Perception of Internet

Banking Users
towards Internet Banking
Adoption

Abstract
The extension of commerce and banking to cyberspace is an inevitable development in the era of information
technology. Over past decade many financial institution have gone retail banking over internet which resulted
in to fostering the number of internet banking users. This study aims at identifying the factors that affect
the adoption of internet banking from internet banking users’ perspective. Four adoption dimensions, viz.
Usefulness,Exposure, Trust and Ease-of-Use are identified based on principal component method of factor
analysis. Further the difference in the perception of internet banking users of public sector and private
sector bank is examined. The results indicated that both public sector and private sector banking users have
similar perception towards all dimensions of internet banking adoption.The empirical findings not only
prioritize different parameters of internet banking adoptionbut also provide guidelines to banks for focusing
on important factors that affect perception of individual internet banking users.

Vanita Joshi 1 Alok Bansal2

Key Words : Internet Banking, Adoption, Internet Banking Users, Usefulness, Exposure, Trust, and Ease-of-Use.

Introduction
Technology has played a crucial role in the financial service sectors. Drastic growth in global internet access
resulted into increased offering new market or internet-based services. Year 2014has shown increase in the number
of internet users in India with 19.7 percent of total population (www.internetworldstats.com). Banking sectors
have adopted technology to offer latest modes for transacting business. With the increase number of internet users’
base, competition is the driving force behind the introduction of online retail banking. Primarily, commercial banks
viewed it as a competitive strategy to retain existing customers, attract additional business, increase market share
and support business re-engineering. Despite the ominous increase internet users and considerable diffusion of
consumer internet banking, bank seek further market expansion by increasing internet banking user base. Therefore,
banks are looking for an increased customer base with more number of internet banking users. Also banks cannot
take risk of losing customers to competitors within the aggressive competition in the banking industry around the
world. The present research focused on identifying and highlighting the main potential factors that are currently
fostering the growth of internet banking users and resulting into adoption of internet banking offered by private and
public sectors banks.
The term internet banking is used to describe the provision of information and services by the bank to its customers,
via a page on www (World Wide Web). At the basic level, internet banking can mean the setting up of a web
page by a bank to give information about its product and services. At an advance level, it involves provision of
1
Associate Professor, Sanghvi Institute of Management & Science, Indore, vanita.joshi@sims-indore.com
2
Professor and HOD, Prestige Institute of Management & Research, Indore, alok_bansal@pimrindore.ac.in

