Does Indonesia Moslem Society Still Trust Islamic Banking Technology

Platform? Case study of Cyber Attacked Crisis

Suratmi Putri1, Adam Rama Putra1, Bhakti Ahmad Munajat1, Siti Ziyadatur Rohmah1, Muhammad Pahmi1, Nur Aisyah
Kusumawati1, Muhammad Ihya Ulummudin1, Teuku Cut Abidzar1, Umair Ibrahim1, Rio Rivaldo1, Mohammadtahir Cheumar2,
Fakhrul Islam3

1
Sekolah Tinggi Ekonomi Perbankan Islam Mr. Sjafruddin Prawiranegara, Indonesia
2
International Islamic University Sultan Abdul Halim Mu’adzam Shah (UNISHAMS), Malayasia
3
International Islamic University Chittagong, Bangladesh.
Abstract

I. Introduction
I.I Background
The Islamic banking sector in Indonesia is experiencing rapid growth. Currently, Indonesia has 11
Islamic commercial banks, 23 Islamic business units, and 163 Sharia People's Financing Banks (Bank
Indonesia, 2023). Among these prominent institutions is Bank Syariah Indonesia, commonly known
as BSI, which officially commenced operations on February 1, 2021, following the merger of three
state-owned Islamic banks: Bank Mandiri Syariah, Bank BNI Syariah, and Bank BRI Syariah. BSI
consistently strives to provide exceptional services, prioritizing digital solutions and unique offerings
to foster customer loyalty. Their unwavering commitment to excellence has earned BSI a reputation
as a trusted provider in the post-merger service transformation era. In addition to enhancing service
quality and cultivating customer loyalty, the utilization of digital trust services by Bank Syariah
Indonesia serves a dual purpose: to raise public awareness of these banks and facilitate convenient
access to services for the Indonesian population. Customer satisfaction and trust are essential for
Bank Syariah Indonesia in their mission to advance Islamic banking in the country (BSI, 2021).
After the cyber breach crisis in 2023, the utilization of the BSI platform is expected to face numerous
challenges. Customers may experience a decline in trust due to concerns about the security and
confidentiality of their data, resulting in their reluctance to use the platform. Additionally, the BSI
platform could become a repeated target for cyber attacks, leaving customers feeling insecure and
apprehensive about its usage. The detrimental effects of the cyber breach on BSI's operations should
not be underestimated. It can not only lead to a decline in service quality but also potentially hinder
customers' ability to access and utilize platform features easily, thereby impacting the institution's
reputation as a reliable financial entity. The potential consequences of this can negatively affect
users' perception of the BSI platform, compelling them to explore alternative options. Loss of critical
information and other financial implications may occur. In the event of a security breach, users
relying on the BSI platform may face the harsh reality of compromised personal data and the
subsequent financial setbacks. Such circumstances are likely to cause concern and discomfort among
users navigating the platform (BBC, 2023).
With the aforementioned description, the researcher aims to examine the level of trust among BSI
customers in utilizing technology following the cyber breach event at BSI in 2023. This question is
crucial in the banking world as it pertains to customer data confidentiality. The emerging question is
whether Indonesian Muslims still have faith in the integrity of technology in Indonesian Islamic
banks, and furthermore, whether they remain inclined to avail themselves of the services offered by
Bank Syariah Indonesia.
This study employs the Partial Least Squares Structural Equation Model (PLS-SEM) with a sample of
300 respondents from various cities in Indonesia. Respondents are selected from diverse
backgrounds, encompassing various age groups, generations, educational levels, income levels,
professions, and length of tenure as customers at BSI bank

II. Literature Review

The development of the industrial revolution gives an effect on all industries, which make
industries experiencing very rapid growth. This has also happened to the financial and banking
industries that have used a digitalization system in the form of financial technology which is
continuously being developed to increase profits. Financial technology is a combination of
technology and financial services that can change conventional business models into
moderators and change operational processes that were initially carried out directly online
(Bank Indonesia, 2020). There are several types of financial technology, namely payment
channels, digital banking,
peer-to-peer lending, digital insurance, and crowdfunding.
Conventional banking and Islamic banking have used financial technology because they are
considered capable of improving banking financial performance before the COVID-19 pandemic
and during the COVID-19 pandemic. In addition, financial technology is also very important for
the development of banking, especially Islamic banking, which is increasing the number of
assets and the amount of banking equity because financial technology can be an attraction for
the public to become customers of the bank. Financial technology used in Islamic banking
includes ATM, Internet Banking, Mobile Banking, SMS Banking, Phone Banking, Video Banking,
and Branchless. But for branchless still few uses it.

