Int. J. Business Innovation and Research, Vol. 14, No.

2, 2017 239

Modelling customer’s intention to use e-banking in

Saudi Arabia: an empirical study

Mohamed A. Youssef*
College of Business Administration,
American University in the Emirates,
Dubai, UAE
Email: Mohamed.youssef@aue.ae
*Corresponding author

Eyad M. Youssef
College of Business Administration,
Delta State University,
Cleveland MS, USA
Email: eyoussef@deltastate.edu

Yaprak Anadol
College of Business Administration,
University of Dubai,
Dubai, UAE
Email: yanadol@ud.ac.ae

Abdullah Al Zahrani
Saudi ARAMCO,
Saudi Arabia
Email: aalzahrani@outlook.com

Abstract: This study examines how customers perceive and adopt internet
banking (IB) in Saudi Arabia. Developments of this study were based on
technology acceptance model (TAM) which is used with an added construct of
Web Security to determine the level of adoption to use IB. Attitude, perceived
usefulness, perceived ease of use, perceived Web Security and intention to use
are the main constructs of the study. Intention to use IB is used as the
dependent variable and the determinant of the adoption. The questionnaire of
the original study was utilised with some modifications to fit the Saudi
environment. The analysis in this paper is based on a sample of 252 responses,
collected from individuals living in the eastern province of KSA. A series of
regression analyses was used to test the six main hypotheses of this study. This
study contributes to the existing body of the literature in that it confirms the
findings of original study by Cheng et al. (2006). It also confirms the strength
of the TAM in determining the level of acceptance to IB services in a
developing economy.

Copyright © 2017 Inderscience Enterprises Ltd.

240 M.A. Youssef et al.

Keywords: e-banking; consumer attitude; technology acceptance model; TAM;

Web Security; ease of use; Saudi Arabia.

Reference to this paper should be made as follows: Youssef, M.A.,

Youssef, E.M., Anadol, Y. and Al Zahrani, A. (2017) ‘Modelling customer’s
intention to use e-banking in Saudi Arabia: an empirical study’, Int. J. Business
Innovation and Research, Vol. 14, No. 2, pp.239–258.

Biographical notes: Mohamed A. Youssef is a Professor of Operations and

Quality Management in the School of Business, American University in the
Emirates. He has published extensively in many reputable international
journals. His research papers have been cited more than 1,800 times in 14
different languages. He has translated 13 business and management books from
English to Arabic. Most of these books are Harvard Publishing Press books.

Eyad M. Youssef is an Assistant Professor at Delta State University in

Mississippi. He received his BS in Chemistry from Norfolk State University, an
MBA and PhD degrees in Business Administration, majoring in Marketing and
International Business from Old Dominion University. He teaches marketing
and international business courses in the Business Department at University of
Minnesota. His research interests are in the fields of consumer behaviour,
customer satisfaction, quality management, and international business. With
regards to international business, his research focuses on marketing and
methodological issues in a cross-cultural environment.

Yaprak Anadol is an Assistant Professor in the College of Business

Administration and has been working in the University of Dubai since 2011.
After receiving her BA degree, she was awarded with a scholarship to study in
the UK and received her MBA from University of Glamorgan, Cardiff, UK.
While she was working as a professional in MNCs, she continued her PhD at
Hacettepe University, Ankara, Turkey and her PhD was completed in 2007.
Prior to joining the faculty, she worked over ten years in the Middle East with
regional assignments. Her strength is to achieve collaborations between the
academia and the industry; meanwhile she is a member of Turkish Business
Council in Dubai. Her research interests are service management, strategic
marketing, channel management and corporate social responsibility and she is
teaching various courses mainly on marketing and service management area.

Abduallah Al Zahrani is a seasoned results-oriented practical leader in the

domain of human resources, change management and organisation
development. He holds a Master’s degree from one of the top HR programs in
the USA with more than 12 years of diverse business experience in the Saudi
market. He possesses a successful track record in developing strategies and
programs, leading teams, implementing solutions, and managing change in fast
paced multinational organisations. He is certified in human resources, change
management, organisation development as well as psychometric assessments
for the purpose of recruitment, selection and leadership development.