Anvesha, Vol. 8 No. 1 20

facilities such as accessing accounts, funds transfer,
and buying financial products or services online.
This is called ‘transactional’ online banking (Sathye,
1999). Any user with an internet access device and
a browser can get connected to his banks’ website to
perform any banking function.It allows the customer
to logon to the bank’s website with the help of bank-
issued identification and PIN. Internet banking offers
features like bank statements, electronic bill payment,
funds transfer, account aggregation, loan applications
and transactions that allow users to monitor all of their
accounts in one place.
Banks offer Internet banking in two main ways. An
existing bank with physical offices can establish a
website and offer internet banking to its customers as
an addition to its traditional delivery channels. A second
alternative is to establish a ‘virtual’,‘branchless’, or
‘internet-only’ bank that sometimes may even not
have any physical branch presence in a particular
region despite offering different banking services.
Internet banking is a cost-effective service delivery
channel for banking sector. As per the Internet and
Mobile Association of India’s (IAMAI) report on
online banking, there are many advantages of online
banking. It is convenient, it is not bound by operational
timings, there are no geographical barriers and the
services can be offered at a miniscule cost. Internet
banking allows one-to-one interaction of customers
with the bank’s website. It has advantages for banks
to maintain competition, to save costs, to enhance
mass customization, marketing and communication
activities, and to maintain and attract consumer (Mols,
2000).
From the individual customers’ perspective i.e. retail
banking, internet banking provides a very convenient
and effective approach to manage one’s finances as
it is easily accessible 24 hours a day, and seven days
a week. For corporate customers, sophisticated cash
management packages offered through corporate
internet banking which provides them up-to-date
information, allowing for timely funds management
decisions. Internet banking allows customers easier
access to their bank accounts, lower service charges,
and save time. Moreover, Chang (2002) showed that
internet banking had a low transaction cost and a high
speed of service when compared to other banking
services. The cost of one banking transaction through
21
had a great influence on the adoption of internet banking
(Sathye, 1999; Mols, 2000; Pikkarainen et al., 2004).
Utmost of previous researches on internet banking
adoption have focused on technology acceptance model
(TAM) (Daniel, 1999; Mols, 2000; Pikkarainen et al.,
2004) in context to different countries and to a lesser
extent in other regions containing a mix of developed
and developing countries.
For instance, Sathye’s (1999) study in Australia; Tan
and Teo’s (2000) research in Singapore; Hoppe et
al.’s (2001) study in South Africa;Karem’s (2003) and
Eriksson et al.’s (2005) study in Estonia; Chang’s (2003)
work in Korea; Wang et al.’s (2003) and Shih and Fang’s
(2004) studies of internet banking in Taiwan;Polatoglu
and Ekin, (2001) study in Turkey;Jaruwachirathanakul
and Fink, (2005) study in Thailand. In addition to
these,Suganthi and Balachandra (2001), Ndubisi and
Sinti (2005) all have conducted research in Malaysian
on adoption of internet banking. In view of all
aforementioned contexts, very few researches were
reported in India that focused on internet banking
adoption.
Technology Acceptance Model (TAM) proposed by
Davis et al., (1989) for studying the acceptance of
information technology services had also been referred
in literature. According to TAM, adoption behavior
is determined by the Behavior Intention (BI) to use
a particular system, which in turns determined by
Perceived Usefulness (PU) and Perceived Ease of
Use (PEOU) of the system. It was realized by many
researchers that internet banking acceptance can be
more precisely studied from the information systems
acceptance point of view. The dimensions of internet
banking adoption identified in present study also
verified the determinants of TAM.
Wang et al. (2003) felt that perceived usefulness
and perceived ease of use do not fully explained the
user’s behavior towards internet banking and hence
introduced perceived credibility and computer self-
efficacy as new factors. While Celik (2008) indicated
that perceived usefulness and perceived ease of use
are immediate direct determinants of customers’
attitudes towards using internet banking. Pikkarainen
et al. (2004) presented a model indicating online
banking acceptance among private banking customers
in Finland in the light of the TAM and added new
variables derived from online banking acceptance
Anvesha, Vol. 8 No. 1
literature. The four new variables other than that of
TAM were perceived enjoyment (PE), information on
online banking, security and privacy, and the quality
of the Internet connection. Suh and Han (2002) also
added trust to the original TAM model. They studied
their model by empirically evaluating responses from
personal customers of five major banks in South
Korea.
Some of the studies concurred that use of the TAM in
the study of internet banking reflects a focus on the
technological aspects of internet banking adoption but
neglects other parameters (e.g. social, psychological)
that may also influence the adoption decision. As
a result several competing models and theoretical
approaches have been used by researchers. One of
these models is Fishbein and Ajzen’s (1975) Theory of
Reasoned Actions (TRA), which is based on Davis’s
(1986) TAM.TRA model assert that attitude towards
a behaviour is determined by relevant beliefs (Davis
et al., 1989). Other theories are Theory of Planned
Behavior (TPB), the Decomposed Theory of Planned
Behaviour (DTPB) by Taylor and Todd (1995) and
the Innovation Diffusion Theory (IDT) by Rogers
(1983). The decomposed TPB model, according to Tan
and Teo (2000), uses constructs from the innovation
literature such as relative advantage, compatibility,
subjective norms and perceived behavioral control by
decomposing them into more specific dimensions.
Along with the studies supporting models and
theories on technology acceptance, many studies have