The increase in banking financial performance can be seen by increasing assets, income, and
profits of Islamic banking every year. This indicates that the existence of financial technology can
have a positive impact on Islamic banking so that when the financial performance of Islamic
banks is getting better, the bank will continue to improve its financial technology. However, this
still needs to be re-analyzed to find out in detail the financial performance that has a significant
effect on financial technology so that Islamic banking can improve the quality of its financial
technology.
This study focuses on aspects of financial performance that have an impact on the existence of
financial technology which previously been studied by several researchers. This study represents
the financial performance of Return on Assets (ROA), Profit, BOPO, cash ratio, and debt to total
equity ratio. Research conducted by Margaretha (2015) shows that financial performance has a
significant positive effect on financial technology. This is not in line with the results of research
by Syarifudin (2014), Yohani (2015), and Sinambela (2017) which show that financial
performance has no significant effect on financial technology. Based on the description above,
the results of some of these studies are still diverse. Therefore, this study was conducted to
 review the factors that influence financial technology in Islamic banking. The difference between
this study and previous research is that the selected variables are a comparison of the results of
previous studies that have a significant effect and there are variables that have not been studied
by previous research and the sample period used is different from previous research is 2016 to
2020.

III. Methodology
Research Framework

Data collection technique

In this study, the data collection process involved conducting a survey among the participants. The
survey consisted of questions about the variables studied, and participants were asked to indicate
their responses using a 5-point Likert scale. The survey was distributed through an online platform,
specifically Google Forms, which allowed participants to fill out the questionnaire conveniently over
the internet.The questionnaire was divided into two parts. The first part focused on gathering
demographic information of the participants, including their gender, age, educational level and their
use of digital platforms.These demographic questions were designed to provide basic information
about the participants that could potentially influence their attitudes and perceptions about
technology.The second part of the questionnaire was used to measure the UTAUT metamodel, a
theoretical framework for understanding behavioral dispositions towards technology. In this section,
the Likert scale was used, in which participants were presented with statements about the constructs
of the meta UTAUT model and asked to indicate how strongly they agreed or disagreed with each
statement using the 5-point Likert scale .The Likert scale is a commonly used method of measuring
perceptions and attitudes in research. It allows participants to express their opinion and attitude
towards certain statements or constructions by choosing the most appropriate answer option on a
scale from “strongly agree” to “strongly disagree”.This scale provides a structured and standardized
approach to quantifying participants' responses and allows for data analysis in a meaningful and
statistically valid way, as recognized by [ 25 ] .Overall, the survey methodology employed in this study
involved collecting data through a questionnaire administered online using Google Forms. The Likert
scale was utilized to measure participants' perceptions and attitudes, with the survey divided into
two parts, including demographic questions and statements related to the meta UTAUT Model.

Data screening Process and Diagnostic Test

A normality test assesses whether the data conforms to a normal distribution, which resembles a
bell-shaped curve. Conversely, a non-significant p-value implies that the data can be assumed to
conform to a normal distribution. Testing for normality is critical because many statistical analyzes
and models rely on the assumption of normality to provide accurate results and interpretations.
Skewness and kurtosis are commonly used as measures of normality and provide information about
the shape and distribution of the data. The z-statisticfor the skewness value is calculated:
skewness
zskewness =,
√ 6
N

where N is the sample size. The Z value can also be calculated using the kurtosis value with the
formula:
kurtosis

