The key loyalty to usage internet banking of individuals in hochiminh city, vietnam

THE KEY LOYALTY TO USAGE OF INTERNET BANKING OF INDIVIDUALS IN HOCHIMINH CITY, VIETNAM In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION...

THE KEY LOYALTY TO USAGE OF INTERNET BANKING

OF INDIVIDUALS IN HOCHIMINH CITY, VIETNAM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

THE KEY ANTECEDENTS TO USAGE OF INTERNET BANKING

OF INDIVIDUALS IN HOCHIMINH CITY, VIETNAM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In International Business

by Ms: Võ Thị Diệu Hiền ID: MBA03011 International University - Vietnam National University HCMC

Acknowledge

To complete this thesis, I have been benefited much from Doctor Lê Nguyễn Hậu-the advisor So, I would like to express many thanks to him for guiding us months from months

of hard working on my thesis

From the bottom of my heart, I wish to express sincere appreciation to Doctor Nguyễn Quỳnh Mai-the faculty dean, and Master Nguyễn Văn Tuấn-the SPSS tutor These teachers have lightened up our mind and supported us with their knowledge and enthusiasm

Besides, I am very grateful to respondents for their feed-back Thanks to input data they contributed I can complete this thesis today

Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Hochiminh City

Copyright Statement

This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author‟s prior consent

© Võ Thị Diệu Hiền/ MBA03011/2010-2013

Table of Contents

List of Tables vi

List of Figures vii

Abstract viii

Chapter one: Introduction 1

1.1.Research background 1

1.2.Thesis Topic 3

1.3.Rational 3

1.4.Problems 3

1.5.Research question 4

1.6.Research objective 4

1.7.Significant of the research 5

1.8.Research method 5

1.9.Scope of study 5

Chapter two: Literature review and Frame work 6

2.1.Literature review 6

2.1.1.Internet banking 6

2.1.2.TAM, TRA, TPB 6

2.1.3.Perceived Usefulness (PU) 9

2.1.4.Perceived Ease of Use (PEOU) 9

2.1.5 Perceived risk (PR) 10

2.1.5.1.Financial risk (FR) 11

2.1.5.2.Privacy risk (PR) 11

2.1.6.Cost of price (COP) 12

2.1.7.Usage Intention (UI) 13

2.2.Theoretical framework 13

Chapter three: Research Methodology 15

3.1.Introduction 15

3.2.Sampling and data collection 16

3.2.1.Sampling approach 16

3.2.2.Data source 16

3.2.3.Data collection 16

3.2.4.Measurement development 17

Chapter four: Data analysis and result 22

4.1.Sample demographics 22

4.2.Result 23

4.2.1.Analysis of measurement model 23

4.2.2.Exploratory Factor Analysis (EFA) 26

4.2.3.Reliabitity for groups of PEOU and PRC 30

4.2.4.Correlation between variables 30

4.2.5.Adjusted model after EFA 31

4.3.Hypothesis restating 31

4.4.Hypothesis testing 32

4.5.Multicollinearity 33

4.6.The equation 33

4.7.Descriptive statistics 34

4.8.ANOVA test 37

4.9.Achievement in predictive purpose 40

Chapter five: Discussion and recommendations 41

Chapter six: Conclusion and limitations 44

Refferences 46

Appendix A: Questionnaire (English) 49

Appendix B: Questionnaire (Vietnamese) 52

Appendix C: Reliability Statistics and Item-total statistics 55

Appendix D: Reliability Statistics and Item-total statistics after EFA 57

Appendix E: Measurement Scale and Sources 60

List of Tables

Table 1 Dimensions of perceived risk

Table 2 Independent variables (indicators)

Table 3 Cronbach's Alpha before EFA

Table 4 KMO and Bartlett's Test

Table 5 KMO and Bartlett's Test after rejecting PEOU1 and PR3

Table 6 Factor loading

Table 7 Total variance explained

Table 8 Representative variables

Table 9 Correlations

Table 10 Coefficients

Table 11 Descriptive statistics of variables

Table 12 Test of Homogeneity of Variances (experience)

