INVESTIGATING FACTORS IMPACTING ON INTENTION TO USE BANKING SERVICES IN RURAL AREAS AND SUBURBS OF HANOI45472

Results of the study shows that usefulness, usability, trust, innovation, social impact, communication about services are the six factors having positive relationships with the intention

IN TERNATIONAL CONFERENCE ON - CIFBA 2020

INVESTIGATING FACTORS IMPACTING ON INTENTION TO USE BANKING SERVICES IN RURAL AREAS AND SUBURBS OF HANOI

Nguyen Thi Hanh*, Nguyen Chu Du

Trade Union University

ABSTRACT

This study aims to investigate factors affecting intention to use banking services in rural areas and suburbs of Hanoi The study serves as a basis for the Commercial Banks to accurately assess the demand and expectation of the customers on the supplied service products, from which suggest directions

to help the Banks develop services suitable with rural areas The relationships

in the model are analyzed with regression model Results of the study shows that usefulness, usability, trust, innovation, social impact, communication about services are the six factors having positive relationships with the intention

to use Banks’ services of the customers Especially, customers’ trust and communication about the Banks’ services are the two factors having strongest effects on with the intention to use Banks’ services of the customers

Keywords: Banking services in rural areas, using intention, regression model

1 INTRODUCTION

Attracting customers and expanding commercial banks' markets in enhancing competitiveness as well as coordinating with government programs to implement hunger eradication & poverty reduction for rural areas is an important strategy in each country (Nguyen Kim Anh et al., 2011) The empirical evidence from many studies shows that banking services in rural areas are one of the powerful means for the families there to access and increase business performance, escape poverty and develop their lives (Nguyen Kim Anh et al., 2011)

To meet the requirements on economic development in such global economic

* Corresponding author

Email address: hanhtc9@gmail.com

integration of the country in general and of the rural areas and suburbs of Hanoi

in particular, demands on Banking services are of more and more diverse quality and high standard requirement Thus, it is essential to investigate real performance situation of the Commercial Banks and study the factors affecting intention to accept and use Baking services in rural areas so that the Banks can have accurate evaluation

of the demands and desires of the customers on the supplied service products and suggest solutions to develop banking services suitable with the customers in rural areas

However, according to the authors' database, currently, there are very few studies conducted in the world and Vietnam on this topic Therefore, this study is conducted

to help the Banks exactly identify the factors affecting the intention of using services

of the customers in rural areas and suburbs of Hanoi, from which analyze and evaluate and selective apply solutions for other rural areas in Vietnam Specifically, the objectives of this study include:

(i) Identify factors affecting the intention to use banking services of the customers

in rural areas and suburbs of Hanoi

(ii) Suggest solutions to help managers of the Banks develop strategies to promote the use of banking services in rural areas and suburbs of Hanoi

2 THEORETICAL BASIS AND RESEARCH MODEL

2.1 Theoretical basis

In the world, there are many researches on the intention of the customers in accepting and using the services provided by the organizations Consumers have rights to choose products with low cost, high quality and safe Barsh et al (2010) argued that it is increasingly important for the enterprises to have a better understanding

of consumer intention to attract and retain consumers The models to assess the relationships between the intention to accept and use banking services were built and applied Fishbein & Ajzen (1975) analyzed consumer trends through consumer behavior Research by Engel & et al (1978) pointed out that consumer behavior is human thoughts and feelings during shopping and consumption That is an ongoing process that includes identifying needs, gathering information, reviewing options, deciding to purchase and giving assessments after purchasing Porter (1985) has argued that in order to gain competitive advantage, the businesses should create values for the customers in the market, meet customer needs and increase customer satisfaction Researchers have also demonstrated that motivation have important effects on the formation of customer purchasing attitudes and behaviors Rogers (1995) built an Inovation Diffusion Theory model - IDT and identified four factors that affect the intention / acceptance to use of the customers, namely: innovation, communication channels, time, and social influence Fishbein & Ajzen (1975) with TRA - Theory of Reasoned Action argued that the influencing factors include (1) attitudes of consumers towards the conduct of behavior and (2) the Subjective standards of consumers TPB (Theory of Planned Behavior) was developed by Ajzen

in 1991 with the addition of an element of cognitive behavior control Davis et al (1993)

IN TERNATIONAL CONFERENCE ON - CIFBA 2020

developed TAM -Technology Acceptance Model based on TRA argued that the elements perceiving usefulness, trust and usability affect the using and acceptance intention

