Student’s Perception of E-banking Services
Background of the Study
In our modern era, profound technological changes have occurred in the provision of banking services all over the world and among these technologies are the emergence of internet banking, mobile banking, e-commerce and online banking via telecommunication systems. It is currently the fastest growing area for the banking businesses worldwide. For instance, Gikandi (2010) mention that a global explosion in the use of electronic commerce has been witnessed in recent times with the monetary value of products and services exchanged electronically being estimated at above US$ 7 trillion in the year 2004.
Online banking is gathering momentum in many parts of the world. In the United States of America, for example, it has been projected that the majority of the banks would offer online services in a couple of years’ time (eMarketer, 2000). In European Union countries, the rate by which the banks are adopting online banking is increasing in a remarkable fashion (Irish Times, 1999). Studies related to online banking have been conducted in Europe, North America the Arab world and Asia.
Studies conducted in this areas includes such issues as Internet banking acceptance model: Cross-market examination Alsajjan et al (2008); An investigation into the acceptance of online banking Al-Somali et al (2009); Adoption of internet banking: An empirical study in Hong Kong, Cheng et al (2004); Determinants of behavioral intention to mobile banking Sang-Chul et al (2009); Strategic online banking adoption Hernandez-Murillo et al (2010); The identification of technology regimes in banking: Implications for the market power-fragility nexus Koetter et al (2009); Toward an understanding of the behavioral intention to use mobile banking Luarn and Lin (2005); New technologies, information reusability and diversification: A simple model of a banking firm Novo-Peteiro (2000) and Effect of trust on customer acceptance of Internet banking Suh et al (2002) just to mention a few.
According to Aladwani (2001) the idea of introducing a transforming technology such as online banking into a bank may come from different sources. This article is set as follows; the initial section gives an introduction to electronic banking in general; in the second section I will look at brief history of Electronic banking in Ghana, the third part will address some banking technologies; further, the fourth highlights Challenges affecting the adoption of technology in banking, the fifth talk about factors influencing acceptance of technology in banking; the sixth looks at some benefits of e-banking and the finally the seventh framework used.
Brief History of E-Banking in Ghana
Abor (2005) states that the earliest forms of electronic and communication technologies used were mainly office automation devices such as telephones, telex and facsimile. It was Barclays Bank (GH) and Standard Chartered Bank (GH) which pioneered electronic banking that ultimately changed the banking landscape in Ghana. Abor (2005) continues that, the most revolutionary electronic innovation in Ghana and the world at large has been the automated teller machine (ATM). The backbone of this innovation is a network. It was The Trust Bank which installed the first ATM in 1995. Ghana Commercial Bank started offering ATM in 2001 in collaboration with Agricultural Development Bank (ADB). The ATM has been the most successful delivery channel for consumer banking in Ghana and banks which delayed to offer this innovation suffered a great loss. Another technological innovation in Ghanaian banking, Abor (2005) further states, is the various electronic cards developed by the banks. The first electronic card was issued by Social Security Bank (now Societe Generale SSB) in May 1997. This was the `Sika Card’ — value card onto which a cash amount is electronically loaded. In 2001, Standard Charted Bank launched the first ever debit card in Ghana.
In November, 2001 the ‘E-card’ was introduced by a consortium of three (3) banks namely Ecobank, Cal Merchant Bank and the Trust Bank. This card is online in real time, so anytime a client uses the card, or changes occur in their account balance, their card automatically reflects the change. Other electronic cards such as the VISA, Etranzact and MasterCard also came into existence. Then came the recently introduced E-zwich smart card in 2008, which is a much secured way of paying for goods and services for all Ghanaians both online and offline. These new electronic cards have been explained in the succeeding chapter.
Abor (2005) further states that no bank currently is pursuing Internet banking (i-banking) in Ghana, but some have laid plans to start. Ecobank (Gh.) Ltd. Standard Chartered Bank (Gh.) Ltd., and Barclays Bank (Gh.) Ltd. all have plans for doing so very soon. Telephone banking has also been given prominence given its convenience and time-saving nature. Barclays Bank (Gh.) launched its telephone banking services in August 18, 2002. SSB bank also launched its “Sikatel” or “SSB call center” (telephone banking) in September 19, 2002. This form of electronic banking in Ghana is very effective for ascertaining credible information about the bank’s products, the customer’s complaints, bank statements and check book request and any other complaints and inquiry.
Electronic Banking Technologies
With respect to this study, E-banking is defined as the process of employing one or more of the electronic delivery channels such as automated teller machines (ATMs) and any other such technologies in a two-way transaction between a customer and his/her bank and between two or more banks with the aid of a network. Early researches on electronic banking have showed that there is a positive relationship between ease of use and perceived usefulness as important factors on the use of electronic banking (Venkatesh and Davis, 1996; Johnson and Marakas, 2000; Chau, 2001; Wang et al, 2003; Pikkarainen et a!, 2004). If electronic banking offers convenience as pointed out above then why do most Ghanaians pay little attention to this innovative banking?