Table 13 ANOVA (experience)

Table 14 Multiple comparisons

Table 15 Test of Homogeneity of Variances (Education)

Table 16 ANOVA (Education)

Table 17 Multiple comparisons

Table 18 Test of Homogeneity of Variances (Job)

Table 19 ANOVA (Job)

Table 20 Multiple comparisons

Table 21 Model summary

List of Figures

Figure 1 The propose model for key determinants of internet-banking usage

Figure 2 Male and Female distributions in the sample size

Figure 3 Education distribution in the sample size

Figure 4 The adjusted model for key determinants of internet-banking usage

Findings – The results indicate that the customers‟ usage intention was affected mostly by the perceived usefulness characteristics and the perceived ease of use secondly The findings suggest that banks should have specific plans to develop services and related facilities, including software or machinery

Research limitation – The result only aims to Hochiminh city customers only, and with limitation of respondents, it may bias Moreover, the indicators of financial risk were still limited in two So, it may not enough information for customer to give out their real view

of point

Managerial implication – The research points out that although perceived risk had not effected to usage intention of users, banks still need much care on this issue to prevent negative affection from users Besides, as perceived usefulness got highest score in adoption

of customers‟ usage of internet banking, the service providers develop more utilities and extend the services

Keywords: internet banking, usage intention, TAM

Chapter One - Introduction

1.1 Research background

Internet and information technology (IT) are antecedents for the development

of numerous industries of which banking industry represents the most Thanks to the revolution of internet, banks have facilitated and offered to customers numerous

novel services Electronic banking or e-banking speaks of this E-banking is services

based on a high banking technology that could process information online E-banking includes services of ATM cards, online banking, SMS banking and phone banking Bank‟s users (or clients) can stay at home or at their office or at any place while doing banking transactions on their own without the bank teller

E-Banking supplies customers with internet banking, SMS-Banking, Phone Banking, e-token and other forthcoming services

Electronic banking includes internet-banking which based on internet applications Pikkarainen, Karjaluoto, and Pahnila, (2004) define internet-banking as

an internet portal, „through which customers can use different kinds of banking services ranging from bill payment to making investments‟

According to Ranjit (2012), current internet banking websites can be classified into four levels: entry, basic, intermediate and advanced At entry level, only general information as an image of the bank is presented with general production and company news Second level adds some additional basic interactive tools and some origination capabilities Next comes with more interesting level where customers can access their account, track and view account information Finally the advanced level serves complete internet banking functionality and security At this stage, customers can do themselves the banking transaction at home

by transferring their money to and from account(s), paying internet bills, electronic

and water bills, insurance premium bills, etc., paying credit card statement balance, transfer money to electronic wallet, virtual accounts Recently, one novel function has been added to internet-banking services is online saving account opening

SMS banking is a service where customers use their mobile phone as a mean

of receiving and/or sending their order via Short Message Service protocol to the bank system SMS banking responses requirement of account statement, current account balance, credit balance, foreign exchange rate, account balance report, and many other inquiries etc

Phone banking uses the same mean of SMS banking, that is to say customers‟ cell phone as a way to ask for services from banks With customers‟ phone, they call

to the bank switchboard and inquire for account balance, and other card service performance

Banks employ internet as an alternative service delivery channel to traditional ones such as face-to-face and telephone banking in providing customers with a varieties of services The boost of new technology leads the new trend of utilization

of banking service According to a survey in 2011, the American Banker Association found that 62 percent of American bank customers preferred online banking to other methods, up from 36 percent of year 2010 Only 20 percent of respondents said they preferred using bank branches