Over the recent decades, there have been many empirical studies on the intention to use products / services conducted in most areas of human life based on the basic theory mentioned above These studies have applied a model or integrated multiple models to assess the impact of the factors on intention of the customers in various fields (Pham et al, 2013) Although there have been a few researches on the factors affecting the intention to use banking services in rural areas around the world and in Vietnam, the above theories and empirical evidences in different areas will support the development of research models and assumptions in the context of rural areas, particularly rural areas and suburbs of Hanoi (sample data collected in this study)

2.2 Research models

Through actual conditions in Vietnam as well as the theoretical basis of TRA, TPB, TAM, UTAUT models, Porter's research (1985); Kortler (1989) and related studies on the intention of acceptance and using services and products, the author studies the factors affecting the intention to accept and use banking services in rural areas and suburbs of Hanoi as follows:

Awareness of usefulness is the subjective ability of users when using the services of

a specific application system increases their productivity (Davis et al., 1989)

Awareness of usability of the services is the feeling of the difficulty or ease of learning

to use the organization's products and services provided, Davis and colleagues (1989)

The studies by Davis (1989); Foon and Fah (2011); Featherman & Fuller (2003); Venkatesh and Zhang, (2010); Sripalawat and colleagues (2011); Dasgupta et al (2011) have demonstrated awareness of usability as a determinant influencing online banking service users TAM model by Davis and colleagues, research by Lee and colleagues (2001) on acceptance and use of electronic commerce; Yaghoubi and Bahmani (2010) on the acceptance and use of Internet Banking, Clegg et al (2010); Pham et al (2010) on the acceptance of E-Banking have also affirmed the important factor affecting the acceptance and use of services is the awareness of usability and awareness of the usefulness of the products and services

Trust, defined by Chaudhuri and Holbrook (2001), Rauyreuen et al (2007), is a

belief in a party's promise and fulfill its obligations in exchange relations Trust gives customers a sense of safety when the partners can meet their expectations The studies by Foon and Fah (2011), Laforet and Li (2005) research the security and confidential factors to assess risk perception and find that customer trust is the most important factor affecting the use of online banking services Researches by Amin et

al (2008), according to the test, have concluded that customer trust significantly affects the intention of online banking users

Social influence through the research by Venkatesh et al (2003) is the degree to

which an individual perceives that important people and other people think that they

should use new products The studies by Venkatesh et al (2003), Kotler (2004); Venkatesh and Zhang (2010), Foon and Fah (2011), Sripalawat and colleagues, (2011) and Kotler's studies (2004) also have confirmed the influence of society on customer buying behavior Amin et al (2008), according to empirical research results, showed that the intention to use mobile phone services of people has been significantly affected by those around them; Singh et al (2010) found that individual decisions

to accept mobile commerce services are affected by friends and family members; Puschel et al (2010); Riquelme and Rios (2010) and Sripalawat et al (2011), showed that social influence is a prominent influence affecting the intention to accept and use products and services

Innovation, according to Steenkamp et al (1999,) is the tendency to buy new and preferability of product differences Consumer innovation is measured through the desire to find information about new products Researches by Manning et al (1995); Venkatraman (1990, 1991); Im et al (2003, 2007) innovation is a new and challenging preference in life The study by Cao Thi Thanh (2014) on the impact of some individual cultural factors on consumer acceptance of new products of the consumers in Hanoi inner city (study on personal electronic products) also confirms that the innovation has positive influences on consumer acceptance of products and services

Service communication is a communication process to share knowledge, experiences

and feelings about used products and services Schultz and Lauterborul (1993) define that mass media is every opportunity for readers, listeners, viewers to a media message Information of the media message is to disseminate information to individuals and organizations Communication and information from the Banks help the customers be aware of the benefits of products and services Being aware of the usability of the products will help increase the intention to use banking services Researches of Rogers (2003) acknowledge that communication is an essential element of the society to create understanding for the customers Through the mass media and personal communication, individuals can exchange ideas, knowledge and social values about the innovation Researches on the influence of communication factors by Terro et al (2004); Rankin and Luther (2006) agree that the relationship between information, initial awareness affect customer innovation preferences