Consumer behavior and customer differences may quite affect the acceptance of electronic banking. As pointed out by social psychology and marketing research, customers differ in the type of relationship they wish to maintain with service providers such as banks (Clark and Mills, 1999). They further continued that whilst some individuals may desire to establish relationships that are more personal and friendship-like (communally oriented customers), there may be others who value efficiency of services and prefer more impersonal association (exchange oriented customers). This means that customers who may establish personal relationships with their banks for the sake of social and psychological benefits will prefer face — to — face interactions and vice versa.
Communication also plays a crucial role in the acceptance of electronic banking. There is empirical evidence which suggests that the choice of communication channel will affect how relationships are developed. Computer mediated communication is less personal and less socio-emotional than face to face communication. Moreover, scholars believe that for electronic banking to be accepted and well patronized, extra effort must be pushed towards the sensitization and awareness of this new banking innovation. To them, consumer behavior, customer differences and communication may all be determining factors on accepting electronic banking, but the key emphasis should be on the importance of awareness (Guiltinand and Donnelly, 1983). It seems most Ghanaian banks have taken this idea and are implementing it whole heartedly with slow response from customers.
Interestingly, other scholars claim that content on online banking on the website is one of the factors influencing online banking acceptance. In contrast, quality designs, graphics or colors and the propensity to portray good image of the bank would ensure efficient use of navigation (Pikkarainen et al, 2009; Jayawardhena and Foley, 2000). This implies that the level of access to and use of the Internet is a determining factor of the acceptance of electronic banking.
Again, banks will continue to face challenges in their bid to introduce electronic banking in Ghana since a larger percentage of the population still remain illiterate and lack basic computing skills and this is in indeed a fact that remains true in our modern Ghanaian society. Stewart (1999) claimed that the failure of electronic internet in retail banking is attributable to lack of trust consumers have in electronic channels. It is only natural that we justify customers’ fears regarding security and privacy issues since the process of electronic banking involves the disclosure of certain vital and private information of the customer to the electronic medium of which the end result could be disastrous if the information is not well secured. Trust has striking influence on users willingness to engage in online exchange of money and personal sensitive information (Hoffman et al,. 1999; Wang et al, 2003).
On the other side, some studies have shown that internet consumers are primarily computer users (example, Koufaris, 2002).Also, Wilhelm (2000) and Martin (2003), maintain that the lower socio — economic group will be less to use the internet. Wilson (2000) also reports that socio economically disadvantaged consumers would be less likely to pay for a monthly fee to subscribe to an internet service and would be less likely to have a home computer. This explains why internet banking is not yet developed in Ghana (Abor, 2005).
Benefits of E-banking Technology
In the findings of Aladwani (2001) on the importance of technology in banking particularly online banking includes; providing faster service to customers; providing easier service to customers; providing more reliable service to customers; improving the competitive position; improving bank’s image; meeting customers demand for the service; creating new markets; reducing operational costs; reducing administrative costs; and reducing workforce. But, stated that reducing administrative and operational costs and cutting the number of workers were perceived by participating managers as the least important drivers of online banking and among the top are improving the competitive position of the bank, enhancing bank’s image, and to a lesser extent creating new markets for the bank (Stewart, 1999).
Moreover, Lee (2009) agreed with the above by saying that there are two main types of perceived benefits, which can be categorized as direct and indirect advantages. Direct advantages refer to immediate and tangible benefits that customers would enjoy by using online banking. For example, customers can benefits from a wider range of financial benefits, faster transaction speed, and increased information transparency (Cheng et al., 2006). First, this wider range of financial benefits includes the lower transaction handling fees, higher deposit rates, opportunities to win prizes and extra credit card bonus points. Second, the faster transaction speed obviously means that time can be saved since online banking does not need paper documents; the processing of which can give rise to errors and delays, and which also requires more personnel.
Third, during the transaction, online banking allows customers to monitor contractual performance at any time or to confirm delivery automatically. In other words, more relevant information is immediately available and transparent to customers.
Indirect advantages are those benefits that are less tangible and difficult to measure. For example, online banking allows customer to perform banking transactions anywhere in the world and enjoy 24-hour service, as well as offering customers more investment opportunities and services, such as stock quotations and news updates. The factors outlined above are the perceived benefits that will be considered in the preliminary model of online banking adoption.
Firstly, you simply require your details, access codes and information to utilize your account. There are even call centers made available to clients who encounter registration issues.
Secondly, Internet banking is cost efficient to users. Clients are able to decide which interest rates suit their standard of living. Most of these interest rates serve as a means by which clients are able to save money more frequently.