In Vietnam, the number of internet users increases tremendously within nearly nine years, that is to say 901.77% from the year 2003 (statistically called for 3,098,007 users; users per capita is 3.8%) to June 2012 (31,034,900 users; users per capita is 35.4%) (as stated in http://www.thongkeinternet.vn) This clearly indicates the significance of online banking sector towards Vietnamese banks, and why the banks have been well invested in infrastructure for the kind of services in recent years

Hence, in the present research we considered the customers‟ intention of utilization of internet-banking in Vietnam in good condition of internet and in the

availability and readiness of the service providers

1.4 Problems

Today banks provide electronic banking (e-banking) to customers with plentiful methods, such as internet banking, phone-banking, SMS banking, ATM cards, etc., Nonetheless the amount of users does not reach as high as expected We can take Hochiminh city e-banking users for instance As for the non-cash payment, based on statistics of 15 commercial banks in Hochiminh city there were nearly 112,000 customers using payment services via e-banking systems with total

transaction value of more than VND49 trillion in 2011, according to Nguyen Van Dung, deputy director of the Hochiminh city branch of the State Bank of Vietnam (SBV) (Van Oanh, 2012) Counting up the Hochiminh city population of over eight million persons in 2012 (statistical population in 2010 is 7.4 million persons), that amount of users is quite few

Besides, mobile payment is also a concern There are over 100 million mobile phone subscribers in the country counting for the Viettel brand name only (regardless

of Mobifone and Vinafone), and around 20 million bank account users However, these customers are just a great potential source, according to Nguyen Viet Dung, deputy director of Viettel telecom company (Van Oanh, 2012) In addition to Viettel, Mobifone and Vinafone are two more giants of mobile telecommunication providers The number of subscribers is really a mine of gold The market turns out an attractive pie for banks with phone-banking services In actual fact the account holders do not

pay much attention to phone-banking, or maybe they even ignore the services

1.5 Research Question

The study addresses two following research questions:

1/What are the key antecedents of customers‟ acceptance of internet-banking? 2/What should banks do to entice customers to internet-banking services?

1.6 Research Objective

The objective of this study is to examine key loyalty of usage of banking in individuals of Hochiminh city banking users

internet-1.7 Significance of this Research

The research contributes value both to the bank users and to the banks First, e-commerce providers can adjust the activities to boost their business thanks to the analysis of customers‟ acceptance and the recommendation of the research Second, financial institutions can manipulate online services as a simultaneous channel of earning money Finally bank users have an additional way to enjoy the bank facilities

1.8 Research Method

This research applied deductive approach, using the literature review as base

to build up model and develop hypotheses In additions to that, empirical data withdrawn from usable survey questionnaires were used to test the treaties To perform the statistical tests, we used two key techniques: Exploratory Factor Analysis and Multiple Regression The SPSS was to analyze data The theoretical models employed to study user acceptance, adoption include the Theory of Reason Action (TRA) (e.g Fishbein and Ajzen, 1975; Aizen and Fishbein, 1980), and the Technology Acceptance Model (TAM)

1.9 Scope of Study

This study was conducted in Hochiminh city, the most dynamic city in southern area of Vietnam E-banking is quite a broad field, so in this research we just focus on one of its areas that calls internet-banking

Chapter Two – Literature Review and Frame Work/ Model 2.1 Literature review

2.1.1 Internet banking

According to Pikkarainen, Karjaluoto, and Pahnila, (2004) Internet banking is defined as an “internet portal, though which customers can use different kinds of banking services ranging from bill payment to making investments” Internet banking provides bank customers access to almost any type of banking transaction at a click

of a mouse, except for the cash withdrawal (De Young, 2001; Nupur, 2010) Thanks

to internet banking, financial services have an alternative channel to get close to the users