independently identified the parameters of internet
banking adoption. Some researchers used attitude as an
influential factor in relation to internet banking. Attitude
toward internet banking is defined as an individual’s
overall affective reaction to using the internet for his/her
banking activities (Venkateshet al., 2003). Karjaluotoet
al. (2002) showed that Prior Experience with computer
technologies and attitudes towards computers influence
both attitudes towards online banking and actual
behaviors. Their study revealed among these factors,
prior computer experience had a significant impact on
online banking usage.
Trust has striking influence on user’s willingness to
engage in online exchanges of money and personal
sensitive information (Friedman et al., 2000; Wang et
al., 2003). This indicates that banks should not only
give attention to designing easy to use, useful but to
Anvesha, Vol. 8 No. 1
trustworthy systems too. Further trust was notified as
a strong correlate of Security and Privacy measures
used by the banking sectors offering internet banking
services. Certainly with rapid growth in amount of
products and services offered via the internet, customers
are increasingly more concerned about security and
privacy issues. That is why the importance of security
and privacy for the acceptance of online banking has
been noted in many online banking studies (Tan and
Teo, 2000; Polatoglu and Ekin, 2001; Sathye 1999).
Customer perception of bank’s Service Quality and
the availability of internet banking services had been
indicated positively correlated with each other by
a large number of empirical research (Mols, 2000).
Service quality is determined by the difference
between customers’ expectation and service provider’s
performance and their evaluation of the services they
received (Parasuramanet al., 1998). Demographic
factors have also been found to be associated with
adoption of different banking channels, especially
internet banking (e.g. Karjaluotoet al., 2002). Sathye
(1999) indicated that young, educated, and wealthy
customers were among those most likely to adapt to
internet banking.
The new technological capabilities implied in banks
can create value and better customer relationship.
Comparison between public sectors and private sector
banks has also been noticed in previous researches like
Singh and Arora (2011) have compared the customer
satisfaction in public, private and foreign banks. The
outcome showed that customer satisfaction level
with employee behavior was higher in private and
foreign banks than nationalized banks because of
strong management system of the above banks. They
further concluded that the charges levied on different
service by private and foreign banks are higher than
nationalized banks. With IT-enabled services they
concluded that customers of nationalized banks were
using comparatively fewer IT-enabled services as
compared to private and foreign banks. Reddy (2001)
justified that banks are different stages of technology
adoption partly due to their different legacies, as much
as the differences in their strategic approaches to
computerization of technology absorption. Since private
sector banks and foreign banks were the early adopter
of technology, a decade late researches have shown
relative difference in the technology based services of
22
public sector and private sector banks. A report by RBI
(2001) stated that foreign banks are ahead in offering
better banking services and products, coupled with
smart use of IT adoption and have considerably higher
operational efficiency.
Study Objectives
In the developing countries like India the empirical
studies on the adoption of technology based financial
innovations have focused mainly on various distribution
channels of e-banking collectively, only a handful studies
look specifically at internet banking adoption. Though,
banking industry has applied the entire necessary means
to provide internet banking services to its customers.
But unfortunately, customers have not adopted internet
banking in a big way in India. Hence, banks need to
influence their customers towards electronic modes of
performing banking transactions. Knowing the factors
that may influence customers’ perception towards
internet banking can help to enhance banks’ present
system and attract more customers. Over the years,
several studies have been conducted to compare the
services of public and private sector banks but studies
neither reported this comparison in specific context of
internet-enabled banking services nor even analyzed it
from internet banking users’ point of view.The present
study is an attempt tofirstly, identify the dimensions of
internet banking adoption and secondly, to find out the
difference in the perception of internet banking users of
public and private sector banks towards these identified
dimensions through the following specific objectives.
1. To ascertain the dimensions affecting the perception
of internet banking userstowards internet banking
adoption.
2. To find out the differences in the perception of
internet banking users of public and private sector
banks on identified dimensions.
Methodology
The Study : The research is exploratory in nature. It
aims to identify the dimensions of internet banking
adoption on the basis of perception of internet banking
users of public or private sector banks related to their
internet banking experience.
The Sample : The sample of the study constituted
of 401 individuals selected from the population of
internet banking users of private and public sector
banks fromselected cities of Madhya Pradesh. Out of
23
401 respondents 202 are from public sector banks and
199 from private sector banks. Selection of private
and public sectors banks was done on the basis of
first bank where they have maximum internet banking
access. The extraneous variables for this study like age,
gender, location, etc. were controlled by randomization
and elimination. The sample covered 311 male and 90
female respondents, whereas age ranged from 19 years
(minimum) to 65 years (maximum). The average age
of male and female respondents was 34.0 years and
29.9 years respectively.
In the absence of sampling frame, non-probability
judgment sampling method was applied to select the