Again, bouncing a check is no longer an issue since you can track your balance daily by logging in to verify any monetary transfer.
If anyone writes a check or withdraws funds from your account and you know it wasn’t you, you will see it right away. Moreover, internet banking offers a great deal more convenience than you could get from a conventional bank. You aren’t bound by ‘banker’s hours’ and you don’t have to go there physically in your car. Time is not wasted when you have work to do because you can do your office’s banking without leaving the office. No matter where you are or what time it is, you can easily manage your money. The economic advantages have encouraged banks to provide an increasing range of easy to use services via the internet. Customers have found doing business online simple and speedy and have become very comfortable with the arrangement. Internet banking gives people more control over their money in a very convenient way that they find enjoyable and reassuring.
Challenges affecting the adoption of technology in banking
Internet security; Customers’ trust; the speed of service delivery; Customers’ information privacy; Customers’ awareness; Continuity of the service; Spread of computer use; Spread of Internet use; Difficulty of using online banking by some customers; Pricing of Internet service; Internet infrastructure in the country; Cost of maintaining the site; Lack of legal regulations; ISP monopoly; and Difficulty of maintaining the site are some of the challenges listed by (Aladwani, 2001) in his research findings.
Factors influencing Acceptance of technology in banking,
It is important to take these factors into account when deciding to adopt online banking and they are according to Al-Somali (2009) Quality of the Internet connection; Awareness of services and its benefits; Trust; Computer self-efficacy; Resistance to change; Social influence; Computer self-efficacy and Resistance to change.
Quality of the internet connection
Sathye (1999) used Internet access as one of the factors affecting the adoption of online banking in her research. He opined that without a proper Internet connection the use of online banking is not possible. The quality of the Internet connection is an essential component for any Internet-based application (Al-Somali, 2009). Almogbil’s (2005) study confirms that there is a significant relationship between the speed of Internet access and the use of online banking services.
Awareness of services and its benefits,
According to Sathye (1999) the use of online banking services is quite a new experience to many customers and low awareness of online banking is a critical factor in causing customers not to adopt online banking. This in the researcher’s opinion is the case of Ghana, where many bank customers are somehow unaware of internet banking or lack the necessary experience in its usage.
Consumers’ trust in their online transactions is important and has been identified as a key to the development of e-commerce (Yousafzai et al., 2003). According to Suh and Han (2002), the issue of trust is more important in online as opposed to offline banking. Many researchers agree that trust is more important in online banking because transactions of this nature contain sensitive information and parties involved in the financial transaction are concerned about access to critical files and information transferred via the Internet (Alsajjan and Dennis, 2006; Suh and Han 2002). Ghana is a typical case study when it come trust in online banking. This is because of the advent of what is popularly known as “419” scam on the internet. This has created fear and panic in using the internet to transact any form business which the banking sector is no exception.
Venkatesh and Morris (2000) confirm that social influence plays an important role in determining the acceptance and usage behavior of adopters of new ITs. Davis et al. (1989) believed that in some circumstances people might use a technology to comply with others’ mandates rather than their own feelings and beliefs.
Resistance to Change
Daniel (1999) finds in his study that there is a high level of customers’ inertia in changing their established banking activities to online banking. The attitude of the Ghanaian customer is no exception. This seen in case of the E-ZWICH introduced some years back, where most bank customers were reluctant to adapt to this changes of carrying cash around.
Computer Self Efficacy and its relationship with online banking
Computer self-efficacy’ is defined as an individual’s self-confidence in his or her ability to perform tasks across multiple computer application domains (Monsuwe’ et al., 2004). Several studies have examined the relationship between self-efficacy with respect to computer use (e.g. Wang et al., 2003; Eastin, 2002; Bandura, 1977; Monsuwe’ et al., 2004; Wang and Newlin, 2002), find that ‘computer self-efficacy’ and ‘perceived ease of use’ are related. In the area of online banking, researchers have found positive relationships between perceptions of convenience and the use of online banking (Wang et al., 2003; Gerrard and Cunningham, 2003; Polatoglu and Ekin, 2001; Lassar et al., 2005). Polatoglu and Ekin (2001) imply that customers, who are familiar with the Internet and e-mail, should not find Internet banking o be complex. Based on the theoretical and empirical support from the IS literature, it can be concluded that, the stronger a person’s self-efficacy beliefs, the more likely he or she tries to achieve the required outcome.
Technology acceptance model
A lot of researchers have been trying to find factors that influence individual’s acceptance of information technology (IT) in order to enhance its usage (Al-Somali et.al, 2009). User acceptance of technology mostly depends on the richness of that technology. The Technology Acceptance Model (TAM) developed by Davis (1989) has been a model used to gauge a user acceptance of a given technology. It is broadly use by researchers and practitioners to forecast and make sense in user acceptance of information Technology (Venkatesh ; Davis, 1996; Lee ; Turban, 2001). TAM was based on earlier work with the theory of reasoned action (Fishbein and Ajzen, 1975). It was specifically tailored for modeling user acceptance of information systems (Data, process, input, output and Information Technology). The main aim of TAM is to provide explanation of the determinants of computer acceptance that is general, capable of explaining user behavior (beliefs and attitude) and intentions of using a particular technology.