The internet banking dedicates benefits to both the supplier and the consumer

of the services As the supplier, banks use online banking as it is one of the cheapest delivery channels for banking products (Pikkarainen et al., 2004) Such services also save the time and money of the bank with an added benefit of minimizing the likelihood of committing errors by bank tellers (Jayawardhena & Foley, 2000) On the other side, users gain from having alternative choice to consume the bank service Now that some customers who felt branch banking that took too much time and effort can make use of internet banking to make transactions at a click of their fingers (Nupur, 2010) The user can also save time doing transaction on online as “banking is

no longer bound to time and geography Customers over the world have relatively easy access to their accounts, 24 hours per day, and seven days a week” (Karjaluoto

et al., 2002)

2.1.2 TAM, TRA, TPB

Internet banking adoption has been a subject for researchers to involve in for many decades ago The scholars have tried to figure out the factors that most impact

users‟ intention to accept the online service They successfully studied the individual‟s adoption of Internet banking by applying theories, together with its variables (or factors) The utmost theories are Technology Acceptance Model (TAM), Theory of Reasoned Action (TRA), and Theory of Planned Behavior (TPB) The first model, TAM was used in the researches of Davis et al in 1989 The second one, TRA originally proposed by Fishbein and Ajzen (1975) (Gefen et al, 2003) while the TPB originally proposed by Ajzen (1991) (Shih and Fang, 2004)

The Theory of Reasoned Action (TRA), developed by Fishbein and Ajzen (1975), was probably one of the most influential theories used to explain human behavior (Venkatesh et al, 2003) According to TRA, the behavioral intention can be explain by the attitude towards behavior and subjective norm The attitude towards behavior posits the individual‟s feeling of negative or positive about performing the target behavior (Fisher and Ajzen, 1975) Subjective norm relates to perception that most people who really matter to the individual think that he/she either should or should not perform the behavior in question (Fisher and Ajzen, 1975)

The theory of Planned Behavior (TPB) was suggested by Ajzen (1991) It extends TRA (Fisher and Ajzen, 1975) as for case of people who have incomplete volitional control This proposes that a central factor in human behavior is behavioral intention, which is affected by attitude toward behavior, subjective norm, and perceived behavioral control (Ajzen, 1991) This theory shows how people acknowledge the internal and external limitations to their behavior It refers to how people believe it would be to perform certain behaviors (Ajzen, 1985)

The Technical Acceptance Model (TAM) (Davis, 1989; Davis et al, 1989)

was adapted from the Theory of Reasoned Action (TRA) (Fishbein & Ajzen, 1975; Ajzen & Fishbein, 1980) to understand the causal chain linking external variables to

technology usage intention and actual use in a work place (Ndubisi and Jantan, 2003) TAM posits that user adoption of a new is determined by the user‟s belief about the system TAM further suggests that the two beliefs - perceived usefulness and perceived ease of use – are instrumental in explaining the variance in the intention of users (Wang, Lin and Luarn, 2006) These two beliefs have been empirically justified

as important factors determining the adoption and use of new information technology, including the adoption of Internet banking (Vijayyasarathy, 2004)

As an inheriting model from TRA, TAM shares some issues with the previous theory However the two models still comprise some significant differences One is that according to TRA all beliefs are bound to context and hence they cannot be generalized Conversely, TAM states that Perceived Usefulness and Perceived Ease

of Use are issues that have an effect on acceptance of all information system Another utmost distinction is that in TRA all beliefs are summed together, whereas in TAM

both beliefs are seen as separate constructs

TAM has been tested in many previous studies and been demonstrated its ability to explain the attitude toward using an information system better than other models (TRA and TPB) (Mathieson, 1991) Moreover, TAM is chosen to be the research model owing to two main reasons (Guriting and Ndubisi, 2006) Firstly, it helps to understand the relationship between users‟ perception of the benefits and the usability of their system(s) (Ndubisi and Jantan, 2003) Secondly, TAM is acclaimed for its parsimony and predictive power which make it easy to apply in different situation (Ndubisi and Jantan, 2003; Venkatesh and Morris, 2000)