1 Introduction

Internet-based e-banking is one of the key innovations in the banking industry in

developing economies. There have been a number of studies that addressed e-banking in
various parts of the globe. See, for example, Alalwan et al. (2015), Iman (2014), Ali and
 Modelling customer’s intention to use e-banking in Saudi Arabia 241

Bharadwaj (2010), Al-Smadi (2012), Giovanis et al. (2012), Mansumitrchai and Chiu
(2012), and Mzoughi and M’Sallem (2013). In many of these developing economies, the
proliferation of advanced technologies in the e-banking industries and Web Security
(WS) have made it easier for consumers not to be afraid of using internet-based
e-banking. As a matter of fact, the attitude of consumers towards e-banking has changed
dramatically in the past two decades.
The potential of online or internet banking (IB) was well recognised, when key Saudi
institutions began to align the product delivery mix with new technologies in order to
explore and exploit all new approaches to their businesses. The technological and
business evolutions forced banks to reassess their costs and profit structures, reduce their
operating expenses and increase customer satisfaction. In 2005, Saudi Arabia joined to
the World Trade Organization (WTO), this event signalled major challenges for local
banks. The Saudi Government initiated a major project as a strategic response to increase
the competitiveness of local Saudi banks. The IB initiative has not taken off in
Saudi Arabia as expected. In fact, many customers needed to be made aware of IB
services. Customers needed to feel secure and comfortable with using the new IB
operating procedures, which were radically different from those they were accustomed to.
The need emerged for an investigation of the acceptance level of the IB in the Saudi
market.
This study focuses on only IB, it excludes the other forms of electronic banking
(e-banking) such as telephone banking, ATM, WAP banking and other electronic
payment systems that are not operated through the internet. IB service is widely seen as
the most important and most popular delivery channel for banking services as it has
demonstrated a considerable potential of improving customer satisfaction because it can
provide faster, easier and more reliable services via a single platform (Cheng et al.,
2006). Banks can benefit from much lower operating costs by offering IB services, which
require less staff and fewer physical branches. Bank customers can also benefit from the
convenience, speed and round-the-clock availability of IB services.
There is a clear need to study the factors that influence customers’ intention to adopt
IB so that banks can better formulate their marketing strategies to increase IB usage in
the future. This study aims to investigate the behavioural intention of customers to use IB
services with a focus on users’ perceptions of Ease of Use and Usefulness of IB, and the
security of using new technology to meet their banking needs in Saudi Arabia market.
This study is replication of the study conducted by Cheng et al. (2006) that utilises the
well-established technology acceptance model (TAM) to measure IB adoption rate in
Hong Kong. This study has utilised the same construct to evaluate IB adoption in the
Eastern Province of the Kingdom of Saudi Arabia.
The reminder of this paper is organised as follows: In the next section a review of the
relevant literature on innovation diffusion and technology adoption is presented. After
that, the research methodology is discussed and later the findings from the analysis of the
empirical data are presented. Finally, in the last section the paper is concluded with
discussions of the limitations of the study, managerial implications and further research
directions.
242 M.A. Youssef et al.

2 Literature review

2.1 IB adoption
In early research, Bradley and Steward (2002) suggested that banks adopt IB due to
external drivers such as risk, consumer demand, competitive forces, government support,
potential revenue availability and internet security. The authors relate the inhibitors of
e-banking with internal issues including; lack of ability to deal with customers, resistance
to change, attitude of the bank towards e-banking innovation, available resources and
existing legacy system. IB was seen as an important for the future of banking (Bradley
and Steward, 2003). The authors also emphasised that although the IB transactions
matched with decrease of the branches, it does not replace the branch banking. Rather IB
is considered as an additional channel to branches, ATMs and telephone banking.
There are many studies in the IB literature targeting various markets, using different
models to explain the behavioural elements of the IB adoption (Cheng et al., 2006;
Giovanis et al., 2012; Harrison et al., 2014; Mansumitrchai and Chiu, 2012; Mzoughi and
M’Sallem, 2013). Some studies focus specifically on the behavioural intention to use as
the final determinant of the level of adoption of IB (Chan and Lu, 2004; Guriting and
Ndubisi, 2006; Lai and Li, 2005; Wang et al., 2003).
There are also models that were used to investigate the adoption of new technology.
For instance, Hernandez and Mazzon (2007) suggested an integrated methodology
approach (IMA) which is a comprehensive model using the most significant factors that
influence new technology acceptance from the traditional models such as innovative
diffusion theory (IDT), TAM, and decomposed theory of planned behaviour (TPB). IB
was used as a case study to test this model on internet and IB users, internet but non-IB
users and non-internet users. These results highlighted that the IMA exceeded other
models in explaining the IB adoptions. The study also concluded that individuals’ belief
about the IB is influenced more by their personal characteristics in Brazilian market.
Harrison et al. (2014) proposed a customer readiness and web-channel readiness
model for IB adoption. They used 19 variables to measure the construct by focusing on
customer demographics as mediatory variables in predicting the attitude and intention
towards IB which lead to actual IB adoption. The study suggested that the predictor
variables were prior experience, awareness of the IB options, prior involvement with
banking technology (such as cards, POS ATM), and willingness to adopt/change. The
perceived web-channel readiness predictors were perceived IB channel convenience, ease
of use, security and privacy guarantee, and channel cost (no hidden cost). The authors
suggested that the level of regular income, education and residential area as mediating
variables predicting the attitude and intention towards IB which lead to actual IB
adoption.
Polasik and Wisniewski (2009) investigated factors influencing the individual’s
decision to adopt IB such as internet experience and connection mode, perceived security,
exposure to marketing campaigns, experience with other banking products, and
socio-demographic characteristics. The results indicated that high level security is
necessary for acceptance of online banking. The authors stated that demographic
characteristics have an influence on IB adoption. Individuals who are better educated, and
more familiar with the internet medium are more positively motivated towards online
banking. Promotional activities were also essential to gain IB acceptance.
 Modelling customer’s intention to use e-banking in Saudi Arabia 243