The intention to accept and use banking services in rural areas is an incentive to take

action, make decisions about whether or not to use banking services in the future Based on researches by David (1985); Venkatesh et al (2003); Foon and Fah (2011) along with studies on the intention to accept and use TRA, TPB, TAM, UTAUT model services; Foon and Fah (2011); Riquelme and Rios (2010); Venkatesh and Zhang, (2010); Dasgupta and colleagues (2011); as well as the theoretical background in the above section, the authors propose a research model on the factors affecting the intention to use banking services in rural areas and suburbs of Hanoi as follows:

IN TERNATIONAL CONFERENCE ON - CIFBA 2020

Picture 1 Proposal research model

3 RESEARCH METHODOLOGY

3.1 Scale in the model

The research scales in the model include usefulness scale (HI) with 5 questions based on research by Venkatesh et al (2003); Usability scale (DSD) with 5 questions based on research by David et al (1993); Trust scale (TN) with 4 questions based

on research by Venkatesh et al (2003); Social influence scale (XH) with 5 questions based on research by Venkatesh et al (2003); Innovation scale (7) with 7 questions based on 3 questions in the study by Agarwal & Prasad (1998), 2 questions in the study of Manning & et al (1995) and 2 additional questions from group discussions; Communication scale of banking services (DV) consists of 15 questions based on the content of 03 questions in the study by Terrolet al (2004) and 12 additional questions from group discussions; Scale of intention to use the service (YĐ) with 4 questions, in which 3 questions are based on David research (1985) In the study, the author uses Likert measurement with 5 levels (1- 5) to measure and understand the level of agreement, including totally agree, agree, normal, disagree and strongly disagree

3.2 Data collection

This study selected customers in the suburbs of Hanoi to conduct the analysis and evaluation of basic factors affecting the intention of using banking services in rural area and suburbs of Hanoi The study collected samples based on random access and questionnaire delivery to 350 customers doing transaction at the Banks with the help of bank officials at the banking transaction offices in rural area and suburbs

of Hanoi, such as Quoc Oai, Thach That, Dong Anh, Soc Son After collecting, the questionnaires with coincident answers (those who choose only one level among the scale of 1-5, maybe because they don't have time or don't want to participate in the

Intention to use banking services

Usefulness

Usability

Trust

Social

influences

Innovation

Communic

ation about

services

survey) and blank questionnaires have been removed The valid questionnaires using for the survey was 92.3%, meeting the conditions of selecting the sample According

to the survey results, among 323 respondents, 159 were male, accounting for 49.2% and 164 remaining women accounted for 50.8% There are 57.6% of respondents having graduated from colleges / universities (186 people); 3.7% of respondents having Master Degree (12 people); 38.7% remaining respondents are secondary graduates and high school graduates The average income of the sample is over 5 million VND per month The sample with higher college / university education level compared to other rural areas is due to the condition that this area is close to Hanoi capital, the awareness of raising the level of education to access to the city's modern, advanced knowledge and skills are also stronger than other rural areas

3.3 Data processing method

Data processing, information coding, data entry and data analysis were conducted with SPSS 19.0 statistical processing software The survey results were analyzed

by Cronbach alpha coefficient to measure the reliability of the scale Exploratory factor analysis (EFA) to test the value of the scale results in the weights of observed variables so that the author can conduct a comparison and decide to keep or remove from the research Regression analysis is used to prove the hypotheses given

4 RESEARCH RESULTS

4.1 Exploratory factor analysis (EFA)

Variables are measured by Likert scale of 5 levels Data is analyzed with SPSS software From 45 recommended variables, there are 8 variables being removed from the scale due to low reliability coefficient EFA analysis helps to extract 7 factors from 37 observed variables The elements are divided into groups of elements in the factor rotation matrix in accordance with the proposed model

The results of EFA analysis are presented in Table 1 KMO coefficient is 0.913 with statistical significance of 0.000 This result shows that the analysis of the exploratory elements of independent components is appropriate Total Variance Explained is 70.495%, explaining 70.495% of the variation of data

Table 1 Results of multivariate EFA analysis

Extraction Method: Principal Axis Factoring.

Rotation: Promax with Kaiser Normalization.

Total Variance Explained: 70.495

* Accreditation Bartlett<0.05, KMO=.913

4.2 Regression model analysis of factors affecting the intention to use products of the Bank

The results show that the proposed model is relevant to the data The model shows the influence of communication factors on banking services affecting the intention

IN TERNATIONAL CONFERENCE ON - CIFBA 2020

to use banking products through intermediate variables, including awareness of usefulness, innovation, usability, trust and social influence of banking services on the intention to use banking services

Table 2 Regression models of the factors affecting intention to use products of the Bank

Model Standard-ized beta

coefficient t Sig.