sample from population. According to Saunders (2000),
“… the inability to specify a sampling frame may
indicate the use of one or a number of non-probability
sampling techniques”. Similarly Creswell (2003)
mentioned that approaching the people for the collection
of primary data was mainly based on their convenience
and availability to fill in the questionnaires. Therefore,
using judgment sampling a total of 450 surveys were
collected with 49 rejections due to response error. The
sample of 401 respondents was finalized.
Tools for Data Collection : Primary data have been
collected through a self-administered questionnaire
comprised of 37 items (with 75.5 percent acceptance
from judges/experts during face validity process). These
items in the tool were presented on five point Likert
scale range from ‘Strongly Agree (5)’ to ‘Strongly
Disagree (1)’ and administered on the sample of 401
respondents. The internal consistency and reliability
of measuring instrument have been evaluated initially
through item-total correlation method.The correlation
coefficient between each item and total was found
to be more than 0.40. The reliability of the scale
was determined by Chronbach’s alpha method. The
reliability coefficient alpha ( ) was found to be 0.941
and showing high reliability of the scale. The validity
was taken to be equivalent to reliability index (square
root of reliability coefficient) and computed for the
scale i.e. 0.97.
Tools for Data Analysis : Collected data was analyzed
using Statistical Package of Social Science (SPSS 17.0)
and MS Excel 2007 to arrive at meaningful conclusion.
Reliability and validity of survey instrument were
measured usingChronbach’s alpha, reliability index
Anvesha, Vol. 8 No. 1
and face validity methods respectively.For sampling
adequacy test, Kaiser-Meyer-Olkin (KMO) measure
was found to be 0.962 (Annexure C) which is adequate.
To ensure significant correlations among input
variables, Bartlett’s test of sphericity was done and the
P value found is 0.000 (<0.05) indicating that there is
significant correlation among the selected variables.
The principal component method of factor analysis,
with Eigen value one or above, using varimax rotation
was applied on the items/variables to explore the factors
and dimensions of internet banking adoption. All 37
significant items were subjected to the first order factor
analysis which resulted into the emersion of eight
factors namely EfficientService, SocialDesirability,
Publicity, Awareness, Security, Convenience,
User-friendliness and Enjoyment (Annexure A)
withcumulative percentage of variance of 59.72%.
Further, these eight important factors when subjected to
second order factor analysis produced four imperative
dimensions viz. Usefulness, Exposure, Trust and Ease-
of-Use of internet banking adoption (Annexure B)
with cumulative percentage of variance of 64.63%. In
the second phase of the study, the differences in the
mean perception of public and private internet banking
users weretested through Independent Sample t-test
(Annexure D). For finding out the difference in the
perception following hypotheses have been framed on
the basis of dimensions ascertained in the first phase
of the study:
H01 = There exist no significant difference in the mean
perception of internet banking users of public and
private sector banks towards Usefulness dimension
of internet banking adoption.
H02 = There exist no significant difference in the mean
perception of internet banking users of public and
private sector banks towards Exposure dimension
of internet banking adoption.
H03 = There exist no significant difference in the mean
perception of internet banking users of public and
private sector banks towards Trust dimension of
internet banking adoption.
H04 = There exist no significant difference in the mean
perception of internet banking users of public
and private sector banks towards Ease-of-Use
dimension of internet banking adoption.
Anvesha, Vol. 8 No. 1
Results and Discussion
Dimensions of Internet Banking
The study empirically explored the dimensions
of internet banking adoption keeping track of the
literature to give better criteria that make internet
banking users decide to adopt internet banking services.
Technology Acceptance Model (TAM) was considered
as foundation for exploring the four imperative
dimensionswith cumulative percentage of variance of
64.62viz. Usefulness, Exposure, Trust and Ease-of-
Use which were emerged out of eight identified factors
(Figure 1).
Figure 1: Dimensions and Factors of
Internet Banking Adoption
The TAM, originally presented by Davis (1989)
argued that acceptance of a new system is predicted
by understanding the users’ perceptions towards
the Ease-of-Use and Usefulness of the new system.
While Exposure and Trust has transpired as important
indicators of customer perceptions towards adoption of
innovation like internet banking.
Firstly, Usefulness (Dimension Load=1.643 and
percentage of Variance =20.091%)has come up as
relatively strong indicator of users’ perception towards
internet banking adoption. This dimension constituted
of two factors viz. ‘Social Desirability’ (Factor
Load= 0.878) and ‘Efficient Service’(Factor Load=
0.765). This outcome in the context of acceptance
of internet banking has supported the usefulness
factor of Technology Acceptance Model suggested
by Davis (1989). The study explored that usefulness
has significantly positive impact on users’ perception
towards adoption of internet banking. Usefulness
indicates the users’ belief about using particular
system is worthwhile which in turn improves users’
performance. On the one hand, it affects the usage of
internet banking systems because of the reinforcement
value of outcome. On the other hand, it captures the
extent to which a potential user views the internet
banking as offering value over alternatives ways of
performing the same task (Agarwal and Prasad, 1999).
Usefulness is a key success factor of internet banking,
because internet banking system is built for providing
extended banking services keeping customers’
flexibility in mind. It was found to be influenced by the
social norms and the efficiency of the services provided
24
by the banks. At present, a practically useful internet
banking system can enable its customers to search for