2.2 Technology acceptance model

TAM developed by Davis (1989), is a widely validated model to predict and explain the
acceptance of any information system which is considered to be the result of behavioural
intention. In the model, intention to use is directly impacted by attitude which consists of
perceived usefulness (PU) and perceived ease of use (PEOU). These two behavioural
elements are the key determinants of the adoption of any information system and are also
major elements of our model.
Researchers have also used the TAM to determine the level of adoption by users.
Cheng et al. (2006) have added WS as an additional construct. This is believed to be a
legitimate concern of not only the internet users but also the internet bank users. The
authors surveyed 203 users and found the level of adoption rate in Hong Kong was 23.8%
and confirmed the strength of the TAM in explaining the adoption of IB.
A study by Suh and Han (2002) suggested that although TAM provides basis for
determining the adoption of information systems, due to the evolving environment that
we live in, trust needed to be added to the model as an additional construct to explain the
adoption of IB. Based on 845 users responses on the web, the study concluded that trust
has a significant impact on the acceptance of IB. Yap et al. (2010) suggested that
perceived security, privacy, usefulness and ease of use are the attributes of e-banking
website and affect the trust and further willingness to adopt e-banking.
Yiu et al. (2007) confirmed that PU of adopting IB has a direct relationship with its
actual adoption while ease of use is a critical factor in the development and delivery of IB
services. Their study provided evidence on the applicability of using such factors as the
determinants of adoption to IB usage. The authors suggested that a significant
relationship exists between IB adoption and perceived risk and personal innovativeness in
information technology. Mansumitrchai and Chiu (2012) investigated characteristics of
online banking adoption in the UAE. The study revealed that adopters and non-adopters
differ on their perceptions of online banking adoption on compatibility, trust and human
contact factors. Al-Smadi (2012) also used the TAM in Jordanian market and found that
uncertainty avoidance has a positive and significant effect on PU and PEOU while
perceived risk has strong effect on customers’ attitude, which impacts customers’
intention to use electronic banking services.
TAM has received many critics and empirical support from social psychology theory
(Giovanis et al., 2012). The authors extended TAM model and concluded that perceived
compatibility, PU, PEOU, and perceived security and privacy risk have a significant
direct influence on customers’ behavioural intention of using online banking. The authors
combined the TAM and IDT and suggested that in Greece market perceived compatibility
has the highest influence on adoption of IB, followed by PU and PEOU. Security and
privacy risk are found to have a significant negative effect on the intention to adopt IB
services. The authors also stated that, individual differences of the customers have a
significant effect on compatibility. Their result suggested that values, way of living, and
needs of the young male individuals, with high IT experience are closer to the features of
IB services (PEOU, PU) and thus, ensuring convenience and additional free time for
them.
244 M.A. Youssef et al.

In Saudi market, Al-Somali et al. (2009) attempted to identify the factors encouraging
customers’ online banking adoption in Saudi Arabia by using TAM model. The authors
used PU and PEOU as dependent factors and confirmed that they are affected by social
influence, awareness of service, self-efficiency and quality of internet connection. The
authors also found trust, resistance to change and education has a significant impact on
the attitude towards the likelihood of adopting online banking.
Since our study tends to replicate the study done by Cheng et al. (2006) in
Hong Kong, we will be using the TAM to explain the level of adoption of IB in Saudi
Arabia. We will also be adding the construct ‘WS’ to test its relationship and impact in
determining the adoption of IB in Saudi Arabia market.