Multicollinearity accreditation ANOVA Durbin-Watson Tolerance VIF F Sig

1

.000 1.000

100.471 000 1.712

Method: Enter, R=.810; R 2 =.658; R 2 correction =.650; Constant =6.473

The models are included in the analysis via Enter method, the model has the coefficients as follows: R = 810; R2 = 658; R2 correction = 650; accreditation F

= 100,471 and significance level is 0.000; multicollinearity testing shows that VIF coefficients are small; Durbin-Watson coefficient of 1,712 proves that the data model has practical meaning The results in Table 2 show that the factors included in the analysis are able to explain 65.0% of the variation of the intention to use banking services of the customers

Communication elements about banking services; awareness of usefulness, innovation, usability, trust, social influence of banking services affecting the intention to use the bank's services all show that there is a statistically significant connection with the significance level p of <0.05 and all of these factors show a positive relationship with the intention to use bank’s services

The analysis results show that there are two factors that have the strongest influence

on the intention to use human service products, including customer trust (TN) and communication about banking services from the employees and media These factors have the strongest influence on the intention of using banking services with standardized beta ratios at 0.306 and 0.185 respectively

Trust in business is a very important factor especially in the financial sector Research results show that the more customers trust the bank, the more they intend to use banking services According to Stephen M R Covey, Rebecca R Merrill (2006), trust, from an invisible and unquantified category, becomes both tangible and quantifiable Trust always affects speed and cost When faith decreases, speed decreases, costs increase and vice versa For the Banks, trust affects every aspect of business Creating trust in the customers will save time and money to maintain relationships with the customers and they will use the products provided by the Banks

Communication is the second most influential factor after trust With multimedia, that the customers are both affected and accessible to banking products are no longer difficult According to media theories, through one-way public communication, people will be strongly influenced by messages and gradually change the behavior and perception similar to the broadcasted message Therefore, the more people are affected by the information about banking services propagated by the mass media

as well as the marketing staff, the sales staff, the more likely they are to use banking services

The remaining factors such as usefulness of banking services, innovation in banking services, social influence, usability of services have a weak impact on intention to use banking products Thus the original hypotheses have been proved

5 CONCLUSION

The analytical results show that there are two factors having strong influence on the intention to use banking products, including customer trust in banking services and communication on banking services

Customers trust is an important factor to enhance the bank's reputation In the market of rural banking services, customers have their own characteristics, so they always have a psychological tendency to ensure their financial safety Thus, the Banks need to implement risk prevention measures for banking services to ensure safety when customers use these services

The lack of information tends to cause worries about risk and distrust the organization providing the products/services As a result, the intention to use shall be lower This

is consistent with the cultural characteristics of Vietnamese consumers

Factors of usefulness, usability of banking services, customer innovation, social influence have a positive impact on the intention to use banking services Therefore, the banks need to build products suitable with customers’ needs and create benefits for the users At the same time, products and services must be simple to implement, the procedure is short and easy to remember so that customers don't mind using Finding ways to share and grasp customer needs, pay attention to guide customers when they use the services Learn the characteristics of the cultural level of each customer group to build appropriate products

This study initially pointed out the factors affecting the intention to use banking services in rural area and suburbs of Hanoi, thereby assessing the impact of each element on the intention to use banking services in rural areas and suburbs of Hanoi

at different levels However, the research results still remain some limitations and open the next direction for future studies:

In order to have a more accurate assessment of the influence level of the factors

to the intention to use banking services in rural areas, it is essential to have further expansion in terms of sample size and scope of research In addition to the factors studied, there may be other factors affecting the intention to use banking service

in rural areas Subsequent studies can modify and supplement to more study comprehensively the intention to use banking services in rural areas

IN TERNATIONAL CONFERENCE ON - CIFBA 2020

REFERENCE

[1] Agarwal, R & Prasad, J., “A Conceptual & Operational Definition of Personal

Innovativeness in the Domain of IT”, Information Systems Research, 9(2), June, 1998,

204-215.

[2] Ajzen, I., (1991), “The Theory of Planned Behavior University of Massachusetts

at Amherst Cronin”, J J., & Taylor, S A (1992), “Measuring Service Quality: A

Reexamination & Extension”, Journal of Marketing, 56(3), 55-68.

