factors affecting the use of mobile banking services in hanoi, vietnam

Thai Nguyen University Socialist Republic of Vietnam Southern Luzon State University Republic of the Philippines DOCTORAL DESSERTATION ABSTRACT FACTORS AFFECTING THE USE OF MOBILE B

Thai Nguyen University

Socialist Republic of Vietnam Southern Luzon State University Republic of the Philippines

DOCTORAL DESSERTATION

(ABSTRACT)

FACTORS AFFECTING THE USE OF MOBILE BANKING

SERVICES IN HANOI, VIETNAM

In Partial Fulfillment of The Requirements for The Degree of Doctor in Business Administration

Full Name: Vu Manh Cuong English Name: Cameron

Adviser

Dr Nelly Mendoza

(Southern Luzon State University)

HANOI, 2013

Chapter I INTRODUCTION

Mobile banking services have become the objective and inevitable trend during the international economic integration more and more deeper in Vietnam The development of mobile banking services has brought significant benefits to customers

as a convenient, fast and accurate of the transaction At the same time it also opens up new development opportunities for the telecommunications providers, application and software developers, e-commerce merchants and bankers in Vietnam

Vietnam has more than 86 million population (GSO, 2012), 120.7 million mobile subscribers, 15.5 million fixed subscribers, over 31% rate of people use the Internet regularly, 30.2 million mobile users and (MIC, 2012), 44 bankers with high-tech infrastructure (SBV, 2013), and more then 400 Value added services providers (MIC, 2013) It should be a great potential market

1.1 Background of the study

The study of consumer behavior is an important part of the research needs of customers To succeed in any business at all the fields, especially in fast-growing and dynamic markets as today's, entrepreneurs, marketers need to know clearly about customers such as the needs, convenience, the difficulty, suitable time, etc

Numerous theoretical models have been launched and continuous improvement Most notably, Theory of Reasoned Action Models introduced Ajzen & Fishbein (1975), often referred to TRA model, and then extended into TPB model (Ajzen, 1991) Davis (1989) has applied this theory to build the Technology Acceptance Model (TAM), and then Venkatesh and Davis (2000) has built Technology Acceptance Model 2 (TAM2)

Thousands of studies have applied TAM model to explain the behavior of using integrated technology services on many different areas in many countries around the world In the technology service sector in general and mobile banking services in particular, the choice and use by customer is also comply the basic principles of psychology and behavior, but specific expression of consume behavior

in these situations, conditions and environment are totally different This has made the line of research on consumer behavior continues incessantly

In recent years, mobile banking has attracted particular and get the attention of researchers, managers There are a lot of research in the world were conducted, but, in-depth studies of this field in Vietnam were very rare So far there is no research about the use of mobile banking services in Hanoi specifically and Vietnam overall Stemming from such pressing issues, this study was conducted to explore the factors influence the use of mobile banking services of customers in Hanoi The dissertation contributes to propose the policy to develop this services in the near future

1.2 Statement of the objectives

- Determine the relationships of the demographic characteristics (age, gender, occupation, income and educational attainment) of the respondents and the use of mobile banking services;

- Determine the differences in the purpose of the use of mobile banking services

by customers in Hanoi by gender, age, education, occupation and income;

- Determine the factors affecting the use of mobile banking services by consumers in Hanoi;

- Analyze the level level of influence of the different factors to the use of mobile banking services in Hanoi; and

- Propose solutions to improve mobile banking services to increase the number

of users in Hanoi, Vietnam

1.3 Hypothesis

H1: The use of mobile banking services are affected by the geographical location

and demographic characteristics such as age, gender, education, area, occupation and income

H2 Perceived usefulness of mobile banking services has a positive impact on the

use of the services

H3: Perceived of ease of use of mobile banking services has a positive impact to

the use of the services

H4: Perceived costs to use mobile banking services have a negative impact to use

the service

H5: The trust of customers on mobile banking services has a positive impact to the

use of the services

H6: Perceived risks of customers for mobile banking services have a negative

impact to the use of the services

1.4 Significance of the study

Regarding scientific, dissertation contributed (i) reviewing the basis of the theory of consumer behavior generally and Theory of Technology Acceptance Model (TAM) in particular; (ii) providing the research model of consumer's behavior in the use of mobile banking services in Hanoi

Regarding practice, dissertation contributed (i) to enrich the practical research

in the field using mobile banking services in Vietnam generally and Hanoi in particular; (ii) to outline a comprehensive picture of the use of mobile banking services in Hanoi And then identify the major factors affecting the use of the services

of customer in the studied area; (iii) to suggest the main recommendations of the policy for the mobile banking service providers in Hanoi, practical contribution to improving mobile banking services in Vietnam; (iv) to provide a good reference material for managers, service providers, researchers and practitioners in the management agencies, universities of Vietnam and International

1.5 Scope and Limitations

The research will be conducted within Hanoi Capital The respondents were living in Hanoi and using mobile banking services (included SMS banking and Internet banking) The survey was conducted in districts: Hoan Kiem, Ba Dinh, Hai