2.3 IB adoption in various cultural settings

The level of IB adoption varies according to culture, values, and belief systems. Malhotra
and Sing (2010) explored the status of IB in India and provided the country wise IB
related literature. Nor et al. (2010) investigated the cultural traits on the intention to use
of IB amongst Malay and Chinese ethnic groups. Although the results shown that PU,
PEOU, and trust, all have a positive effect on the intention to use of IB in both ethnic
groups, the effect of PU on the intention to use is higher amongst Chinese. The authors
emphasised that culture effects one’s behaviour therefore each customer group needs to
be evaluated differently and communalised approach to be avoided when encouraging IB.
Ndubisi and Sinti (2006) examined customers’ attitudes and characteristics in IB
acceptance in Malaysia. The study focused on the customers’ characteristics and website
features and design in IB adoption. An online questionnaire was used via e-mail and
resulted in 126 responses. The questionnaire was focused on the two main items of
attitude and adoption factors, and system design features. The study showed that the
following factors strongly influence the IB adoption; including needs, compatibility
complexity, and trainability. Risk had a weak influence which could be attributed to the
Malaysian culture.
In contrast, in Australia, one study highlighted security as a main concern preventing
IB adoption. The empirical study by Sathye (1999) explored the factors effecting
Australian customers’ IB acceptance. Two types of respondents were included in this
study, personal and firm clients with 250 respondents from each type. The study tested
the awareness, ease of use, security, cost of use, resistance to change and
non-availability of PC/internet factors. Security concern was found to be the most
prevented factor of IB followed by users’ unawareness about IB availability and benefits
received.
There was no significant influence of age, education, income, or occupation in IB
acceptance.
Polatoglu and Ekin (2001) investigated Turkish people’s acceptance of IB and
discussed the factors effecting the growth of IB in Turkey. The study suggested that
many of the conventional banking dimensions are equally important for customers.
Reliability, access and savings are found particularly important for IB satisfaction. The
research also suggested that relative advantage, observability, compatibility, perceived
risk, type of decision (business or personal banking) and marketing effort of the
institutions are the factors influencing IB adoption.
 Modelling customer’s intention to use e-banking in Saudi Arabia 245

Another study by Akinci et al. (2004) evaluated the attitudes and IB acceptance of
highly educated customers. The study was conducted via a questionnaire distributed
randomly to academicians who were either IB or non-IB users. The questionnaire
covered demographic, attitudinal and behavioural characteristics of the two segments.
The study evaluated the attractiveness of banks website and its affect in getting new
users. The authors found that there is no significant difference between IB and
non-IB users in their attitudes, behaviour and characteristics. This finding could be due to
the study’s limited use of a homogenous group of respondents (i.e., highly educated).
A comparative study by Sayar and Wolfe (2007) evaluated the IB services between
UK and Turkey. Nine banks were chosen from each country for cross country
comparison and evaluation, based on three main factors, including functionality (range of
providing the service), reliability (trust of using the IB), and usability (Ease of Use). The
study demonstrated that Turkish banks provide wider range of IB than UK banks. The
culture differences could be a reason. The study also showed that the Turkish banks use
technology-oriented method to deal with security issues by relying on new software and
one time password, whereas UK banks use conventional methods to make it difficult to
get the password and memory data.
Eriksson et al. (2007) conducted a study to analyse technology acceptance of IB in
Estonia and found that perceived use was positively affected by PU, but not by PEOU.
The authors further suggested that trust has a positive effect on both PEOU and PU.
In Thailand, Jaruwachirathanakul and Fink (2005) conducted a quantitative research
with a sample size of 600. The authors sent questionnaires to 15 people in each of the
40 large companies in Bangkok. The paper classified the encouraging factors into the
three categories of facilitating factors, inhibiting factors and moderating factors. The
features of the website and the PU are found as the most encouraging factors that affect
IB adoption. The paper discussed the internal factors as well as the external factors. Risk
and privacy concerns and personal preferences are also found to impact customers’
intention to use IB.
Finally, in the USA, Kolodinsky et al. (2004) explored the factors that affect the
adoption or intention to adopt three e-banking technologies and changes in these
factors over time. Using a Federal Reserve Board commissioned dataset, the authors
suggested that relative advantage, complexity/simplicity, compatibility, observability,
risk tolerance, and product involvement are associated with adoption. Income, assets,
education, gender and marital status, and age also affect adoption. The study revealed that
adoption changed over time, but the impacts of other factors on adoption have not
changed. The study confirmed that income and education levels play a strong role in the
adoption of a variety of technologies, as found in previous research. However, these
results also pointed to the existence of a large, untapped target market which may be left
behind as the e-banking revolution moves ahead. The paper also confirmed that
consumers will continue to weigh the advantages of IB against issues of security and
privacy, the need to obtain cash and deposit checks and currency, and the desire for
personal service.
In addition to the papers reviewed above, Table 1 summarises some of the related
studies done on IB adoption.
 246

Table 1
Author/date of publication Country Dimensions Findings (IB adoption)
Wang et al. (2003) Taiwan PEOU The results strongly support the extended TAM in predicting the
PU intention of users to adopt internet banking. Also, there is a significant
effect of computer self-efficacy on behavioural intention through
Perceived credibility perceived ease of use, perceived usefulness, and perceived credibility.
Computer self-efficacy
Chan and Lu (2004) Hong Kong Subjective norm Subjective norm and computer self-efficiency has indirect significant
effect perceived ease of use has indirect significant effect through
M.A. Youssef et al.

