software SPSS is used and three tests have been performed. At first, to check the reliability of the collected data, Cronbach's Alpha (1951) is performed. Reliability means that the result of the research is same as the previous studies that were carried under the same conditions with the same variables. As the research is conducted to find out whether results of previous researches are valid in Bangladesh or not, the Cronbach's Alpha test is performed. Secondly, Principal Component factor analysis (Jolliffe, 2002) is performed to measure validity of the collected data. Validity is important to measure because it says whether the measurements or items of a variable in the study behave in exactly the same way as the variable itself. Correlation matrix is constructed to find the correlation among items representing a single variable, KMO test is performed to find the suitability of data for factor analysis. Bartlett's test is performed to find the strength of the relationship among the variables. Finally, multiple linear regression analysis is performed to test the hypotheses. Regression Analysis measures what portion of the dependent variable can be explained by the independent variables. Multiple regression is used because this research is conducted to find empirical evidence of the influence of independent variables on the dependent variable; has more than 1 independent variable and the data is ordinal.

Findings

The hypotheses are derived from the research paper of Davis (1989) and modified according to the objective of this research paper. As a rule of thumb, it is known that in a hypothesis testing, null hypothesis always denotes no relation between the dependent and independent variable. In this research, null hypothesis is that the selected variables have no influence on user acceptance of e- banking in Bangladesh. The alternative hypotheses state that there is positive influence of independent variables on the dependent variable.

Hypothesis 1 H 0A : Perceived usefulness (PU) has no influence on the user acceptance of e-banking in Bangladesh. H 1A : Perceived usefulness (PU) has a positive influence on user acceptance of e-banking in Bangladesh. Hypothesis 2 H 0B : Perceived ease of use (PEOU) has no influence on user acceptance of e-banking in Bangladesh. H 1B : Perceived ease of use (PEOU) has a positive influence on user acceptance of e-banking in Bangladesh.

Reliability and Validity

To test the reliability of data, this research performed Cronbach's Alpha (1951) test. It is a standard scale reliability test. The test is used to check the internal consistency reliability. Table 2 shows that Cronbach's Alphas for PU and PEOU are 0.857 and 0.867 respectively. Both values are greater than

the critical threshold of 0.7 as suggested by Nunnally (1967). So, the test shows that the measures are reliable.

Table 2: Reliability test result

Independent Variables

No. of Items

Cronbach’s Alpha

Perceived Usefulness (PU)

5

0.857

Perceived Ease of Use (PEOU)

5

0.867

Source: Analysis of Data Collected

The following table contains the correlation matrix of the 10 items. It is found from the correlation matrix that items representing one variable are positively correlated with each other and negatively correlated with another variable. According to Wong and Hiew (2005), the values of correlation coefficients ranging from 0.50 to 1.0 is considered strong. Among the items of PU, PU1 and PU5 shows high correlation, correlation between PU2 and PU4 is moderate. Among the items of PEOU, the highest correlation value is 0.755, which indicates PEOU3 and PEOU5 are highly correlated. However, moderate correlations exist between PEOU4 and PEOU5, between PEOU1 and PEOU4, between PEOU2 and PEOU5, finally between PEOU3 and PEOU4.

Table 3: Correlation Matrix

 

PU1

PU2

PU3

PU4

PU5

PEOU1

PEOU2

PEOU3

PEOU4

PEOU5

 

PU1

1.000

                 

PU2

.535

1.000

               

PU3

.570

.609

1.000

             

PU4

.515

.418

.661

1.000

           

Correlation

PU5

.664

.538

.636

.603

1.000

         

PEOU1

-.454

-.400

-.381

-.333

-.495

1.000

       
 

PEOU2

-.360

-.258

-.372

-.310

-.470

.633

1.000

     

PEOU3

-.378

-.387

-.446

-.362

-.387

.635

.521

1.000

   

PEOU4

-.439

-.283

-.473

-.440

-.518

.462

.611

.465

1.000

 

PEOU5

-.385

-.462

-.422

-.350

-.461

.634

.472

.755

.458

1.000

Source: Analysis of Collected Data

KMO and Bartlett's tests are done before factor analysis. Both of the test results show that items are valid. Test result and interpretation is provided in the Appendix - A.

Factor Analysis is done to check whether all the items are loaded in the two variables as described above. Test result and interpretation is provided in the Appendix - B.

Finally, to test the hypothesis, the research employed Multiple Linear Regression Analysis. From the table 4, it is found that the value of adjusted R² is 0.31, which implies that 31% of the variation in

user acceptance of e-banking is explained by these two independent variables (perceived usefulness and perceived ease of use). It is found that F value of 27.729 being significant at p = 0.000. Thus, this implies that the entire model in this study is well fit and significant.

Table 4: Model Summary

Model

R

R Square

Adjusted R

Std. Error of the

F

Sig. (p-value)

Square

Estimate

 
  • 1 .567 a

.322

.310

.5824

27.729

.000

Source: Analysis of Collected Data

Results of Table 5 shows that Perceived Usefulness is significantly lower p-value (p < 0.05) and it

indicates a positive relationship as the standardized coefficient (beta) value is positive. The beta values are what the regression coefficients would be if the model were fitted to standardized data, that is, from each observation, the sample mean is subtracted and then divided by the sample standard deviation. It rejects the null hypothesis H 0A and accepts alternate hypothesis, which states that Perceived usefulness (PU) has a positive influence on the user acceptance of e-banking in Bangladesh. In contrast, PEOU is a weak predictor with greater p-value at 5% significance level (p > 0.05). It means the null hypothesis cannot be rejected. Perceived ease of use (PEOU) has no influence on user acceptance of e-banking in Bangladesh.