In this research we use the modified version of TAM to justify the customers‟ usage intention of internet banking In other words, the practical TAM model would

be added up three more other factors together with the two basic ones, Perceived

Usefulness and Perceived Ease of Use The additional factors are Financial Risks, Privacy Risks, and Cost of Price

2.1.3 Perceived Usefulness (PU)

According to Davis (1989), Perceived Usefulness defines as a degree to which

an individual perceives a particular system enhancing his or her job performance Lee (2008) also added that as Perceived Usefulness reflects the person‟s salient belief in the use of technology, it will be helpful in improving performance Hanudin (2007) confirmed that there is significant effect of Perceived Usefulness on usage intention Customers would choose online banking when they acknowledge the positive contribution of this kind of service Hence, we propose the hypothesis as follows:

H1: Perceived Usefulness has positive impact on intention of banking usage

internet-2.1.4 Perceived Ease of Use (PEOU)

Perceived Ease of Use is a degree to which an individual believes that using a particular system would be free of effort (Davis, 1989; Taylor and Toadd, 1995; Hanudin, 2007) Previous researches have come to the conclusion that there are significant effects of Perceived Ease of Use on usage intention, either directly or indirectly through its effect on Perceived Usefulness (Venkatesh, 2000; Venkatesh and Morris, 2000; Agarwal and Prasad, 1999, Davis et al., 1989) It comes to our work the under mentioned hypothesis:

H2: Perceived Ease of use has positive impact on intention of

internet-banking usage

2.1.5 Perceived Risk (PCR)

Perceived Risk theory has been used to explain consumers‟ behaviors since the 1960s (Lee, 2008) It has definite impact on consumer decision making (Lin, 2008) Bauer (1960) defined risk in terms of uncertainty and consequences associated with consumers‟ actions Cunningham (1967) noted that perceived risk consisted of the size of potential loss if the results of the act were not favorable and the individual‟s subjective feelings of certainty that the results will not favorable Peter and Ryan (1976) described perceived risk as the possible loss when pursuing a desired result According Clow (1998), customers receive greater risks when buying services than tangible goods In addition, Zeitheml (1981) suggested that services riskier than goods because it is intangible, non-standardized, and often sold without guarantees Perceived risk was claimed by many scholars to be a multi-dimensional construct, which are: financial, performance, social, physical, privacy, and time-loss (Jacoby and Kaplan, 1972; Kaplan et al., 1974; Roselius, 1971) Nevertheless, it depends on the service or the product that accompanies the dimensions of perceived risk Internet banking service in this research mainly focuses on financial risk and privacy risk

Table 1 Dimensions of perceived risk

Dimension Definition

Financial risk The probability that a banking transaction results in loss of money

due to transaction error or bank account misuse

Privacy risk Potential loss of control over personal information, such as when

information about the user is used without his/her acknowledge or permission This commonly happens with fraudulent attack

2.1.5.1 Financial Risk (FR)

Financial risk is defined as the potential loss of money due to transaction error or bank account misuse This is the second most important factor to prevent the adoption of online banking (Lee, 2009) and has been proven as one of the key concern in e-service adoption (Feathernam & Pavlou, 2003) Failure transaction may take money away from the users In fact, many customers are scared of losing money while performing transaction or transferring money over the internet (Kuisma et al, 2007) As a result it discourages users to accept internet banking Thus, we will test the following hypothesis:

H3: Financial Risk has negative impact on intention of internet-banking usage

2.1.5.2 Privacy Risk (PR)

Privacy risk is described as a potential loss resulting from fraud or a hacker who attacks the security of an online bank user (Lee, 2008) The customer‟s loss may also come from phishing The phisher try to obtain financial or other confidential information such as username, password, credit card number, and even OTP number from internet user, typically by sending out legitimate-looking emails These emails contain a link to a fake website that replicates the real one Both fraud and hacker intrusion not only lead to monetary loss, but also violate users‟ privacy, a major concern of many

internet users Criminals aim on stealing users‟ online banking credentials as the user name and password combination is somehow easy to acquire and then relatively easy to fraudulently access an internet banking account and commit financial fraud (Nupur, 2010) Pikkarainen et al (2004) proved that privacy risk significantly impacts on online banking and e-service adoption That is the reason why we should consider this hypothesis:

H4: Perceived Risk has a negative impact on intention of banking usage

internet-2.1.6 Cost of Price (COP)

Cost of Price is the banking fee that the customers have to pay for internet-banking services The users were significant satisfied with the cost saving amount through electronic banking (Polatoglu and Ekin, 2001) Low fees, time savings and freedom from time and place (Karjaluto et al., 2002a) have been found to be the most important elements of internet banking However, researchers also suggested that consumers perceive electronic banking as inexpensive and that it does not offer extra cost benefits (Karjaluoto et al., 2002; Gerrard and Cunningham, 2003) Regardless of conflicting finding, Sathye (1999) assured that the cost associated with electronic banking, such as the cost of electronic banking activities and bank charges, had a negative impact on internet-banking usage Under those circumstances, the following hypothesis needs to be tested:

H5: COP has negative impact on intention of internet-banking usage

2.1.7 Usage intention (UI)

Intention to use is the customers‟ willingness to adopt online-banking The more the customers allure e-banking, the more the commitment of usage

is born

2.2 Theoretical Framework

The theoretical framework is based on the modified TAM There are five factors influence customer acceptance of internet-banking In detail, the model employs Perceived Usefulness (PU), Perceived Ease of Use (PEOU), Financial Risk (FR), Privacy risk (PR), and Cost of Price (CP) The first two are initial constructs for TAM model The next two factors constitute Perceived Risk of customers, being „a combination of uncertainty plus seriousness of outcome involved‟ (Baue, 1967) The last is an additional factor that we want think it is suitable to test in the environment of Hochiminh city of Vietnam

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Chapter Three – Research Methodology

3.1 Introduction

The author chose four domestic Hochiminh city-based banks as representatives for internet banking service providers in Hochiminh city for the research Those banks were Vietcombank (the Joint Stock Commercial Bank for Foreign Trade of VietNam), Vietinbank (the Vietnam Joint Stock Commercial Bank for Industry and Trade), Techcombank (the Vietnam Technological and Commercial Joint Stock bank), and ACB (the Asia Commercial Joint Stock bank) Reasons for us

to take samples from these banks resulted from their high symbolization of domestic banks, their large size and scale, well-developed internet banking service, healthy and long-standing existence, as well as the high rate of retail-banking individual customers According to the latest annual report on credit rating of Vietnam index released on the 8th of September of the year 2012, the above mentioned banks have gained the top “A” rating in respect to market strength, business performance efficiency, financial capacity and long-lasting development (http://crv.com.vn/20120909034815454p0c34/crv-cong-bo-bang-xep-hang-nang-luc-canh-tranh-32-ngan-hang-thuong-mai-viet-nam.htm) So, we are completely confident that the samples chosen from the population contained high validity and reliability

3.2 Sampling and Data collection

3.2.1 Sampling approach

Sampling method for this research was quota sampling technique because the time and the cost for the research were really limited We selected elements into the sample based on subjective convenience

3.2.2 Data source

Data for the research‟s analysis was mainly taken from questionnaires survey collecting from the customers of four targeted banks, namely Vietcombank, Vietinbank, Techcombank and ACB

We performed a quantitative research Based on the literature review and the previous concerning researches we build up our own questionnaires that were most suitable to our case, to our geographic and demographic situation of bank service consumers on internet banking of Hochiminh city, Vietnam Data were collected from the questions posed in the questionnaires, and were based on the frame of reference to address the Research Questions The survey questions consisted of five main sections including the usefulness (Perceived Usefulness), the feasibility (Perceived Ease of Use), the risk (including Financial Risk and Privacy Risk), Cost of price, and Usage intention Straightforwardly, beside the traditional needed parts the personal information of surveyor was also added onto the question list for the reason that the demographic data could support us in deeply analyzing the environmental clues that attract customers to use the internet banking

