Factors affecting the adoption behavior of mobile banking service an empirical research in shinhan bank vietnam tran duy hung branch

Cohort 2016 - 2018 Factors affecting the adoption behavior of Mobile banking service: An empirical research in Shinhan Bank Vietnam – Tran Duy Hung Branch Author: Vuong Thi Hong Hanh Advisor: Ph.D Dao Tung May 2018 Table of Contents Chapter 1: Introduction .5 The necessity of the research Research purposes Research objects and scopes 3.1 Research objects: 3.2 Research scope: Research methodology .8 Research structure: Chapter 2: Literature review and current situation of M-banking adoption in Vietnam commercial banks and Shinhan Bank Vietnam – Tran Duy Hung branch 10 Literature review on M-banking adoption: 10 1.1 Literature review: 10 1.1.1 Research history on factors affecting technology adoption behavior 10 1.1.2 Models on impact factors affecting technology adoption behavior 13 1.1.3 The applied model: Extended TAM .14 1.2 Description of studied variables 18 1.2.1 M-banking and Intention to use M-banking 18 1.2.2 Perceived usefulness: 19 1.2.3 Perceived ease of use: .20 1.2.4 Trust: .20 1.2.5 Perceived risk: 20 Overview on current situation of M-banking adoption in Vietnam commercial banks and Shinhan Bank Vietnam – Tran Duy Hung branch .21 2.1 Overview on current situation of M-banking adoption in Vietnam commercial banks 21 2.2 Overview on current situation of M-banking adoption in Shinhan Bank Vietnam – Tran Duy Hung branch .23 2.2.1 Shinhan Bank Vietnam – Tran Duy Hung branch .23 2.2.2 M-banking adoption in Shinhan Bank Vietnam – Tran Duy Hung branch .26 Chapter 3: Research model, hypotheses and research methods 30 Research model and hypotheses: 30 1.1 Research model: .30 1.2 Hypotheses: .30 1.2.1 Hypothesis 1: 30 2 1.2.2 Hypothesis 2: 31 1.2.3 Hypothesis 3: 31 1.2.4 Hypothesis 4: 31 Research methods: 32 2.1 Measurement scale of the variables: .32 2.2 Data collection: .33 2.3 Data processing: .34 2.4 Data analysis methods: 34 Chapter 4: Data analysis on factors affecting M-banking adoption behavior in Shinhan Bank Vietnam - Tran Duy Hung branch 37 Characteristics of the sample: .37 1.1 Gender .37 1.2 Age 37 1.3 Job status .38 1.4 Income .39 1.5 Level of education 40 1.6 Experience with M-banking 40 1.7 Frequently used banking services 41 The validation of the measurement scale: 42 Statistic description: .43 3.1 Description of “perceived usefulness” items and variable: 43 3.2 Description of “perceived ease of use” items and variable: 44 3.3 Description of “trust” items and variable: 45 3.4 Description of “perceived risk” items and variable: 46 3.5 Description of “intention to use” items and variable: 48 Testing the hypotheses: 48 4.1 Coefficient correlation matrix among variables: .48 4.2 Multiple linear regression model 50 4.3 The reliability and fit of the model .51 4.4 Hypothesis analysis: .53 Chapter 5: Conclusion and recommendations 55 Recommendations on improving M-banking adoption behavior in Shinhan Bank Vietnam – Tran Duy Hung branch 55 1.1 Recommendations relating to Trust .55 1.2 Recommendations relating to Perceived usefulness 56 1.3 Recommendations relating to Perceived risk 57 1.4 Other recommendations: .58 Limitations of the research and the development for future research: .59 Table of figures 61 REFERENCE .62 APPENDIX 64 Abstract: This study concentrates on analyzing the impact of some factors on the mobile banking (M-banking) adoption behavior: perceived usefulness, perceived ease of use, trust and perceived risk By applying the theoretical model which is TAM and the data analysis method which is multiple regression model, the results indicate that except for perceived ease of use, the other factors have significant influence on the intention to use M-banking service Based on the results, the recommendations are offered to improve the adoption rate of M-banking service Key words: M-banking, perceived usefulness, perceived ease of use, trust, perceived risk, intention to use M-banking, M-banking adoption behavior, TAM Chapter 1: Introduction The necessity of the research In the context of technological boom, the Internet, which is extremely popular and largely affects everyday activity in every aspect, has become a vital part of human life Today technologies have reached such a high level of development that any country, organization or individual wants to utilize them in their daily jobs Experts in business presume that electronic marketing enables them to get quicker access to their customers than ever Moreover, it helps to reduce costs and to overcome the time and location limitations Now businessmen can introduce and sell their products and services with just a cell phone or tablet connected to the Internet or 3G/4G One of the most modern activities using electronic technology is providing banking services via Internet banking and M-banking, which are still in their infancy and have a great deal of room for improvement Due to the similarity of Internet banking and M-banking in service functions, especially in the context of smartphone popularity, this research will focus on the latter only Nowadays, most of the Vietnamese own one or more mobile phones The telecommunication network is everywhere If each mobile phone can be made into a mini transaction office of banks, it can be said to be a revolution to the economy because of its convenience and speed M-banking brings a supreme quality to customers owing to its high speed and security in making transactions Catching the market trend and the importance of M-banking application, banks need to understand customers’ expectations as well as the factors influencing their adoption behavior of M-banking This research will engage in identifying those factors, especially focusing