banking information, conduct real-time transactions,
make investment plan, etc. However, there are a
variety of banking and financial services which might
demands legal requirements and obligations. Previous
researches suggested that usefulnessis influenced by
various variables in different environment (Adam et
al., 1992; Davis, 1993). In case of internet banking,
individual customers might use this banking alternative
if they would perceive it useful. As a result they would
utilize banking services in a relatively more frequent
manner.
Venkatesh and Bala (2008) indirectly supported the
importance of perceived usefulnessin the process of
decision-making, since customers with greater and more
developed banking needs were shown to have a stronger
drive to accept the technology. A study by Venkatesh and
Davis (2000) tested a theoretical extension of the TAM
that explained perceived usefulness and usage intention
in terms of social influence and cognitive instrumental
processes. As noted by Gerrardet al. (2006), there are
close parallels between the constructs of perceived
ease of use and usefulnessin the TAM model and the
concepts of complexity and relative advantage in the
Diffusion of Innovations framework. In fact ease-of-
use has been found promoting usefulness of internet
banking.
Usefulnessof internet banking is an outcome of
efficient services provided by banks to the users.
Many customers may be attracted to certain appealing
features of internet banking, such as better access to
information, speed of payment transactions or a sense
of complete control over one’s account (Karjaluoto,
2002). An efficient service implicitly assures service
quality. What customer perceives and what he actually
25
get leads to considerable acceptance and would in
turn satisfy them. If the service quality is not as per
customers’ expectation, then the financial institution
is considered indifferent by its customers. Therefore,
what the company thinks about its performance is not
important for customers. Their satisfaction is a matter
of customers’ perceptions.
Social desirability has come as important constituent
of usefulness. Individual behaviour and requirement
in a particular society influence other also. Acceptance
of internet banking channel for conducting banking
transaction may be socially desirable by certain group
in a society. The outcome of the study conducted
by Anderson et al. (2002) on socio-demographics
suggested that similar status in term of income,
educational attainment and the current employment
status of the residential (household) customers have a
positive correlation to the internet banking access rates.
According to Luk (2003), Hong Kong consumers were
generally practical; also bank managers mentioned
that their customers seldom chose a channel because
the channel is socially desirable. At the same time
social and psychological factors had been considered
for discussing the usability aspects of technology
acceptance which are proved important predictors of
the decision to adopt / accept a technologically based
innovation (Venkateshet al., 2003).
Second dimension named Exposure (Dimension Load=
1.53 and percentage of Variance =17.012%) comprised
of two factors viz. ‘Publicity’ (Factor Load= 0.814)
and ‘Awareness’ (Factor Load= 0.721). The acceptance
of new technology among customers relies heavily on
promotion done by the financial institutions in order
to gain their attention towards the new services. This
can be done through any popular media like radio, TV
advertisement, hoardings, banners, internet advertising,
etc., even mouth publicity can work. The issue of
attention has been vastly underrated in previous studies
on this subject. Undoubtedly publicity leads to the
awareness by exposing internet banking products and
services. Howard and Moore (1982) emphasized that
for adoption, “consumers must become aware about
the new brand”. Many banking customers may still be
unaware of the existence, features, relative advantages
and benefits of internet banking, as their attention has
not yet been drawn to internet banking.
Results indicated that customer’s awareness of an
Anvesha, Vol. 8 No. 1
innovation plays an important role in the early stage
of its diffusion. Improper diffusion may lead to the
knowledge barrier to the adoption of internet banking.
“Don’t assume good products sell themselves” (Cooper,
1997). Hence, if customers are not adopting internet
banking, it may be because they are not aware about
such a service being available and the added value
that it offers in the form of benefits. Laforet and Li
(2005) got the similar findings in China, they found
that non-users of online banking were not at all aware
of technology based services (two-thirds of the sample
surveyed), while about one-third of online banking
users adopted mobile banking, two-thirds heard about
it but did not use it because they were not clear about
its benefits. Muzividzi et al. (2013) concluded that
marketing exposure and security as the main factors
that affect intellectuals’ decision to take up internet
banking.
Proper exposure of internet banking services may be the
outcome of financial knowledge. According to Mitchell
(2002), a lack of financial knowledge may result in two
possible scenarios. Individuals, who do not understand
a product or a service, have a tendency to hesitate
when they are buying. Customers who intend to buy
despite their lack of knowledge become vulnerable to
salespeople who may try to sell them a product or a
service that is inappropriate or that they do not need.
Neither of these scenarios is good for the providers of
financial services. The first case results in an absent
sale, and the second case may result in unsatisfied
customers and increased governance regulation.
Third dimension Trust (Dimension Load= 1.58 and
percentage of Variance =14.554%) is composed of
two factors viz., ‘Security’ (Factor Load= 0.869)
and ‘Convenience’ (Factor Load= 0.711). The
establishment of trust and confidence plays a major
role when providing financial services. Hence forming
trust among the internet banking customers have
a significant impact on customer intention toward
internet banking adoption. According to Mayer et al.
(1995), customers’ trust in e-banking is defined as