Image
perceived usefulness but no significant direct effect on intention to
PEOU adopt.
Result demonstrability
Perceived risk
PU
Summary of other related studies

Computer self-efficiency
Lai and Li (2005) Hong Kong PU TAM is validated and the construct was invariant across different
PEOU gender, age and IT competence subgroups.

Attitude towards use

Gender
Age
IT competency
Jaruwachirathanakul and Fink (2005) Thailand Features of website The most encouraging factors are features of the website and perceived
PU usefulness while the most significant inhibitor to adoption is external
environment and the significant moderating factors are gender,
Risk and privacy educational level, income, internet experience and internet banking
Adoption attitude experience, but not age.
Personal preference
External environment
Culture

Author/date of publication
Cheng et al. (2006)
Guriting and Ndubisi (2006)
Ndubisi and Sinti (2006)
Yiu et al. (2007)
Eriksson et al. (2007)
Table 1
Country Dimensions Findings (IB adoption)
Hong Kong Perceived usefulness PU is a major, PEOU is a significant secondary determinant of customer
Perceived ease of use intention however it is mediated through perceived usefulness instead of
having a direct impact on intention. Perceived Web Security is
Perceived Web Security significant and direct determinant of customer intention.
Attitude (mediator)
Borneo-Malaysia PU Perceived usefulness and perceived ease of use are strong determinants
PEOU of behavioural intention to adopt online banking. There is also an
indirect effect of computer self-efficacy and prior general computing
Computer self-efficacy experience on behavioural intention through perceived usefulness and
Prior computing perceived ease of use.
Experience
Malaysia Attitude Attitudinal factors play a significant role in internet banking adoption.
IB site features
Hong Kong Socioeconomic status There is a direct relationship is found between the adoption of internet
Personality variables banking and PU, PEOU, personal innovativeness in IT Perceived risk
Communication behaviour
Summary of other related studies (continued)
PU
PEOU
Estonia PU Perceived use is positively affected by perceived usefulness, but not by
PEOU perceived ease of use. Trust has a positive effect on both perceived ease
of use and perceived usefulness.
Trust
Internet experience High level security is essential for acceptance of online banking. The
Connection mode authors state that demographic characteristics have an influence on IB
Modelling customer’s intention to use e-banking in Saudi Arabia
adaptation. Individuals who are better educated, and more familiar with
Perceived security the internet medium are more positively motivated towards online
Marketing exposure banking. Promotional activities also necessary to gain widespread
acceptance.
247

Author/date of publication
Polasik and Wisniewski (2009)
Al-Somali et al. (2009)
Nor et al. (2010)
248
Table 1
Country Dimensions Findings (IB adoption)
Poland Internet experience High level security is essential for acceptance of online banking. The
Connection mode authors state that demographic characteristics have an influence on IB
adaptation. Individuals who are better educated, and more familiar with
Perceived security the internet medium are more positively motivated towards online
Marketing exposure banking. Promotional activities also necessary to gain widespread
M.A. Youssef et al.
acceptance.
Experience with other
Banking products
Socio-demographic
Characteristics
Saudi Arabia PE Social influence
PEOU Awareness of services
Social influence Self-efficacy
Awareness of services Quality of internet connections have significant effect on PU and PEOU
Summary of other related studies (continued)
Self-efficacy
Quality of internet
Connections
Resistance to change
Trust
Education
Malaysia Perceived usefulness Although the results show that perceived usefulness, perceived ease of
PEOU use, and trust, Trust all have a positive effect on the intention to use
internet banking in both ethnic groups, the effect of perceived usefulness
Trust on the intention to use is higher amongst Chinese.