3.2.3 Data collection

A total of 270 questionnaires were sent to individual customers in four banks located in Hochiminh city, Vietnam Online questionnaire was also dispatched to 200

email addresses in parallel However only a total of 260 responses were collected and just 194 (of which 40 ones gained from online survey) were usable for analysis Those unusable responses were left aside and rejected, of which that were not completely finished, or suspiciously unintended crossed, or crossed with same scale for more than five items with the same frequency

Each out of four chosen banks contributed approximately 50 responses A total number of 140 usable questionnaires to be collected would be enough for the survey since it satisfies the requirement for chosen sample size Conforming to Hair‟s theory (Hair et al, 2010), the required sufficient sample size is a result of number of variable multiplies by 5 There were 28 variables in our questionnaires Thus, the number of 140 accessible samples would be ideal However, the higher the number was, the more reliable the data became

The respondents were persons who had been using internet-banking for a to-3-year period of time They were selected by convenient sampling method The duration of three years can count the users‟ satisfaction from the bank for the long time, and that is long enough for experiencing the internet-banking services

0-3.2.4 Measurement development

The usable responses were collected and the data were input into SPSS software version 11.5 A double check was also be done by the author to make sure that the inputted data encountered no error In the next step, data analyzing process had been made to find out whether five hypotheses mentioned in figure 1 be accepted

or be rejected From that result, we found out which of five dimensions had relationship with customer‟s intention of internet banking usage

The instrument was designed to include a three-part questionnaire The first part included very general information about the service using These two survey questions was very few, very simple, and on-the-title to engage the respondent‟s both attention and concentration

The second part contained measurement context It was developed based on the constructs of perceived usefulness, perceived ease of use, perceived financial risk, and perceived privacy risk, cost of price, and usage intention The measures were adapted from the literature and refined to fit the present study The first two factors contained six items for each construct Perceived usefulness was adapted from the measurements defined by Cheng et al (2006) Perceived ease of use was adapted from the measurements defined by Tero Pikkarainen, Kari Pikkarainen, Heikki Karjaluoto, Seppo Pahnila (2004) Perceived financial risk and privacy risk were adapted from the measurements defined by Featherman and Pavlou (2003) Cost of price was adapted from the measurements defined by Heikki Karjaluoto (2002) Usage intention was adapted from the measurements defined by Cheng et al (2006)

In addition, we applied 5-point Likert-type scales ranging from „strongly disagree‟ (1) to „strongly agree‟ (2) to measure the variables, which were all scales All of the measures used in this study together with the instrument questionnaire are presented

in the Appendix 1, 2 and 5

The third and final part was enquiries into totally personal issues relating to the respondents This part of questionnaire was used to collect basic information about customers‟ characteristics including gender, age, education, and occupation It was positioned at the end of the survey list owing to its discreet place The respondents might feel safe on what they had submitted so they could freely share their own private information

Due to their characteristics, the first and the last parts were input nominal measurement and analyzed as demographic and supplemental purposes

Before conducting the main survey, we performed a pilot test to validate the instrument A pilot test is a simulation of our survey implementation carried out on a small scale with members of our target population As a matter of fact, we performed this step within 10 respondents who have experienced more than 3 years in using internet banking, including the thesis advisor Respondents were asked to comment

on the format, the length of the instrument, and the wording of the scales Most important usefulness is that the pre-test helped to justify the respondents‟ comprehensibility on wording of questionnaire Therefore the respondents can so truly understand the content that might submit the validated responses On the other side, this can help the investigator to figure the weaknesses and flaws in the questions, formats, survey procedure, and technology used After that we collected commentary and supporting ideas, adjusted the contexture and built up the actual more perfect questionnaire As a result the instrument achieved content validity