Table 5: Coefficients

Model

Unstandardized Coefficients

Standardized

t

Sig. (p-value)

Coefficients

B

Std. Error

Beta

 

(Constant)

1.449

.509

 

2.849

.005

  • 1 PU

.589

.092

.610

6.378

.000

 

PEOU

.060

.076

.076

.792

.430

Source: Analysis of Collected Data

Demographic and frequency of use data is presented in Appendix - C

Discussion

From the test results, it is found that Technology Adoption Model (TAM) proposed by Davis is not entirely true in the context of Bangladesh. Perceived ease of use has no significant influence in the user acceptance of e-banking in Bangladesh. From the response of the questionnaire, it is seen that almost half of the respondents find it somewhat difficult to operate the e-banking system. They find it

tough to operate and they need give a lot of effort. The result is presented in Appendix - D. It can also be observed from the responses that they encounter minimum error, which is a positive side. The result is consistent with the study of Kazi (2013) that were in the context of Pakistan. Kazi focused on the students. In this research, 88 among the 120 respondents belong to age group 30 or less than 30, which indicates that these respondents are still students or recently have joined the workforce. Another reason of UA not being influenced by PEOU can be the exposure and usage of internet to the mass people. People of Bangladesh have been introduced to internet in the early 90s (Wikipedia). Speed was not good enough to surf the World Wide Web. Optic fiber was introduced in 2006. Still, the speed is much lower than the developed countries. Cost is also higher. So, most of the people do not use internet extensively. People use it to extract the important information and perform crucial tasks, not because it is easy. This result differs from the developed countries like Turkey, Singapore and fast developing countries like Malaysia (Poon, 2008; Polatoglu et al., 2001; Tan and Teo, 2000). Correlation matrix table also indicates that PEOU is not a significantly influencing factor. Because from the correlation matrix table, it is found that the correlation between the items of PEOU is not that good. 4 among 10 correlations are found to be moderate. In the regression analysis, the beta value of PEOU is also insignificant comparing to the beta value of PU (0.076 and 0.610 respectively). However, PU can explain only 31% of the user acceptance of e-banking in Bangladesh. It indicates that there are other significant factors that influence the user acceptance of e-banking in Bangladesh.

Conclusion

This research is conducted to find the influence of two selected variables (PU and PEOU) on independent variable (UA). From the multiple regression analysis, it is found that perceived ease of use has no influence on user acceptance. However, perceived usefulness has influence and 31% of user acceptance can be explained by it. Further research can be to find what the other factors that influence user acceptance are. For example - trust, perceived credibility, perceived risk etc. these factors are already proven influential in many researches done in many developed and developing countries. So, these factors can be also tested in the context of Bangladesh. One limitation of this research is that the population of this research is the people who use e-banking. Therefore, it cannot be generalized for all the people of Bangladesh. Further research can be done considering non-users of e-banking.

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Appendix - A

Kaiser-Meyer-Olkin measure of sampling adequacy test is performed to find the suitability of data for factor analysis. Kaiser (1974) suggested that the value should be greater than 0.5 for a satisfactory factor analysis to proceed. He further suggested that values ranging from 0.80 to 0.89 are meritorious. Table 7 shows the KMO test value is 0.874 which is, according to Kaiser, is meritorious. Bartlett's test is performed to find the strength of the relationship among the variables. It tests whether the correlations matrix is an identity matrix. If it is an identity matrix, it will indicate that the factor model is inappropriate. Because in identity matrix, the items are totally noncollinear. It means if the items are factor analyzed, It would extract as many factors as items, since each item would be its own factor. Null hypothesis of this test is that the correlation matrix comes from a population in which the items are noncollinear. In table 7, test result shows that the null hypothesis can be rejected as p-value<0.05. It can be concluded from the test that the strength of the relationship among items is strong and, therefore, factor analysis can be performed.

Table KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

.874

Approx. Chi-Square

654.698

Bartlett's Test of Sphericity

df

45

Sig.

.000

Appendix - B

Extraction method is set at Principal component analysis (PCA). PCA is a statistical procedure that uses an orthogonal transformation to convert a set of observations of possibly correlated variables into a set of values of linearly uncorrelated variables called principal components (Wikipedia). Varimax rotation method is used because it assumes that there is no correlation in among the factors in the final solution. Table 8 shows the rotated component matrix. The matrix indicates the correlation of each items with each factor. It can be easily understood from the table that there are two factors in the data. The first five items are substantially loaded in Factor 1 (Perceived Usefulness) and the last five items are substantially loaded in Factor 2 (Perceived Ease of Use).

Table Rotated Component Matrix a

 

Component

1

2

PU1

.756

-.272

PU2

.707

-.234

PU3

.825

-.254

PU4

.782

-.179

PU5

.774

-.350

PEOU1

-.254

.810

PEOU2

-.201

.776

PEOU3

-.228

.818

PEOU4

-.397

.604

PEOU5

-.271

.787

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 3 iterations.

Appendix - C

Variable

Frequency

Gender

Male

63

Female

57

Age

Under 21 years

16

21

- 30 years

67

31

- 40 years

20

41

- 50 years

12

51

years and above

5

Frequency of using e-banking

Daily

28

Weekly

53

 

Monthly

25

Quarterly

6

Half-Yearly

5

 

Yearly

3

Appendix - D

Snapshots are taken from the google summary.

Appendix - D Snapshots are taken from the google summary. Page | 14
Appendix - D Snapshots are taken from the google summary. Page | 14
Appendix - D Snapshots are taken from the google summary. Page | 14
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