on perceived risk, perceived usefulness, perceived ease of use and trust Afterwards is the analysis on how each factor affects the adoption of M-banking The traditional Technology Acceptance Model (TAM) will be modified within the M-banking context and two factors “perceived risk” and “trust” are added to the expanded TAM M-banking is becoming a more and more effective channel for bank development In order to improve the M-banking utilization in banks, it is crucial to understand which factors affect the Mbanking acceptance of customers, which is the main purpose of this research Research purposes This research aims at three purposes Firstly, it describes the M-banking usage behavior and the factors affecting the behavior of adopting M-banking service of customers in a specific branch of a bank Secondly, it assesses the level of influence of each factor on the research subject by testing the following hypotheses:  H1: perceived usefulness has positive effect on adoption behavior of M-banking  H2: perceived ease of use has positive effect on adoption behavior of M-banking  H3: trust has positive effect on adoption behavior of M-banking  H4: perceived risk has negative effect on adoption behavior of M-banking Finally, we will analyze the results and giving suggestions on M-banking utilization in the branch: how to develop and make use of it to create more values to customers and the bank Research objects and scopes 3.1 Research objects: This research focuses on these following concepts: Trust, Perceived risk, Perceived usefulness, Perceived ease of use, M-banking and M-banking adoption behavior, which will in turn be analyzed in the following chapters of this dissertation 3.2 Research scope: Shinhan Bank Vietnam – Tran Duy Hung branch’s customers who are Vietnamese are aimed to be questionnaire answerers Firstly, the majority of Vietnamese customers in Shinhan Bank Vietnam are those who more or less have relationship with Korea They may be employees of Korean companies which have Shinhan’s company accounts They may have spouses who are Korean Maybe they used to study in Korea or are going to study in Korea They are doing or going to business with Korean companies The minority are those who have no relationship with Korea but they have known Shinhan bank by opening Shinhan bank’s credit cards or making loans in Shinhan bank The former group of customers normally make more various types of transactions than the latter one who mostly use deposit transactions to pay for card statements and loan due payments once a month In fact, the former are more likely to use M-banking than the latter because they usually make more types of transactions other than depositing money However, there are still exceptions when some customers in the former group not use M-banking and some customers in the latter one use M-banking In this research, there is no distinction between these two groups The research examines the factors affecting M-banking intention to use of customers who either have had experience with M-banking or not Of 201 customers surveyed, 65.7% have had experience with M-banking while 34.3% have not We hope to somehow explain why the rate stops at 65.7% by figuring out the factors affecting M-banking adoption in this research Hopefully we can also work out solutions for improving this users’ rate Secondly, there are some characteristics of the customer sample 201 customers were surveyed in which 75.1% were female and 24.9% were male; 88.6% were equal or less than 35 years old; 95% were having a job; 90% were earning equal or less than 20 million dong per month and 95.5% were holding college or university degrees It can be said that the respondents of the surveys are mostly young people, who are the most sensitive generation towards technology They are also well educated and well aware of what the survey is about Their responses to the questions on the survey therefore are used to apply to the research model In the following parts, we are going to see whether these demographic characteristics affect the intention to use M-banking or not Thirdly, the author also mentioned some frequently used banking services on the survey The result showed that cash deposit or withdrawal and money transfer were two most common types of transactions that the customers usually used, accounting for 70.6% and 65.2% of customers respectively Information inquiry, card payment and top up (mobile phone’s advance payment) took the following ranks for frequently used services with proportions of 39.3%, 27.9% and 26.4% correspondingly Other services such as bill payment, online savings and online loans were hardly used The meaning of adding this question on frequently used banking services is that we can see if a customer with a certain frequently used service is likely to use them on M-banking According to the above mentioned statistics, only four out of eight services which have significant proportions of frequent use are going to be examined: money transfer, information inquiry, card payment and top up Cash deposit/withdrawal is a specific service which can only be executed at the counters or ATMs, therefore it is excluded, together with bill payment, online savings and online loans Research methodology The survey comprises of parts:  Demographic information: Gender, Age, Job status, Income, Level of education, Experience with M-banking and Frequently used banking services  Perceptions of each variable in TAM: This part includes 16 questions which are derived from the article by Payam Hanafizadeh, Mehdi Behboudi, Amir Abedini Koshksaray and Marziyeh Jalilvand Shirkhani Tabar (2014) This article was published by Elsevier in an interdisciplinary journal on the social impacts of new technologies named “Telematics