Ba Trung, Dong Da, Cau Giay, Tay Ho, Thanh Xuan, Hoang Mai, and Long Bien

Chapter II REVIEW OF RELATED LITERATURE

2.2 Mobile Banking Services

The rapid growing of mobile service in Asia has created opportunities for new and innovative mobile services The most promising is Mobile finance service including mobile banking, mobile payment and mobile commerce services Mobile banking allow end-users to get bank information via SMS such as balances, transaction history, promotion information, confirmation for direct payment (Niina M, Matti R, Virpi K.T, 2004) The cost is saved average 19% when using the mobile banking service (McKay, Claudia and Mark Pickens, 2010)

The number of mobile banking users worldwide is forecasted to grow from 55 million in 2009 to 894 million in 2015, at a compound annual growth rate of 59% (Ann H., 2010) Juniper estimate the number of mobile subscribers who use mobile banking will exceed 400 million globally by 2013 Mobile banking can perform account balances and transaction history inquiries, funds transfers, and bill payments via mobile devices (Laukkanen, 2007; Turban, King, Viehland, & Lee, 2006)

2.3 Mobile Financial Services

Mobile Financial Services where telecom and banking converge, using the mobile device for formal financial services, Immediate, simple and convenient access

to money-related transactions Using for shopping online, pay for education, save money, buy insurances, pay bills, receive and payoff loans, buy tickets, pay for

parking, transfer airtime, purchase goods, receive salary, pay for transportation, send money home, etc (Jorge Campos, 2011)

According to Niina et al., the key players of mobile financial services includes banks and other financial organizations, the telecom operators, retailers, equipment manufacturers (hand-set devices), and software vendors that enabling the services are incremental in building the infrastructure progress

2.4 Mobile Commerce Services

Mobile Commerce (m-commerce) is defined as a business transaction conducted through mobile communication networks or the Internet (Siau & Shen, 2003) M-commerce can offer value to consumers through convenience and flexibility

by enabling time and place independence (Kim et al., 2009; Venkatesh et al., 2003)

There are challenges associated with m-commerce, and specifically mobile banking Mobile devices with a small screen size, limited screen resolution and uncooperative keypad may make it difficult for the customer (Kim et al., 2009)

2.5 Mobile banking technology

Currently, mobile banking is implemented through three different technology solutions: browser-based applications, messaging-based applications and client-based applications (Kim et al., 2009; Tiwari & Buse, 2007) The browser-based application

is essentially a Wireless Access Protocol (WAP)-based internet access (Kim et al., 2009) This requires a compatible mobile phone which is WAP-enabled The mobile phone is used to access banking portals through the Internet

Based on assessment of mobile banking is a full-potential field in the world, many technology teams was focused in research and development of technology solutions for this type of service The solutions are continuously improved in line with the rapid development of mobile, especially the rapid growth of smartphone

2.6 Mobile Banking in Vietnam

Mobile banking has been introduced in Vietnam quite late compare to other countries in the region Four commercial banks only have actually introduced in 2011

The mobile banking functions are focusing account inquire, money transactions, payment for bills and online

According to while paper on Information & Communication Technology 2012 (MIC, 2013), by August 2012, Vietnam has 25.79 million smart phone subscribers, contribute to 21% of total mobile phone subscribers and representing an increase 27% compared to the end This is quite good for the development of mobile application in general and mobile banking in particular

With the interest of bankers, service providers, mobile operators, merchants and combined the rapid development of technology environments including core banking, e-commerce, mobile infrastructure, and smart phone, mobile banking is a potential market in Vietnam

2.7 Consumer Behavior

The consumer behavior is a research tries to understand the decision-making processes of buyers, both individually and in-group, including: problem recognition, information search, evaluation of alternatives, purchase decision, and post-purchase behavior It studies characteristics of individual consumers such as demographics and behavioral variables in discovering the people's wants It also tries to assess influences on the consumer from related groups such as family, friends, and society According to Kotler and Armstrong (1996), the factors affecting the consumer behavior are cultural, social, personal, and psychological

The theories and models are most commonly applied in the study and explanation of consumer behavior since the second half of the twentieth century are theories of attitude and behavior, such as Expectancy-Value Theories (Tolman, 1932; Rotter, 1954; Atkinson, 1957), Theory of Reasoned Action (Ajzen & Fishbein, 1980), Theory of Planned Behavior (Ajzen & Driver, 1992)

2.8 Expectancy-Value Theory

Expectancy Value Theory (EVT) was presented by Tolman (1932), Rotter

(1954) and Atkinson (1957) According to Fishbein & Ajzen (1975), people learn

"expectations," i.e., briefs that a given response will be followed by some events Since these "events" could be either positive or negative "reinforcers" (i.e., could have

positive or negative valence), his argument, essentially, was that people would learn

to perform (or increase their probability of performing) behavior that they "expected"

to lead to positively valence events (Tolman, 1932) In the late 1970s Fishbein and Ajzen expanded expectancy-value theory into the theory of reasoned action (TRA)