Coding: 28 main survey questions in questionnaire were measurement

variables They belonged to 5 factors and were coded and shown in table below

Table 2 Independent variables (indicators)

name

Sequence number INDEPENDENT VARIABLES

Perceived

Usefulness

Using internet-banking enhances my effectiveness of utilizing banking services PU1 1 Using internet-banking enables me to utilize banking

I think that using online banking would make it easier for me to carry out my tasks PU3 3

I think that using online banking would enable me to accomplish my tasks more quickly PU4 4

I think internet banking is useful PU5 5 Overall, I think that using internet-banking is

Factor Variables/indicators Coded

name

Sequence number

Financial Risk

When transaction errors occur, I worry that I cannot get

When transferring money in internet, I am afraid that I would lose money due to careless mistakes such as wrong input of account number and wrong input of amount of money

in comparison with other banks' price COP3 20 DEPENDENT VARIABLE

Usage Intention

I think that using the internet-banking is a good idea UI1 21

I think that using the internet-banking is beneficial to

I have positive perception about using the new

I intend to use the internet-banking service frequently UI4 24

I intend to use the internet-banking service more than

I would use the internet banking for my banking needs UI6 26 Using the internet banking for handling my banking

transactions is something I would do UI6 27

I would see myself using the internet banking for handling my banking transactions UI8 28

Chapter four - Data analysis and result 4.1 Sample demographics

Figure 2 Male and Female distributions in the sample size

Among 194 respondents, male was dominant with 121 persons whereas female was only 73 ones Most of them have been using internet banking less than three years and were in the age raging from 25 to 35 There were 70.10 percentages

of users who graduated university, so they were graded as „white-collar‟ workers These respondents worked in many fields, especially intellectual sectors Approximately 16.50 percentages of them worked in other sectors

Figure 3 Education distribution in the sample size

4.2 Results

In analyzing collected data, we stipulated the two-step procedure proposed by Anderson and Gerbing (1988) First, we examine the measurement model to measure convergent and discriminant validity Then we examined the structural model to investigate the strength and direction of the relationships among the theoretical constructs

4.2.1 Analysis of the measurement model

Cronbach‟s alpha scores shown in Table 3 indicated that each construct exhibited strong internal reliability Convergent validity was assessed based on the criteria that the indicator‟s estimated coefficient was significant on its posited underlying construct factor We evaluated the measurement scales using the three criteria suggested by Fornell and Larcker (1981)

1 All indicator factor loading should be significant and exceed 0.5

2 Construct reliabilities are perfect if Cronbach‟s alpha exceeds 0.8 and

if the indicators of measurement scale are inherited from other researches The reliabilities are tolerable if Cronbach‟s alpha reaches 0.7 to 0.8 A gap of 0.6 to 0.7 is quite applicable for indicators of new concepts Still, “Corrected Item-Total correlation” of all variable ought

to gain 0.35 or above

3 Average reliabilities extracted (AVE) by each construct should exceed the variance due to measurement error for the construct (e.g AVE should exceed 0.5)

All measures were analyzed for reliability by checking Cronbach‟s Alpha for all classes of indicators of each factor respectively In case there was some variable that less than 0.7, then it should be considered to be rejected by checking the

“Corrected Item-Total correlation” column If that rejecting the item increases Cronbach‟s alpha, then we should reject However if it goes into the reverse direction, then we should not reject it at all In this situation, this variable should be kept for further analyzing Table gives results that all variables with Cronbach‟ alpha exceeding 0.7, except for Cost of price (Cronbach‟ alpha was 0.68) The numbers was

a little weak Maybe it was a consequence of having only three indicators in this factor Notwithstanding, the Cronbach‟ alpha became worse if some of these indicators was denied On other side, the number of 0.68 was not completely unacceptable, because it almost reached 0.7 and its “Corrected Item-Total correlation” value was above 0.35 Hence, we decided to keep it This is to mean that all variables‟ reliabilities were acquired