and Informatics” The questions are translated into Vietnamese then reviewed by the professor before handing out to targeted subjects In order to measure the level of agreement, the author applies point Likert scales from (absolutely disagree) to (absolutely agree) to each question The 16 questions are items from which the variables are formed: M-banking adoption behavior is the dependent variable while Trust, Perceived risk, Perceived usefulness and Perceived ease of use are the independent variables The multiple regression model is used in SPSS to test the theoretical hypotheses mentioned in the research purposes Research structure: The structure of the research includes five chapters as follows: Chapter 1: Introduction Chapter 2: Literature review and current situation of M-banking adoption in Vietnam commercial banks and Shinhan Bank Vietnam – Tran Duy Hung branch Chapter 3: Research model, hypotheses and research methods Chapter 4: Data analysis on factors affecting M-banking adoption behavior in Shinhan Bank Vietnam - Tran Duy Hung branch Chapter 5: Conclusion and recommendation SUMMARY: This chapter presented the reason to choose the topic, the research purposes, objects, scope, methodology and projected results, as well as the research structure Based on this basic information, the following chapters are developed logically The next chapter is an overview on M-banking service and its adoption situation in Vietnam commercial banks in general and in Shinhan Bank Vietnam – Tran Duy Hung branch in particular Chapter 2: Literature review and current situation of M-banking adoption in Vietnam commercial banks and Shinhan Bank Vietnam – Tran Duy Hung branch Literature review on M-banking adoption: 1.1 Literature review: 1.1.1 Research history on factors affecting technology adoption behavior Many studies have been conducted in the area of technology adoption (including M-banking, internet banking and other internet-based technologies) since 1970 when information and communication technology (ICT) was expansively used together with the popularity of computers After these studies’ publication, researchers’ attention has been drawn to the adoption of modern technologies Some typical studies are going to be mentioned in chronological order as follows Laforet and Li (2005) studied the factors affecting Internet banking usage in China and figured out that most users of Internet banking in China were men Also, security, risk, computers, skills to adapt to new technologies and culture were elements discouraging the Chinese to use M-banking Ndubisi and Sinti (2006) studied the effects of attitude (importance to banking need, complexity, trialability, compatibility and risk) and Internet banking features (hedonic orientation and utilitarian orientation) on Internet banking adoption Their findings showed that both attitude and Internet banking features could affect internet banking adoption in which attitude played a more significant role While complexity, trialability, compatibility and importance to banking needs had strong impact on adoption, risk had weak impact Utilitarian orientation also had stronger influence on adoption than hedonic one Khalfan et al (2006) conducted a study to investigate the factors affecting Internet banking adoption in Oman The major barriers in Internet banking adoption in this country were security and data confidentiality Top management support was another obstacle The authors stated that the speed of launching e-banking services in this area’s banks was relatively slow It was still unattractive due to technology investment costs, customer insecurities and lack of market-readiness though they were persuaded that overhead costs decreased remarkably by online banking Abdul Hamid et al (2007) carried out a study on internet banking which compared the situations between Malaysia and Thailand Despite the differences in basic services offered by commercial banks in both countries, the study’s conclusion stated that the adoption of internet banking was affected by lack of education for consumers about it 10 the workshop, there should be some bank staff’s appearance to directly instruct customers to use the M-banking service at once, especially some elder customers who are not very quick at advanced technology On the one hand, tellers at the counter need training to be more active in M-banking consultation for customers When customers come to Shinhan Tran Duy Hung to open new accounts, tellers should be enthusiastic in introduce and persuade them to register M-banking service On the other hand, the branch should allocate a sum of marketing cost to print flyers and standees then set up them around the waiting hall and the counters During waiting time, customers can read them to know about the added value of M-banking From both the consultation of tellers and the flyers’ image effect, customers will be triggered to search for and access to the service In turn, M-banking can be widely spread by word of mouth from current users The bank needs to add some useful services to enhance the competitiveness compared to other banks in the industry Currently, the advantages of the M-banking only stop at the basic functions such as account transfer, account balance inquiry, bill payment, online savings Some development directions for Shinhan Bank's M-banking service in the coming time are check issuance, request for opening letters of credit (L/C), amendment of L/C, loan application and repayment request, as well as many other benefits to meet more and more diverse needs of customers 1.3 Recommendations relating to Perceived risk Shinhan Bank’s security system on M-banking includes a login ID and password, an account four-digit password and a onetime six-digit password