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0 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIET NAM International School of Business Vo Ngoc Anh Thy ADOPTION OF E-BANKING IN VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 1 UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIET NAM International School of Business Vo Ngoc Anh Thy ADOPTION OF E-BANKING IN VIETNAM MASTER OF BUSINESS (Honours) Supervisor: Dr. Ngo Viet Liem Ho Chi Minh City – Year 2014 2 Abstract E-banking is one of the most powerful tools for making banking transactions. This study examines the relationship between attributes of E-banking website (e.g. perceived security, perceived privacy, perceived usefulness and perceived ease of use) and Trust in E-banking. This study also examines the extent to which trust in E-banking influence perceived value and company image. Data is collected via a survey of customers of Joint Stock Commercial Bank For Foreign Trade of Vietnam (Vietcombank) Bien Hoa Branch and Nhon Trach Branch, which are located in Dong Nai Province, Southeast Vietnam. The findings of this study show that among the four attributes of E-banking, perceived privacy, perceived usefulness and perceived ease of use had a certain impact on trust in E- banking while perceived security did not have such impact. This study also found the positive relationship not only between trust in E-banking and perceived value but also between perceived value and company image. Keywords: trust, E-banking, online banking, Internet banking 3 TABLE OF CONTENTS  CHAPTER 1: INTRODUCTION 1.1. Background of the research 1.2. Research problem 1.3. Research questions 1.4. Scope of the research 1.5. Structure of the research  CHAPTER 2: LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1. Attributes of E-banking Website 2.2. Trust in E-banking 2.3. Perceived Value 2.4. Company Image  CHAPTER 3: RESEARCH METHODOLOGY 3.1. Research design 3.2. Measurement instruments and questionnaires construction 3.3. Sampling and data collection 4 3.4. Data analysis method  CHAPTER 4: ANALYSIS AND RESULT 4.1. Descriptive analysis 4.2. Measurement validation 4.3. Hypothesis testing  CHAPTER 5: DISCUSSION, IMPLICATION AND LIMITATION 5 LIST OF FIGURES Figure 1: Proposed research model Figure 2: Conceptual framework and data process Figure 3: Model with t-value in hypothesis testing Figure 4: Model with β and R square in hypothesis testing LIST OF TABLES Table 1: Trust in previous researches Table 2: Measurements scale of Attributes of E-banking Table 3: Measurements scale of Trust in E-banking Table 4: Measurements scale of Perceived value Table 5: Measurements scale of Company image Table 6: Type of customers Table 7: Typical services customers using Table 8: Period of time customers started to use the service Table 9: Frequency that customers using E-banking and communicating with bank officers Table 10: Percentage of customers based on age and gender Table 11: Demographic characteristic of the sample Table 12: Cronbach’s alpha for each construct Table 13: Composite reliability for each construct Table 14: Average variance extracted values for all constructs Table 15: Outer loadings of manifest variables Table 16: Construct-Level Measurement Statistics and Correlation Matrix Table 17: Path coefficients of the constructs 6 CHAPTER 1 Introduction 1.1. Background of the research Internet banking is the most recent delivery channel introduced to the financial service industry (Saythe, 1999). Kenneth et al (2010, p. 27) state that “online banking, also commonly known as internet banking or e-banking, has experienced phenomenal growth in recent years”. Along with the trend of using technology in commerce, during the past two decades, there has been a shift from using traditional banking services to using online banking services, so that, customers have more time and more convenience in meeting their needs to use banking services. According to Pew Research Center (2013), 61 percent of all Internet users have used online banking, compared to 58 percent and 18 percent in 2011 (Huffingtonpost, 2014). In another research from eMarketer, almost 73 million adult consumers within the United States engaged in online banking in 2006, and forecasts annual growth rates of between 6.5% and 9.5% through 2010 (eMarketer, 2007). However, many studies indicate that distrust in online banking is not reducing and remains of concern to customers (Johnson, 2007). Customers use online banking because of perceived usefulness and perceived ease of use. These include not being waiting in line at the branch, not being messy and fed up with paper statements taking up space, and accessing to their account 24/7. Despite the 7 increasing number of customers using online banking, many of them have the fears of not being warranted about their security and privacy (Huffingtonpost 2014). Kersner (2005) states that 68% of banking customers who are not interested in E-banking cite privacy concerns as their main reason. The above factors might influence the customers’ trust in E-banking. Consumers concern about the positive benefits of E-banking adoption. These benefits include the cost reductions by shifting services online, the extra value that consumers receive from online customization, and the improved image that banks obtained from good values they provide for their customers (Johnson, 2007). Citibank.com reports that their E-banking customers consume a large number of the bank’s products and are the bank get more than 40% profitable than their offline transactions (Schneider, 2004). 1.2. Research problem Not only in developed economies but also in developing ones such as Vietnam, online services has been the newly-targeting industry through decades. Much as the customers’ demand, E-commerce has not satisfied them yet, because of distrust, E- banking is one of the problems. In this context, it is worthy of note that understanding the effects of E-banking attributes on trust in E-banking can help to carry out which factor influences trust in E-banking the most, and which one pushes the least. Moreover, keep 8 on examining the relationship between trust in E-banking, perceived value and company image can assist the banking leaders in the way they operate their business, therefore strengthen their business system and provide their customers with the best services, especially in E-banking. 