Author/date of publication
Giovanis et al. (2012)
Harrison et al. (2014)
Mansumitrchai and Chiu (2012)
Table 1
Country Dimensions Findings (IB adoption)
Greece It experience TAM model is extended and the study conclude that perceived
Gender compatibility, PU, PEOU and perceived security and privacy risk have a
significant direct influence on customers’ behavioural intention of
Age online banking. Perceived compatibility has the highest influence on
Perceived compatibility adaptation of IB, followed by perceived usefulness and perceived ease
of use. Security and privacy risk are found to have a significant negative
PU
effect on the intention to adopt IB services.
PEOU
Perceived security and privacy risk
Scotland Customer demographics The predictor variables i.e. perceived customer readiness, web-channel
Customer readiness readiness and mediating variables, i.e., the level of regular income,
education and residential area predict the attitude and intention towards
Web-channel readiness: IB which leads to actual IB adaptation.
Perceived IB channel
Summary of other related studies (continued)
Convenience
Ease of use
Security and privacy
Guarantee
Channel cost (no hidden cost)
UAE The study investigates characteristics The study reveals that adopters and non-adopters differ on their
of online banking adoption in UAE perceptions of online banking adoption on compatibility, trust and
human contact.
Modelling customer’s intention to use e-banking in Saudi Arabia
249
250 M.A. Youssef et al.

2.4 Barriers to IB adoption

Many studies were conducted to explore the adoption barriers of IB. Mattila et al. (2003)
analysed mature customers’ IB behaviour in Finland. Their study confirmed that mature
customers are the late adopters of IB. Factor analysis showed that the four main barriers
are: practical problems in using e-banking, concerns about the expensive start-up,
security, and lack of personal service.
Gerrard et al. (2006) examined why consumers are resistant to using IB. One hundred
and twenty seven surveys were collected from the consumers who were not internet bank
users. The main factors were ranked as: perceptions about risk, the need, lacking
knowledge, inertia, inaccessibility, human touch, pricing and IT fatigue. These factors
provide a useful basis for researchers to conduct studies to better understand what
influences a consumer decision not to use the internet as a means of sourcing e-banking
services. The findings suggested that marketing campaigns which aim to encourage
consumers to become internet bank users are likely to attract more males, the higher
income groups, the better educated, those who have already used the internet to buy
services and/or goods and those who are knowledgeable about IB.
Laforet and Li (2005) evaluated customers’ attitudes towards new technology by
using the case of online banking. The study based on 300 observations and revealed that
education level and age are not significant factors affecting the adoption of IB. The main
barriers of adoption to online banking were lack of security, lack of computer skills, and
lack of awareness about the benefits of IB.
In Finland, Kuisma et al. (2007) investigated the reasons for resistance to use IB
amongst a sample of 30 customers who registered with the Finish Bank but yet are not
using the IB channel. The authors used an in-depth interview, using the means-end
approach and the laddering interviewing technique to understand the underlying beliefs
hindering them from using IB. The results of the study showed that reasons for resistance
include economic reasons such as cost of buying a computer. Other customers expressed
resistance to change through their lack of interest and comfort to learn this new channel
of service. Also, security and safety were amongst the reasons for resistance. Also, the
lack of control such as receiving a receipt for the payment via the internet was not
considered as official as the receipt via ATM.

3 The conceptual model

Similar to the model used by Cheng et al. (2006), our model postulates that PU, PEOU
and perceived WS directly impact customer’s attitude to use IB. In addition, PU and WS
are directly impact the intention to use IB. Thirdly, PU, PEOU and WS are indirectly,
through the moderating variable ‘attitude’, impact the intention to use IB.

3.1 The research question

The purpose of our model is to investigate the association between PU, PEOU, WS and
the attitude towards e-banking. Subsequently the study investigates the indirect impact if
PU, PEOU and WS and the intention to use via a moderating variable of attitude. These
relationships are modelled based on the popular TAM. The research question is therefore.
First, do the factors of PU, PEOU, and perceived Web Security (PWS) affect attitude
 Modelling customer’s intention to use e-banking in Saudi Arabia 251

toward using e-banking? Secondly, does the attitude toward using e-banking impact the
intention to use e-banking? These research questions have never been addressed in
e-banking studies in a developing economy such as that Saudi Arabia.

Figure 1 Technology acceptance model

3.2 Hypothesis development

Based on the proposed conceptual model, the following hypotheses are developed:
H1 Customers’ attitude positively influences their intention.
H2 PU has a direct positive relationship with customers’ intention.
H3 PU has a direct positive relationship with customers’ attitude.
H4 Perceived ease of use has a direct positive relationship with customers’ attitude.
H5 PWS has a direct positive relationship with customers’ intention.

H6 PWS has a direct positive relationship with customers’ attitude.

These research hypotheses were developed after our extensive review of current literature
on e-banking. We reiterate our rationale for testing these hypotheses is that they have
never been tested in a developing economy such as that Saudi Arabia.

4 Research methodology

4.1 Sample and data collection

The study aims to investigate the self-reported behaviours of individual customers and
their attitude and intention to use IB services for personal purposes. A random sample of
700 individuals was selected to test our model. A cover letter along with a copy of the
questionnaire was sent to these individuals. After the cutoff date 265 questionnaires were
received, of which 13 were discarded for incompleteness. The remaining 252 (36% net
response rate) were used throughout the analysis.
252 M.A. Youssef et al.