2.9 The Theory of Reasoned Action

The theory of reasoned action (TRA) developed by Fishbein & Ajzen (1969, 1980) This model defines the links between beliefs, attitudes, norms, intentions, and individuals behaviors The person’s behavior is determined by its behavioral intention

to perform it The intention is itself determined by the person’s attitudes and his subjective norms towards the behavior TRA also claims that all other factors influence the behavior only do so in an indirect way by influencing the attitude or subjective norms Fishbein & Ajzen (1975) refer to these factors as external variables

2.10 The Theory of Planned Behavior

Theory of Planned Behavior (TPB) was developed from TRA (Venkatesh et

al, 2003) with the aim to improve the predictive power by adding a major predictor, perceived behavioral control, to the model It is one of the most predictive persuasion theories It has been applied to studies of the relations among beliefs, attitudes, behavioral intentions and behaviors in various fields such as advertising, public relations, advertising campaigns and healthcare

TPB is good in explaining individual acceptance and usage of many different technologies (Harrison et al., 1997; Mathieson, 1991; Taylor and Todd, 1995) However, Taylor and Todd (2001) reported that it did not provide a complete explanation of usage intention as compared TAM (Faziharudean & Tan, 2011) According to Gregory (2011) both TRA and TPB models have been widely used to evaluate a range of consumer behaviors

2.11 Technology Acceptance Model

The Technology Acceptance Model (TAM) introduced by Davis (1989) TAM has been continuously studied and extended to TAM2 by Venkatesh & Davis (2000) and the Unified Theory of Acceptance and Use of Technology (UTAUT) by Venkatesh et al (2003) TAM3 has also proposed by Venkatesh & Bala (2008)

TAM suggests that perceived usefulness and perceived ease of use are the two most important factors in explaining individual users’ adoption intentions and actual usage (Davis, 1989) TAM has been extensively tested and validated and is a widely accepted model, which can be modified or extended using other theories or constructs (Taylor & Todd, 1995; Davis & Venkatesh, 2000; Wu & Wang, 2005; Luarn & Lin, 2005; Zhang, Gou & Cheng, 2008) Venkatesh and Davis (2000) introduced such social and organizational factors as subjective norms, impression, quality of output and work relevance into the TAM model and proposed TAM2

Luarn & Lin (2005) conducted a study with perceived usefulness, perceived ease of use, perceived credibility, self-efficacy, and perceived financial cost Lee (2009) investigated the factors influencing the adoption of Internet banking with five antecedents of perceived risk were discussed: performance risk, social risk, financial risk, time risk and security risk Perceived cost is defined as the extent to which a person believes that using mobile banking will cost money (Luarn & Lin 2005) Kim

et al (2009) defined the trust as a psychological expectation The trust was defined as

a feeling of security and willingness (Kim, Chung & Lee, 2010)

2.12 The conceptual framework

income)

The use of mobile banking services

Chapter III RESEARCH METHODOLOGY

3.1 Research design

To achieve the proposed objectives, the research process was organized into two steps including qualitative research and quantitative research The entire research process is summarized in following figure

3.1.1 Pilot study

A pilot study was conducted by interviewing 50 customers in Hanoi who are using mobile banking services to explore preliminarily the main characteristics of the use of mobile banking services The pilot study was a basis to design the survey questionnaire for the next quantitative study

3.1.2 Variable measurement

There are five independent variables, specifically, "perceived usefulness",

"perceived ease of use", "perceived cost", perceived risk" and "trust of service" Each

Theoretical model Orientation

Questionnaire

Completing the questionnaire

Formal Study (N = 800)

Formal Questionnaire

Regression Model Analysis

Descriptive Statistical

Analysis

Exploratory Factor Analysis (EFA)

independent variable measured by three to ten questions related mobile banking services A total of 27 questions were conducted to five aspects of the use of mobile banking services The dependent variable was designed with three questions to measure the use of mobile banking services in Hanoi A five-point Likert scale was applied to measure the responses of the survey

3.2 Determination of Sample size

Total population of Hanoi is 6,451,909, in which 69.1% are aged between 15 and 64 (GSO, 2010) equal to 4,458,269 According to the stratified random sampling method use Slovin’s formula with the error level at 5% showed the sample size is 400

However, Hanoi is a big city, the second biggest city in Vietnam, thus to enhance practical significance as well as to ensure the reliability of data analysis, Authors have collected data from 800 respondents

3.3 Sampling design and techniques

The samples were conducted by the method of convenience sampling surveys, but the adjustment on the surveying area and gender to ensure the sample is spread evenly over the studied region The survey was conducted in 9 districts including: Hoan Kiem, Ba Dinh, Hai Ba Trung, Dong Da, Cau Giay, Tay Ho, Thanh Xuan, Hoang Mai, and Long Bien The number of sample was allocated as following table

3.4 Research Instrument

The measurement tools used Likert scale introduced by Rennis Likert Questionnaire was used to collect primary data using five-point Likert scales The questionnaire was designed with two parts: (i) the questions related to respondents' demographic characteristics to classify the group of consumers such as living area, gender, age, occupation, income and education; (ii) the questions related to measuring the influence and dimension of factors affecting the use of mobile banking services in Hanoi