1.3. Research questions The purpose of this study is to develop and empirically validate a theoretical framework that investigates the interrelationships between attributes of E-banking website, trust in E-banking, perceived value, and company image. Specifically, this study attempts to answer the following research questions. 1. To what extent, do attributes of e-banking website (e.g. security, privacy, usefulness, and ease of use) influence trust in e-banking? 2. To what extent does trust in e-banking enhance perceived value? 3. To what extent does perceived value affect company image? 1.4. Scope of the research 9 This study uses the data conducted from a survey in Vietcombank Bien Hoa and Vietcombank Nhon Trach, which are located in Dong Nai Province, Southeast of Vietnam. The questionnaires are designed to the customers of these banks (especially those who already used Vietcombank E-banking), estimated that 200 customers would conduct this survey. The study applied by multimethod approach to data collection, via e- mail, phone and directly right after their transaction. 1.5. Structure of the research The remaining of the thesis is organized as followed. Chapter 1 presents the background, research problem, research questions, and research objectives of the study. It also briefly discusses the scope and the method of data collection. Chapter 2 reviews the literature upon which a theoretical framework is developed in Chapter 2. Drawing on prior research related to the adoption of E-banking, this chapter crafts the research model and hypotheses. In Chapter 3, a research plan is designed with measurement instruments. It also presents the development of the questionnaire, pilot survey and final survey. This chapter discusses about data collection and data analysis methods to test the research hypotheses. [...]... personal information for any purpose unless I authorize it to do so PP4 I am convinced that my main bank’s web site respects the privacy of the transactions The content of my main bank’s web site is useful to me PU2 My main bank’s web site is useful in carrying out transactions PU3 Using e-banking enhances my effectiveness of utilizing banking services PU4 Using e-banking enables me to utilize banking services... started to analyze the influence of trust for online marketing such as E-banking, because the lack of trust among online consumers is considered as the main explanation for the low rate of making E-banking transaction (Carlos et al 2006) Frankly, trust is considered to be one of the main reasons why consumers are still hesitate to conduct their financial transactions online as high levels of perceived risk... assurances of the Web, perceived risk Trusting intentions: willingness to depend on Web vendor trusting beliefs in Web vendor Balasubramanian, Konana, & Menon (2003) Pavlou (2003) Operational competence, environmental security Trustworthiness of online broker Intention to: follow vendor advice, share personal information, purchase Satisfaction Reputation, past satisfaction, frequency Trust in Web retailer... trust in E-banking Hence, this study keeps on research the following hypothesis: - H1: Perceived security has positive impacts on trust in E-banking - H2: Perceived privacy has positive impacts on trust in E-banking - H3: Perceived usefulness has positive impacts on trust in E-banking - H4: Perceived ease of use has positive impacts on trust in E-banking 2.2 Trust in E-banking The nature of online service... propose that these four attributes of online banking influence the customer’s intention to use E-banking Service quality research has overwhelmingly focused on customer expectations (Esssam et al., 2006) These attributes help consumers to build trust in the online environment, especially online banking One of the most significant obstacles to the process of adopting E-banking is security (Saythe 1999) Even... denying that they had carried out a certain operation Lacking of security blocks the growth in the number of online banking users (Carlos et al 2006) If E-banking security is improved, users will conduct their financial transactions at home, office, or in public places, via the Internet E-banking absolutely will not be used unless it is considered as safe and secured (Saythe 1999) As such, high level of. .. research model for this study is described in Figure 2, in which the six hypothesis are presented as follow: H1-H4 are shown for the influence of attributes of Ebanking (perceived security, perceived privacy, perceived usefulness, perceived ease of use) on trust in E-banking; then, trust in E-banking enhances perceived value in H5; and last, H6 examines the effect of perceived value on company image CHAPTER... of E-banking, trust in Ebanking, perceived value and company image Drawing on prior research related to the adoption of E-banking, this chapter crafts the research model and hypotheses 2.1 Attributes of E-banking Website Past studies has classified online banking attributes into four factors, including perceived security, perceived privacy, perceived usefulness and perceived ease of use Kenneth et al... The display pages within the website are easy to read PEU3 The text on the website is easy to read PEU4 The website labels are easy to understand PEU5 Learning to operate the website is easy for me PEU6 It would be easy for me to become skillful at using the website PEU7 I find the website easy to use Table 2: Measurements scale of Attributes of E-banking 25 3.2.2 Trust in E-banking is measured by 6... After building the complete questionnaires with 3 main parts as above, it is continually delivered to 2 pilot groups, the first group is normal people including 5 users and non-users of E-banking, the second group is more-than-2-year users of E-banking The purpose is to find out unreasonable or confusing statements in the questionnaires Then, it is translated into Vietnamese because most of the correspondents