[3] Agarwal, R & Prasad, J., “A Conceptual & Operational Definition of Personal

Innovativeness in the Domain of IT”, Information Systems Research, 9(2), June, 1998,

204-215.

[4] Cao Thi Thanh (2014), “The reasearch about the influence of a personal culture to the behaviour of accepting the new productions of the consumers in Hanoi”, PhD Thesis - National Economics University.

[5] Dasgupta, S P., Rik; Fuloria, S (2011), “Factors Affecting Behavioral Intentions

towards Mobile Banking Usage: Empirical Evidence from India”, Romanian Journal of Marketing, (1), 6-28.

[6] Davis, F.D (1989), “Perceived usefulness, perceived ease of use, & user acceptance of

information technology”, MIS Quarterly, 319-340.

[7] Davis, F.D., Bagozzi, R.P & Warshaw, P.R (1989), “User acceptance o f computer

technology: A comparison of two theoretical models”, Management Science, 35(8),

982-1003

[8] Davis F D., (1993), “User acceptance of information technology: System characteristics,

user perceptions & behavioural impacts”, International journal of Man-Machine, 38,

475-487.

[9] Engel J., Kollatt D & Blackewll R., (1978), Consumer behavior, Dryden Press.

[10] Fishbein, M & Ajzen, I (1975), “Belief, attitude, intention, & behavior: An introduction

to theory & research”, Reading, MA: Addison-Wesley.

[11] Foon, Y S & Fah, B.C.Y., (2011), “Internet Banking Adoption in Kuala Lumpur: An

Application of UTAUT Model”, International Journal of Business & Management , 13

(4), 161-167.

[12] Kotler, P., & Armstrong, G (2004), Principles of marketing (10 th ed.), Upper Saddle River, NJ: Prentice Hall

[13] Kotler, P & Keller, K L (2008), Marketing Management (13 th edition), Prentice Hall [14] Koening-Lewis, N., A Palmer, & A Moll (2010), “Predicting young consumers” take

up of mobile banking services,” International Journal of Banking Marketing, 28(5):

410-432.

[15] Ledgerwood, J (1999), “Rural Finance H&book, An Institutional & Financial Perspective“, The World Bank, Washington, D.C 1999.

[16] Nguyen Kim Anh et al (2011), Microfinance with poverty reduction in Vietnam - verification and comparison, Statistical Publishing House, Hanoi.

[17] Puschel,J., Mazzon,J & Hern&ez,J (2010), “Mobile banking: Proposition of an

integrated adoption intention framework”, International Journal of Bank Marketing,

28(5): 389 - 409

[18] Porter M E (1985), “Competitive Advantage”, NewYork, The Free Press.

[19] Rogers E.M (1995), Diffusion of innovation, 4th Edition, The Free Press, New York [20] Rogers, E M (2003) Diffusion of Innovations, 5th Edition, New York: Free Press

[21] Riquelme, H., & Rios, R E (2010), “The moderating effect of gender in the adoption of

mobile banking”, International Journal of Bank Marketing, 28(5), 328-341.

[22] Sripalawat, J T., Mathupayas; Ngramyarn, Atcharawan, (2011), “M-banking in

metropolitan bangkok & a comparison with other countries”, The Journal of Computer Information Systems 51(3), 67-76.

[23] Streenkamp, J.-B.E.M., ter Hofstede, F., Wedel, M (1999), “A cross-national investigation into the individual anh national cultural antecedents of consumer innovativeness”,

Journal of Marketing, 63 2, 55-69.

[24] Terro Pikkarainen, Kari Pikkarainen, Heikki Karjaluoto, Seppo Pahnila (2004),

“Consumer acceptance of online banking: an extension of the technology acceptance

model”, Internet Research; 14(3); 2004 Research paper.

[25] Venkatesh, V., Morris, M.G., Davis, G.B & Davis, F.D, (2003), “User acceptance of

information technology: Toward a unified view”, MIS Quarterly, 27(3), 425-478

[26] Venkatesh, V & Zhang, X (2010), “Unified Theory of Acceptance & Use of Technology:

U.S Vs China”, Journal of Global Information Technology Management, 13(5)

[27] Yu (2012), “Factors Affecting Individuals to Adopt Mobile Banking, Journal of Electronic ommerce Research”, 13(2), 104-121.