willingness of customers to perform on-line banking
transactions, expecting that the bank will fulfill its
obligations, irrespective of their ability to monitor or
control banks’ actions.Trust is important in the initial
stages of a relationship between the customers and
online service providers. Kim and Prabhakar (2000)
Anvesha, Vol. 8 No. 1
considered initial trust and risk together as important
determinants of adoption of internet banking.Findings
of the study by Ajam and Khalil (2013) indicated that
trust of using the Internet banking is high and it was
considered as one of the main factors influencing the
intention, because of the degree of uncertainty of a
virtual setting of economic transactions is higher than
in traditional settings.
Security and privacy issues were frequently raised by
many researchers in order to build trust among internet
banking users. Goi (2006) observed that Internet
banking has not been readily accepted by its users due
to the concerns raised by various groups, especially in
the areas of security and privacy. In order to reduce
the potential vulnerabilities regarding security, many
vendors have developed various solutions in both
software-based and hardware-based systems. For
continuous growth of Internet banking, Yang, (1997)
strongly recommended that the security and the privacy
aspects need to be improved. With the security and
privacy issues resolved, the future of internet banking
can be very prosperous. According to Muzividzi et al.
(2013), users are not sure about the security aspect of
internet banking and hence they argued that for them
to take up the new technology they first need full
guarantee of the security of their transactions.
The trust also incorporates users’ convenience in
operating the internet banking services. Internet
banking provides higher degree of convenience that
enables customers to access internet banking any time
and from any place. Convenience has been identified
by a number of studies as an important adoption factor
(Ramsay and Smith, 1999; Chung and Paynter 2002,
etc.) Convenience is important to internet banking
customers because it reduces the time spend on
banking services and save physical efforts of visiting
bank branches (Howcraftet al., 2002). At the same
time, high levels of workplace internet use have also
been associated with the convenient uptake of internet
banking (Durkin, 2004). A study conducted by Bruno
(2003) supporting the outcomes of present study by
mentioning that from the viewpoint of the customers,
the decision to use internet banking is frequently
motivated by convenience and efficiency. Online
account holders do not have to make a trip to the local
branch, queue, or be constrained by the bank’s opening
hours (Lassarat el., 2005). To add further convenience
26
to the internet banking users, many banking institutions
are working together to form an integrated system.
The fourth dimension Ease-of-Use(Dimension Load=
1.227 and % of Variance =12.969)is a vital indicator
of users’ perception about the adoption of internet
banking supported by Davis’s (1989) Technology
Acceptance Model. It is formed by the union of two
important factors viz., ‘User-friendliness’ (Factor
Load= 0.646) and ‘Enjoyment’ (Factor Load= 0.581).
Ease-of-use deals with the level of effort required to
accomplish a particular task successfully. According to
Davis et al. (1989) perceived ease-of-use refers to the
degree to which the prospective user expects that the
use of system would require limited efforts. Therefore
ease-of-use can affect the usage of internet-enabled
financial services like internet banking. The system
which is difficult to use or operate is less likely to be
accepted by the users, this indicates that sometimes
benefits of using the system may over-weighted by the
effort of using systems. Supporting to this, Dabholkar
(1996) pointed out that customers tend to be concerned
about the efforts required to use a particular system and
the complexity of the process of service delivery.
The Wallis Report (1997) identified that technological
innovation “must be easy to use” to ensure customer
take-up or acceptance. Users must find internet
banking system to be easy to understand and navigate,
so that they can learn it on their own. Daniel (1999)
identified ‘ease of use’ as one of the factors for
customer acceptance in her study of electronic banking
in the UK and Ireland. If customers are not adopting
internet banking, it could be because the internet sites
are not easy to operate. User-friendliness of the system
is a substantial constitute of ease-of-use indicator of
acceptance of new technology. Cooper (1997) though
reported that ease of use of innovative product or
service is one of the important characteristics for
adoption from the user’s perspective. But at the same
time, he mentioned that ease-of-use is related to user
friendliness and ease of navigation as well as simple
instructions to use the service. User-friendliness of the
internet banking services appeared to be an important
factor for customers to use these services.Mols (1998)
argued that the acceptance of internet banking is
influenced by technological development, as well
as by the perceptions of bank customers and bank
managers.
27
Internet banking website’s design and better appearance
of content give users an enjoyable access and this in
turn improves the usage of online financial services.
Holbrook and Hirschman (1982) proposed the
experiential perspective of consumption, in which the
consumer is directed by a hedonic pursuit of pleasure,
seeking fun, amusement, fantasy, and enjoyment.
Concerning ‘enjoyment with technology’, Langeardet
al. (1981) found that some people enjoy playing with
machines and suggested that these people may prefer
self-service options. Dabholkar (1996) found a positive
relationship between expected enjoyment from using
a technology-based self-service option and expected
service quality. Therefore an enjoyable access to a user-
friendly internet banking system can be considered as
important basis of adoption.
Hypothesis Testing
The four hypotheses that were set on the basis of above
four dimensions were tested and the results are tabulated
(AnnexureE).The results of hypotheses tests showed
