UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TU THI HANH FACTORS INFLUENCING THE ADOPTION OF INTERNET BANKING: A CASE STUDY IN HO CHI MINH CITY MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ TU THI HANH FACTORS INFLUENCING THE ADOPTION OF INTERNET BANKING: A CASE STUDY IN HO CHI MINH CITY ID: 22110018 MASTER OF BUSINESS (Honours) SUPERVISOR: PHAM QUOC HUNG Ho Chi Minh City – Year 2014 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS ABSTRACT……………………………………………………………………………1 CHAPTER 1: INTRODUCTION .1 Background to the study .2 The advantages of electronic banking services .3 Difficulties in implementing internet banking service .1 Potential factors can improve the development of electronic banking services .2 The reality of electronic banking using and problem statement .8 Structure of Thesis. 10 CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES .1 The relevant theories .1 The theory of reasoned action .2 Theory of planned behaviour .3 Technology acceptance model .2 Research model and hypotheses .2 Perceived ease of use and perceived behavioural control .3 Subjective norm and attitude .4 The moderating role of perceived behavioral control. 22 TIEU LUAN MOI download : skknchat@gmail.1 Measurement of perceived usefulness and perceived ease of use .2 Measurement of attitude .3 Measurement of subjective norm .4 Measurement of perceived behavioural control .5 Measurement of intention to use internet banking .3 Description of the pilot study .5 Methods of data analysis .2 Exploratory factor analysis.1 The Path model .2 Simple linear regression and multiple linear regression. 32 CHAPTER 4: DATA ANALYSIS AND RESULTS .2 Measure scale assessment .1 Reliability analysis for perceived usefulness .2 Reliability analysis for perceived ease of use .3 Reliability analysis for attitude .4 Reliability analysis for subjective norm .5 Reliability analysis for perceived behavioural control.
35 TIEU LUAN MOI download : skknchat@gmail.6 Reliability analysis for intention to use internet banking .2 Exploratory factor analysis.1 Condition for exploratory factor analysis .2 Results of exploratory factor analysis .3 Testing the hypothesis .1 Solving the moderator. 74 TIEU LUAN MOI download : skknchat@gmail. 78 TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Vietnam economy and bank system had to face many difficulties in 2011 and 2012. This challenge opens a new trend for banks.
Electronic banking is a modern service that banks armed to gain market and improve profit. Since, many financial institutions are fostering to provide many banking services to customers via the mobile phone, computers that are connected internet. Financial transactions are conducted via electronic banking have lower cost and faster speed than physical transactions. However, the number of people who decide to adopt and use such technologies is still low, particularly in Ho Chi Minh City.
Hence, there is a need to identify relevant factors that influence the adoption and usage of Internet banking in HCMC. Technology Acceptance Model (TAM) and Technology of Planed Behaviour (TPB) are two basic models to investigate the adoption and usage of Internet banking. This research proposes the model that comprises five variables: Perceived usefulness, Perceived ease of use, Attitude, Subjective norm and Perceived behavioural control. The results reveal that Perceived usefulness, Perceived ease to use, Attitude, Subjective norm and Perceived behavioural control have a significant association with the adoption and usage of Internet banking.
The research result has been a finding so that based on it, leaders of commercial banks will make an effective strategy to enhance customer satisfaction and improve operational efficiency. Contributions of this study are a basis for researchers, students for developing further research to practical applications. Key words: Perceived usefulness, Perceived ease of use, Attitude, Subjective norm and Perceived behavioural control, Intention to use. 1 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1: INTRODUCTION 1.1 Background to the Study Banks are important in every country and have a significant effect in supporting economic development through efficient financial services.
They provide a mechanical system to group saving and convert them into investment. For over a decade, banks have been affected by changes associated with globalization and financial liberalization. Reacting to these changes, banks expand the choice of services offered to the customers and increase their reliance on technology (Al-Smadi and Al- Wabel, 2011). Banks have been significantly affected by the evaluation of technology; competition between banks has forced them to find new market to expand, and the number of financial institutions that offer electronic banking products increased.
Hence, banks have begun to offer electronic banking services to improve the effectiveness of distribution channels through reducing the transaction cost and increasing the speed of services. The definition of electronic banking varies among researchers, because electronic banking refers to types of services through which bank customers can request information and carry out most retail banking services via computer, television or mobile phone (Daniel, 1999). Electronic banking is referred to as using of internet as delivery mode for the provision of services like opening a deposit account, electronic bill payments, and 2 TIEU LUAN MOI download : skknchat@gmail.com online transfers. These services can either be provided by the banks having physical offices and by creating a website and providing services through that or services can be provisioned through a virtual bank as well (Sana haider sumra, 2011).
Recently, electronic banking has become the way for the development of banking system, and the role of electronic banking is increasing in many countries. It offers opportunities to create services processes that demand few internal resources, and therefore, lower cost. As well as it provides wider availability and possibility to reach more customers. From the customers' point of view, electronic banking allows customers easier access to financial services and time saving in managing their finance (Almazari and Siam, 2008; Ayrga, 2011; Tan and Teo, 2000).