4.2 Survey questionnaire and pilot test

Questions in our questionnaire, developed for this study, were collected from e-banking
literature, especially the study by Cheng et al. (2006). It was modified to suit the purpose
of this research. Further, the questionnaire was translated to Arabic and organised in an
Arabic/English format. The bilingual questionnaire was then used in a pilot test involving
27 individuals who completed the questionnaire and provided valuable comments. Based
on the respondents’ feedback, we made modifications to the questionnaire to improve its
readability and ensure its accuracy and appropriateness.

4.3 Analysis and results

Before conducting the analysis, data were screened in many ways. Missing values in each
observation were replaced by using the Series Mean method. Frequency analysis was
utilised to find out the study variables were normally distributed. This was done by
comparing the coefficient of Skewness and Kurtosis to the normal distribution range
(± 3) for all observed variables and their constructs. Results of the analysis showed that
skewness and Kurtosis within the accepted range.
To test the research hypotheses, a series of regressions were used, where the
dependent variables were the consumers attitude towards- and intention to use the
internet-based e-baking and the independent variables were, ease of use, usefulness, and
WS. Intention to use was also regressed on the customers’ attitude to use e-banking.

4.3.1 Demographic characteristics of the respondents

4.3.1.1 Age of the respondents
This variable was operationalised as a categorical variable with the categories as
indicated in Table 2. More than 90% of respondents are of age 19 years or older.

Table 2 Age group of the respondent

Valid Cumulative
Frequency Percent
percent percent
Valid Less than 18 14 5.6 6.2 6.2
Between 19–30 104 41.3 45.8 52.0
Between 31–40 87 34.5 38.3 90.3
Between 41–45 18 7.1 7.9 98.2
Between 46–60 4 1.6 1.8 100.0
Total 227 90.1 100.0
Missing System 25 9.9
Total 252 100.0
Note: Significant differences in the intention to use the e-banking exist among different
age groups (F = 2.802, v P =.002).
 Modelling customer’s intention to use e-banking in Saudi Arabia 253

43.1.2 Education
Respondents were asked to indicate their level of education. This variable was
operationalised using five categories as shown in Table 3.
Table 3 Education of the respondent

Valid Cumulative
Frequency Percent
percent percent
Valid Less than high 14 5.6 6.0 6.0
school
High school 25 9.9 10.8 16.8
Diploma 47 18.7 20.3 37.1
Bachelor degree 108 42.9 46.6 83.6
Higher education 38 15.1 16.4 100.0
Total 232 92.1 100.
Missing System 20 7.9
Total 252 100.0

Table 3 shows more than 85% of respondents have a high school diploma or above.
Significant differences exist in the intention to use the internet e-banking among different
educational levels of the respondents (F = 1.856, P = .047).
In addition, there were seven demographic characteristics of respondents that were
used to measure certain attributes such as years of internet use, location of internet
access, months using internet, IB services used and bank(s) used for IB. The demographic
variables were analysed in Table 4. In addition to the demographic variables in Table 4,
67% of the respondents were male and 24% of the respondents were female. The
dominating age group was from 19–30 years with percentage of 45.8%. Also, around
43% of the respondents had a Bachelor as their education level.
Table 4 Demographics of the respondents

Demographic profile Frequency Percentage (%)

Access to internet
Yes 200 79.4
No 33 13.1
Demographic profile Frequency Percentage (%)
Location of internet access Yes No Yes No
Home 145 42 61.1 16.7
Work 128 67 50.8 26.6
Demographic profile Frequency Percentage (%)
Months using internet
>3 46 18.3
Between 3–6 27 10.7
Between 6–12 37 14.7
> 12 92 36.5
254 M.A. Youssef et al.

Table 4 Demographics of the respondents (continued)

Demographic profile Frequency Percentage (%)

IB services used Yes No Yes No
Enquiry 166 60 65.9 23.8
Deposit 60 166 23.8 65.9
Loan 34 192 13.5 76.2
Equity 97 129 38.5 51.2
Investment funds 43 183 17.1 72.6
Share trading 83 143 32.9 56.7
Bank used for IB
Rajhi IB 96 118 38.1 46.8
SABB 49 165 19.4 65.5
Saudi French B 28 186 11.1 73.8
NCB 64 150 25.4 59.5
Saudi investment B 17 197 6.7 78.2
Jazeerah B 10 204 4 81
Al-Bilad B 16 198 6.3 78.6
Others 37 174 14.7 69

80% of the respondents had access to the internet, 61% of them using the internet from
home and 50% were using it from work. It is also shown that 36% of the respondents are
using the internet for more than a year. The demographic characteristics of respondents
also show that Rajhi and NCB banks are the most preferred banks for respondents to use
IB services. The demographic variables shows that the Enquiry service is the most
attracting to internet bank users since 66% respondents use this service.