Discriminant Validity
zkurtosis =
√ 24
N

Discriminant validity is a type of validity that ensures that a construct differs from other constructs
that are theoretically unrelated [ 26 ] .Cross-loading is a statistical technique for assessing discriminant
validity by examining how much an indicator of one construct weighs on another construct. If an
indicator shows a greater load on a construct other than the intended construct, this indicates poor
discriminant validity. On the other hand, if aindicator has a heavier burden on its own predicted
construct than on other constructs, this indicates good discriminant validity.Therefore, in order to
ensure good discriminant validity, it is important that the transverse loads of each indicator are
higher in its own predicted construction than in other constructions [ 27 ] .
Composite Reliability
Reliability is the degree of consistency or stability of a variable in measuring what it is designed to
measure [ 26 ] .Internal consistency is a specific aspect of reliability that assesses the extent to which
items or indicators within a construct measure the same underlying concept [ 27 ] . Cronbach's alpha is
a commonly used measure of internal consistency. A recommended minimum value of 0.7 indicates
an acceptable reliability of [ 27 ] .Provides an estimate of the reliability of a scale or questionnaire by
measuring the degree to which items within a construct are related or consistent. A higher Cronbach
alpha score indicates greater internal consistency, suggesting that the scale items are reliably
measuring the construct.The composite reliability formula is as follows:
c =¿ ¿ ¿
Inner Model
Hypothesis testing involves analyzing the statistical significance of path coefficients or structural
relationships in the internal model. By comparing the estimated path coefficients with their
corresponding critical values, researchers can determine whether or not the hypothesized
relationships are compatible. This helps validate the theoretical framework proposed byand draw
conclusions about the relationships between variables. In general, the assessment of the goodness of
fit and the testing of hypotheses in the internal model are essential to evaluate the adequacy of the
model and to determine the importance of the relationships between the variables under study.
Coefficient of Determinant (R-Square)
R2 values can be interpreted as follows: an R2 value of 0.67 or more is considered high, indicating a
strong relationship between exogenous and endogenous variables; an R2 value between 0.33 and
0.66 is considered moderate, indicating a moderate association; and an R2 value of 0.19 or less is
considered weak, indicating a relatively weak relationship [ 28 ] . To improve the accuracy of the model
in this study, a modified fitted coefficient of determination was used.The modified fitted coefficient
of determination is a fitted version of R2 that accounts for the number of exogenous variables and
the degrees of freedom in the model. It provides a more robust measure of the model's explanatory
power by accounting for the complexity of the model. By using the modified fitted coefficient of
determination, the researchers aim to obtain a more accurate assessment of the model's
performance and the extent to which exogenous variables explain the variation in endogenous latent
variables. This fitted measure helps account for the potential impact complexity of the model and
provides a more reliable indication of the model's explanatory power.
Predictive Relevance (Q-Square)
In addition to the coefficient of determination (R2), the Stone-Geisser Q2 value is another criterion
for assessing the accuracy of predictions in a structural model. Q2 measures the predictive relevance
of the model, particularly for certain endogenous latent variables.To assess the magnitude of the R2
value in terms of predictive accuracy, researchers calculate the Q2 value. For a given endogenous
latent variable, Q2 must be greater than 0 to indicate that the Partial Least Squares (PLS) model path
contains relevant predictions. A positive Q2 value indicates that the model is able to make accurate
predictions for the specified endogenous latent variable.The Q2 value provides a further assessment
of the model's predictive power and its ability to generate meaningful predictions. By examining Q2,
researchers can determine whether the model is effectively capturing the relevant relationships and
making accurate predictions for the specified endogenous variables. [ 29 ] contributed to the
understanding and application of PLS-SEM (Partial Least Squares Structural Equation Modeling) and
their work includes considerations of the Q2 value as a measure of predictive relevance in PLS
models.
Convergent Validity
Convergent validity is a measure of how well multiple indicators within a construct are related to
each other and represent the same underlying construct. It demonstrates the unidimensionality of
the construct, indicating that the indicators are measuring the same concept or trait. One commonly
used measure of convergent validity is the average variance extracted (AVE), as proposed by [ 30 ] .
The AVE represents the average amount of variance captured by the indicators in relation to the
construct they are intended to measure. A higher AVE indicates a stronger convergent validity,
suggesting that the indicators are collectively capturing a substantial portion of the construct's
variance. To assess convergent validity using the AVE, researchers calculate the average of the
squared factor loadings for each indicator and compare it to the average variance shared between
the indicators. If the AVE value exceeds a threshold (usually 0.5 or 0.7), it indicates satisfactory
convergent validity, implying that the indicators are adequately representing the construct. [ 27 ]
discuss the importance of convergent validity in evaluating the measurement model in structural
equation modeling (SEM). They highlight the use of the AVE as a standard measure to assess
convergent validity, providing researchers with a practical guideline for evaluating the
unidimensionality and reliability of their measurement scales.
The AVE value is calculated using the following formula;
n

∑ Li2
AVE = i=1
n
Assess Coefficient of Determination (R2 and adjusted R2)
These measures allow for a more comprehensive assessment of model fit, considering various
aspects of model performance and considering observed and expected data patterns. [ 31 ]
acknowledge the limitations of R2 and emphasize the importance of using multiple measures to
assess the goodness of fit of structural models.They advocate a holistic approach to model
assessment that considers various fit indices and statistical tests to ensure a comprehensive
assessment of model performance. Therefore, adj R2 (R2adj) was used in this study to avoid bias to
the chosen model for many constructs. The formula for calculating R2adj is as follows:
n−1
R2adj = 1 – (1 - R2). ,
n−k−1
Assess the Effect Size f2
By examining the effect size, researchers can determine the relative importance of individual
exogenous constructs in explaining the variance in the endogenous construct. It aids in identifying
influential variables and understanding their impact on the model. The formula is as follows:
R 2 included−R 2 excluded
f2 =
1−R2 included
As you mentioned, there are general guidelines for interpreting the effect size value (f2). A small
effect size (f2= 0.02) indicates minimal influence of the exogenous construct on the endogenous
construct.A medium effect size (f2 = 0.15) indicates a moderate effect, while a substantial effect size
(f2 = 0.35) represents a significant effect of the exogenous construct over the endogenous construct.
By examining effect size, researchers can assess the practical or essential importance of including or
excluding certain exogenous constructs from the model. It helps assess the relevance and
contribution of each variable to explain the variability in the endogenousconstruct.
Analysis of Moderating Variable
If the interaction term is statistically significant, it means that the moderator variable has a significant
impact on the relationship between the two variables. The meaning of the moderating effect is
important as it helps to understand the conditions under which the relationship between the two
variables is stronger or weaker. It provides information about the boundary conditions and the
contexts in which the relationship is true or varies. By identifying and studying moderator variables,
researchers can gain a deeper understanding of the complexities of the relationships between the
variables and the conditions under which they operate.

IV. Results and analysis

V. Conclusion
VI. Recommendation
VII. References