Indeed, the emergence of electronic banking has prompted many banks to develop marketing and information technology strategies in order to stay competitive. Venkatesh, Morris, and Davis (2003) noted that the successful implementation of information systems is dependent on the extent to which such a system is used and eventually adapted by the potential users. Information system implementation is not likely to be considered successful if users are unmotivated to use that type of technology, and thus it will not bring full benefits to the organization. In order to motivate customers to use electronic banking, banks must make key improvements that address the customers' concerns.
Although Internet banking introduces many benefits for banks and customers; customers still fear from the risk of electronic banking services. Some customers feel that Internet banking services could make them lose their money. Hence, there are still a large group of customers who refuse to adopt such services (Kuisma, Laukkanen, and 3 TIEU LUAN MOI download : skknchat@gmail.com Hiltunen, 2007; Littler and Melanthiou, 2006; Natarajan, Balasubramanian, and Manickavasagam, 2010). Without understanding what motivates the customers to use Internet banking services, banks will not be able to take actions to increase the use of such services.
Therefore, it is necessary to understand the key factors that influence the adoption of electronic banking among the banking customers.2 The Advantages of Electronic Banking Services: Electronic banking services have many benefits for both banks and customers. From the customers’ point of view, Aladwani (2001), found that electronic banking provide faster, easier and more reliable services to customers. Payment services through Internet banking, customers can conduct banking transactions do not need go to the bank, not restricted by geographical area. They can sit at home to ordering, purchase a variety of goods and services quickly.
Those services help customer saving time and costs. For banks, Internet banking is conceded a strategy weapon; help them to achieve competitive advantage and increase their market share. Furthermore, using Internet services can save the cost of resources, which are needed for traditional baking services (Jayawardhena and Foley, 2000). The number of individual customers using the internet and online payment via the internet is increasing.
In particular, the young customers can adaptable easily the new information technology. The commercial banks also save operating costs in counting and storage of cash.3 Difficulties in Implementing Internet Banking Service 4 TIEU LUAN MOI download : skknchat@gmail.com Vietnamese are afraid when dealing online. In particular, a number of Vietnam enterprises still consider with the payment service via Internet banking, do not have the habit of Internet banking transactions. Some customers concern about the safety of payment transactions through Internet banking channels.
Age factor, the older customer has limited to access new technologies and use of banking services on the computer as well as on mobile phone. Social factor, the habit of using cash is a major obstacle. Legal factor, whether Internet transaction law was effect, but crime in this area has not been discuss in detail. The commercial banks need to invest in technology and infrastructure for effective implementation of Internet banking services.
Some banks have not invested properly, so infrastructure cannot meet the demand for payment transactions, sometimes happens the interrupt of customer transactions.4 Problem Statement Internet banking is popularly known is the recent trend in banking transition and holds a bright future that is promising over and above the one brought by Internet banking. Internet banking provided personalized, anytime - anywhere banking services. Nevertheless, with all the laudable benefits of Internet banking, it is yet to gain larger scale adoption, especially in the emerging economies.1 Potential Factors Can Improve the Development of Electronic Banking Services Proportion of Non-Cash Payment: 5 TIEU LUAN MOI download : skknchat@gmail.com According to the State Bank of Viet Nam, the rate of cash payment per total means of payment has declined over 9 years (from 31. This is an important prerequisite for the development of electronic payment services in Vietnam.
See it more clearly in appendix 3. The rate of non-cash payment is more and more increasingly. However, both the proportion and the value of payment with bankcard were still very low when comparing with other payment means. This rate was 0.2% in total non-cash payment.
The Development of Personal Accounts: According to Vietnam Bank Card Association, the development of personal accounts in Vietnam was very high, 124% average growth per year over the period 2006- 2011. At June 30, 2011, the commercial banks have issued 36 million personal accounts, for 17 million people (about 20% of Vietnam's population). The Bank Card Market The bank card, especially the domestic debit card has became a popular payment mean. It has developed rapidly in recent years.
The amount of card that was issued on june 30th, 2012 got 47. Especially, the rate of debit card got 94%. The increasing of bank card became the potential opportunity for bank in improving the Internet banking services. See it more clearly in 3.
The System of ATM (Automated Teller Machine) and POS (Point of Sale) The equipment network that served payment through card was improved obviously. The amount of ATM and POS machine increased considerably. There were 13,920 ATM machines and 89,957 POS machines on june 30th, 2012. See it more clearly 6 TIEU LUAN MOI download : skknchat@gmail.com in appendix 3.
*The Development of Electric Means: The amount of mobile phone subscriber and internet user increased quite regularly, this was a good opportunity for developing electronic banking services through mobile phone and internet. See it more clearly in appendix 3.2 The Reality of Electronic Banking Using and Problem Statement Although, the developing Internet banking of banks met many advantages, the outcome of this business activity was still modest. According to the commercial banks survey of Nielsen Vietnam in August 2011, there are less than 3% banking customers using Internet banking services. This figure is still very low when compare with developed nations in Asia.
It means that Internet banking service in Vietnam is a potential market in future. The Internet banking payment market has developed more strongly. At the end of March 2012, the amount of Internet banking user increased 35% compared with 2010.