4.3.2 Hypotheses testing

A series of regression models were used to test the six hypotheses. The findings are
depicted in Table 5. These results confirm that there is a strong positive relationship
between the dependent and independent variables in all hypotheses. The correlation
coefficients (R) range from .50 to .792, indicating moderate to high association between
the variables. The coefficient of determination (R2) varies from 0.25 to 0.628 according
to the influence of the independent variables on the dependent variables. The PWS has
the least effect on the customers’ attitude and intention to use IB.
Our results also indicate that there is a strong association between attitudes and
intention to use with attitude explaining 79% variation in intention to use. Intention to use
e-banking is greatly influenced by the four latent variables of perceived ease use, PU,
PWS and attitude collectively with a correlation coefficient of .606 and coefficient of
determination of .778. These results are depicted in the bottom half of Table 5. The
message is loud and clear that our model is incongruent with available results from other
studies done in developing economies.
 Modelling customer’s intention to use e-banking in Saudi Arabia 255

Table 5 Regression model results

Regression weights
R-SEQ P R
0.628 0.00 0.792 Intention ← Attitude H#1
0.513 0.00 0.717 Intention ← Perceived usefulness H#2
0.522 0.00 0.723 Attitude ← Perceived usefulness H#3
0.388 0.00 0.623 Attitude ← Perceived ease of use H#4
0.282 0.00 0.531 Intention ← Perceived Web Security H#5
0.250 0.00 0.500 Attitude ← Perceived Web Security H#6
0.606 0.000 0.778 Perceived ease of use ← Intention
model
0.000 Perceived usefulness
0.000 Perceived Web Security
0.000 Attitude

4.4 Findings
The results of hypotheses testing indicated that the attitude of the respondents towards
e-banking is a major element in affecting the Intention to use IB in Saudi Arabia. 63% of
the variation in the intention to use IB is accounted for by consumers’ attitude.
The attitude of the respondent is greatly influenced by the PU of the IB service. More
than 50% of variation in the attitude of the respondent is accounted for by the PU of the
service. On the other hand, the PWS did not have a major impact on the attitude of the
respondent since only 24.6% of the variations in the attitude are accounted for by the
PWS. However, 26.6% of the variations in the intention to use IB are accounted for by
the PWS. The percentage increase could be explained that some respondents would
having the attitude of consider WS being less important to IB usage, however, when they
intend to use IB they have second thoughts about the WS. Finally, we can see that the
model itself succeeds in explaining the variations in the intention to use IB since 68% of
variations are accounted for by all variables considered together.

5 Conclusions and implications

5.1 Conclusions
This study investigates the behavioural intention of customers to use IB services with a
focus on users’ perceptions of ease of use and usefulness of IB, and the security of using
new technology to meet their banking needs in Saudi Arabia market. The findings of this
study support the earlier findings of Cheng et al. (2006) which was conducted in
Hong Kong. The TAM proved its robustness, and confirmed the validity of the model in
explaining behavioural Intention to use IB in a different geographical area, i.e., Saudi
Arabia.
256 M.A. Youssef et al.

The results indicated that PU has a great impact on both intention to use and attitude
using IB. The findings also indicate that perceived ease of use has also positive impact on
the attitude of IB usage in Saudi Arabian market. However, perceived ease of use seems
to have less impact on the attitude than the PU. The results also show that PWS had a
moderate direct affect over the intention to use. As Saudi Arabian market the internet
communication is already under many restrictions and various security measures are
already in place therefore the WS is considered as a default in the country and
consequently may not have a great impact on the intention to use of IB services.
The result of this study has several implications for the Saudi banks. Knowing the PU
of IB is the most important reason for IB users in the market, the banks can better
formulate their marketing strategies to increase IB usage in the future, emphasising the
functionality of the IB for the consumers to enhance the use of IB. Banks can benefit
from much lower operating costs by offering IB services, which require less staff and
fewer physical branches. Bank customers can also benefit from the convenience, speed
and round-the-clock availability of IB services.
The results also indicate that IB was mostly used for enquiries, equities and share
trading. These findings may offer an opportunity to improve IB systems and functionality
in these areas.
This study also have some limitations since, most of the respondents were from the
Eastern Province in Saudi Arabia. The results may not be generalised to other to the
whole of Saudi Arabia or to GCC countries. Although the sample was comparatively
equal to Cheng et al. (2006), the authors have collected larger sample to use in a
forthcoming study or a sister paper.

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