Chang (2008) used TAM in his research to identify consumers’ acceptance of intelligent agent (IA) technology for the automation of auction website. He later found out that perceive usefulness was the most influential in promoting user intention to use auction website. TAM model has been widely use for predicting user acceptance and use of information systems, and has recently been applied to predict Internet adoption as well (Chang et al., 2008).
Study done by Hernandez’s et al.’s (2008) also depicted that TAM model can correctly explain the acceptance of information technology in the business framework as long as the focus and subject proposed are correct. Han and Suh (2002) studies also found that trust has become one of the most significant beliefs in explaining customer’s attitude towards the use of internet banking. The results of Wang et al. (2003) study confirmed the validity of TAM with different populations of users and different software choices.
Key factors that constitute benefit for adopting Electronic banking.
This paper highlights the benefit factors that will engage individual to patronize in electronic banks. These factors include Security/privacy, Convenience/time, flexibility and cost saving. I extend the technology acceptance model (Davis, 1989) and explain behavioral intention towards the use of electronic banking through perceived usefulness and perceived ease of use. I augment TAM with the construct perceived security/privacy, Convenience/time, cost saving and flexibility. Also, intention to use is influenced by perceive usefulness, perceive ease of use, perceived security and privacy, convenience/time, cost saving and flexibility. Propositions depicts the research model.
Figure 1. Research Model
Perceived usefulness and perceived ease of use
In this model, perceived usefulness refers to the degree to which the user believes that using the technology will really improve his or her work performance, while perceived ease of use refers to how effortless he or she perceives using the technology (Davis, 1989). Both are considered distinct factors influencing the user’s attitude towards using the technology, though perceived ease of use is also hypothesized to influence perceived usefulness and attitude towards using the technology. However, attitude towards using the technology determines the behavioral intention to use that technology.
P1: perceived usefulness has a positive influence on customer intention to use E-banking
P2: perceived ease of use has a positive direct relationship on customer intention to use E-banking
The ability to make IRA (Individual Retirement Account) investments, and the opportunity to trade stocks through their web sites. The trend towards “convergence banking” is predicted to shape the future of Internet banking. This simply means that whatever product is added to e-banking one thing stands out and that is it must be convenient to the customer. Therefore if stock trading and convergence banking on the internet are to be realized then it must be convenient as well.
P3: Convenient/Time has a positive direct relationship on customer intention to use E-banking
Electronic banking is more flexible compared to the bricks and mortal way of banking. The design of technology to allow customers to use and appreciate should be more flexible (Dabholkar, 1994).
With e-banking individual have the chance to manage his or her own accounts such as viewing balance information on your accounts (checking, savings, loans), confirm deposits made into your account, along with checks and other debits paid, customize your accounts to receive balance notification alerts as well as reset your own User ID and Password information.
P4: Flexibility has a positive direct relationship on customer intention to use E-banking
Cost is a factor that informed the use of electronic banking almost everywhere in the world and in this case Ghana is no exception. If banking customers are aware of the cost effectiveness of electronic banking, it will inform the perceive use of the banking products and services.
P5: cost saving has a positive direct relationship on customer intention to use E-banking
Security and Privacy
Security of Internet transactions is of paramount concern to most customers particularly where financial information is involved (Hedberg and Taylor, 2001; Stafford, 2001). There is the need to regard security as protection of interests. People want to protect their own money and bank their own exposure. Also, safeguarding the privacy of customer’s financial information and profile are imperative if the public is to embrace Internet banking.
The Office of the Comptroller of the Currency (OCC) released a new handbook outlining procedures for examining banking activities at national banks (ABA Bank Compliance,
1999). Issues in the handbook include customer privacy, threat of intrusions from hackers, and issues surrounding the interrelationship of customer anonymity on the Internet and banks’ responsibility to monitor suspicious activities under the Bank Secrecy Act.
E-Banking platforms offer several methods to ensure a high level of security: (a) identification and authentication, (b) encryption, and (c) firewalls mechanism. The identification of an online bank takes the form of a known Internet address or Uniform Resource Locator (URL), while the customer is identified by his login ID and password to ensure only authorized users can access their accounts. On the other hand, messages between customers and online banks are all encrypted so that another person cannot view the contents of messages (Vrancianu, 2010).
P6: perceived security/privacy has a positive direct relationship on customer intention to use E-banking Intention to Use
Intention to Use refers to customers’ intention to use, as opposed to their actual use of Electronic banking.