that the significant value ‘p’ was greater than 0.05. This
indicated that all hypotheses were not rejected at five
percent level of significance.This imply there exist no
significant difference in the mean perception of internet
banking users of public and private sector banks towards
four identified dimensions viz. Usefulness, Exposure,
Trustand Ease-of-Use of internet banking adoption. In
last decade internet banking saw an exponential rise in
users. Though private banks (ICICI, HDFC, CitiBank
and IndusInd) were the early ones to introduce the
internet banking in 1999 but soon public sector banks
like SBI, PNB, BOI, Canara Bank, Indian Overseas
Bank, etc. have joined the fray for providing versatile
internet banking products and services.
In the current scenario, every bank in India has
the internet banking facility and is encouraging
its customers to use internet banking. The results
discovered that internet banking users of both private
and public sector banks have similar perception on
different dimensions of internet banking adoption. In
a study on customer perception towards e-banking
by Ravichandran and Murugarathinam (2012) it was
evident that majority of customers are highly satisfied
with the e-banking services provided by either of
public sector and private sector banks.Sharma and Vyas
(2011) have received mixed responses from public
Anvesha, Vol. 8 No. 1
and private bank employees towards computerization
banking services. On ‘information technology strategic
advantages’ of private and public sector banks, they
have received more or less identical responses, while
responses were not identical for ‘technology know-
how and organizational capacity’, ‘decision making
process’ and ‘motivation toward IT’ of public and
private sector banks.
On the contrary, some studies reported significant
difference in the internet banking facilities of different
banks.Vyas(2004) concluded that there was effective
implementation of e-banking services in case of private
banks and foreign banks, whereas, nationalized banks
were found to have lesser degree of computerization.
Shankar and Khanna (2011) surveyed the difference
in the customer perception of e-banking as CRM tool.
They, while comparing the customers’ perception of
internet banking facilities of ICICI and SBI, concluded
that ICICI was surging ahead of public sector bank
(SBI) by six percent specifically in case of ‘security
of transaction’ and ‘time required to get user ID and
password’. ICICI bank website was found to be more
user-friendly as well as prompt in replying to the
email queries of their customers. Overall they found
significant difference of eighteenpercent response in
favour of ICICI bank.
Conclusion
Internet banking has not only transformed banking
and financial institution into modern form but has also
brought a paradigm shift in banking operations. Despite
high diffusion of internet in last decade, the momentum
of internet banking has picked up recently. The study
ascertained four vital dimensions of Internet banking
adoption viz. Usefulness,Exposure, Trust and Ease-of-
Use as perceived by the internet banking users. Out of
these four dimensions, two dimensions viz. Exposure
and Trust can extend the implications of the Technology
Acceptance Model (TAM) to the Internet banking
adoption.There has always been a need to providing
better and customized internet banking services to
the customers. Hence banks should design its website
offering transactions based services,keeping the
identified dimensions of internet banking adoption into
consideration. Moreover the outcomes are beneficial
for banks in setting up policies for internet banking
customers which in turn will help banks remainnot only
Anvesha, Vol. 8 No. 1
competitive but will also support banks to continue to
grow. Since every bank irrespective of public sector
and private sector, has now facilitating their customers
with internet enabled banking services, hence no major
differences in customer perception remain which is to
be set as criteria for selecting a particular bank.
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ANNEXURE
Annexure A:Result of First Order Factor Analysis – Internet Banking Adoption
FACTORS ITEMS
IB is an easier way to solve banking needs
IB is convenient way to manage finance
Frequent need to perform banking transaction promotes IB
User-
Its easy to learn and operate IB
friendliness
IB is cost effective and economically reasonable
IB rectify the faulty transaction
IB avoids inappropriate response of bank staff
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ITEM FACTOR EIGEN PERCENT OF
LOAD LOAD VALUES VARIANCE
0.709
0.694
0.59
0.496 0.646 12.22 33.045
0.477
0.371
0.362
30
 Credibility of bank 0.691
IB is the demand of current scenario 0.68
IB provides 24x7 access 0.676
Efficient
User friendliness of the bank’s website 0.455 0.765 2.129 5.755
Service
Using IB saves time 0.446
IB provides value-added services 0.439
Desire for new banking experience promotes IB 0.414
IB is financially secure 0.793
IB protects personal privacy 0.752
Security 0.869 1.734 4.686
IB technology is reliable 0.74
IB improves communication with bank 0.537
I am well aware of the IB benefits 0.801
I am well aware of the services provided by IB 0.744
Awareness Using IB improves performance of utilizing banking 0.674 0.721 1.407 3.803
service
IB is convenient way of doing banking transaction 0.545
Using IB is fun 0.67
Using IB is wise 0.59
Enjoyment IB is compatible with my working style 0.584 0.581 1.333 3.602
While banking online I can get wide variety of 0.466
information about new services offered by bank
IB Ads in various media influences toward IB 0.738
People around me influences to adoption IB 0.626
Publicity Past experience with e-banking services like ATM, 0.613 0.814 1.140 3.080
phone banking etc. drives towards IB
IB can used even when banks are off on certain occasion 0.352
Using IB is fashionable and trendy 0.826
Using IB increases social esteem 0.779
Social
Availability of necessary means and resources influence 0.498 0.878 1.107 2.991
Desirability
to adopt IB
Using IB increases productivity 0.381
IB is location independent 0.641
Convenience IB offers wide range of banking services 0.62 0.711 1.022 2.762
IB avoids irritation of standing in long queues 0.603

Annexure B:Result of Second Order Factor Analysis – Internet Banking Ado

FACTOR DIMENSION PERCENT

DIMENSIONS FACTORS EIGEN VALUES
LOAD LOAD OF VARIANCE
Social Desirability 0.878
Usefulness 1.643 1.607 20.091
Efficient Service 0.765
Publicity 0.814
Exposure 1.535 1.361 17.012
Awareness 0.721
Security 0.869
Trust 1.580 1.164 14.554
Convenience 0.711
User-friendliness 0.646
Ease-of-Use 1.227 1.037 12.969
Enjoyment 0.581

31 Anvesha, Vol. 8 No. 1

 Annexure C:KMO and Bartlett’s Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.926

Bartlett’s Test of Sphericity Approx. Chi-Square 6646.200
Df 666
Sig. 0.000

Annexure D: Comparison of Perception of Internet Banking Users of Public and Private Banks towards
Dimensions of Internet Banking Adoption

D1: Independent Samples Test for the Usefulness Dimension of Internet Banking Adoption

Levene’s Test
for Equality of t-test for Equality of Means
Variances
95% Confidence Interval
Sig. Mean Std. Error of the Difference
F Sig. T Df
(2-tailed) Difference Difference
Lower Upper
Usefu-ness Equal .086 .769 -1.171 399 .242 -.64478 .55066 -1.72734 .43777
variances
assumed
Equal
variances -1.171 398.916 .242 -.64478 .55054 -1.72710 .43753
not
assumed

D2: Independent Samples Test for the Exposure Dimension of Internet Banking Adoption

Levene’s Test
for Equality of t-test for Equality of Means
Variances
95% Confidence Interval
Sig. Mean Std. Error of the Difference
F Sig. T Df
(2-tailed) Difference Difference
Lower Upper
Expos-ure Equal .722 .380 -1.746 399 .082 -.82332 .47168 -1.75062 .10397
variances
assumed
Equal
variances -1.747 396.363 .081 -.82332 .47134 -1.74997 .10332
not
assumed

D3: Independent Samples Test for the Trust Dimension of Internet Banking Adoption

Levene’s Test
for Equality of t-test for Equality of Means
Variances
95% Confidence Interval
Sig. Mean Std. Error of the Difference
F Sig. T Df
(2-tailed) Difference Difference
Lower Upper

Anvesha, Vol. 8 No. 1 32

 Trust Equal 4.314 .038 -.989 399 .323 -.40654 .41088 -1.21430 .40123
variances
assumed
Equal
variances -.991 389.684 .322 -.40654 .41036 -1.21334 .40026
not
assumed

D4: Independent Samples Test for the Ease-of-Use Dimension of Internet Banking Adoption

Levene’s Test
for Equality of t-test for Equality of Means
Variances
95% Confidence Interval
Sig. Mean Std. Error of the Difference
F Sig. T Df
(2-tailed) Difference Difference
Lower Upper
Ease-of- Equal .193 .660 -.706 399 .481 -.45801 .64918 -1.73425 .81824
Use variances
assumed
Equal
variances -.705 398.722 .481 -.45801 .64924 -1.73437 .81835
not
assumed

33 Anvesha, Vol. 8 No. 1

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