generated randomly for each transaction Although it sometimes annoys new users but it is hard to deny the effectiveness in preventing risks from happening Customers perceive the risk of 2.3/5, according to the statistic result in part of chapter Despite all the security methods, customers still feel the risk of a medium level Luckily, perceived risk is the factor least affecting the intention to use among three factors (-0.169) However, in order to improve the M-banking adoption rate, this factor should not be ignored The bank should have some strategies to lower the perceived risk as much as possible Firstly, the bank needs to provide customers with detailed guidelines, which are easy to understand, on providing and using IDs and passwords when logging in the M-banking appliance At the same time, there should be security commitment from the bank to make sure that customers feel safe when doing banking business on M-banking In Shinhan Bank, M-banking’s initial passwords are generated randomly from the core banking system for one time only and delivered directly to customers at the counter It is a relatively safe way to deliver passwords but the risk may 57 arise from bank staff, those who get access to the passwords before customers Another risk is that customers may lose the temporary password papers before they log in and change it into their permanent passwords Therefore, the safer way to deliver temporary login passwords is by SMS or email If the bank wants to expand its functions on Internet Banking, this security system will need adjusting first and foremost Together with security enhancement methods to ensure the safety of customers’ accounts, the bank needs to focus on marketing for its customers to be aware of the confidentiality of M-banking service, especially when there have been more and more cybercrimes which caused many losses for M-banking and Internet banking users recently At the same time, the bank should advice customers about the risks which may be encountered when they use M-banking service and the bank cannot control so that customers use it with high precautions Apparently, the bank should recommend customers not save the passwords on the desktop of the computers or not set passwords related to their personal information Another thing Shinhan is really weak at is that it needs to contact and more closely cooperate with security agencies in the post and telecommunications industry to regularly monitor and check the safety of customers’ accounts If anything abnormal arises, customers need to be immediately informed The bank should pay attention to checking and supervising the operation of the whole system so as to ensure that transactions are smoothly conducted and to minimize the number of faulty and unsuccessful transactions which cause the loss in faith and excitement of customers when using the service Shinhan bank should have attractive recruiting, training and compensating policies to build a highly qualified team in the field of security and M-banking This team will be the core human resource of the bank to help develop the service in a safe and effective way In addition, the bank also needs to increase the number of training sessions on M-banking and information security for all of its employees, especially for the staff of the relevant departments to ensure they have the necessary and constantly updated knowledge to keep up with the extremely quick changes of modern technology 1.4 Other recommendations: Develop customer service standards The bank should set standards for customer service staff, unify the service style of all employees in branches and transaction offices throughout the system to create professionalism of Shinhan Bank Regularly organizing the "secret client" program and ensuring the seriousness and 58 secrecy of the program is another way for the bank to accurately assess the employee's service attitude There should be a fine and reward policy for each program evaluation After that, recommendations and suggestions should be given to improve the quality of customer service Develop customer policy For customers who regularly use bank services or have large transaction volume on the Mbanking channel, preferential policies for VIP customers or loyal customers are impossible to lack Therefore, in order to retain these customers, the bank should have the accumulated points given for each transaction of customers to encourage them to maintain relationships the bank in the long run A customer care team should be established to serve customers with care and attention, to follow up to identify those who have intention to switch to other banks Bank staff need to find out the reasons to consult and persuade customers to remain the relationship with the bank Pay attention to market segmentation An important issue for the M-banking service is the market segmentation and the selection of targeted markets The bank should identify exactly who will use the M-banking service and they belong to which group of people From this point, there can be appropriate methods to influence those customers It promises to bring more effect than mass impact on many groups of customers, including some customers who have almost no need to use M-banking It can help to avoid causing unnecessary costs The bank also needs to have appropriate advertising policies on the media to create the demand for customers Limitations of the research and the development for future research: The first contribution of this research is a proposal of a theoretical model to utilize in explaining and predicting customers’ intention to use M-banking The second contribution is that the two factors (trust and perceived risk) which are absent in the traditional TAM are added to examine in Shinhan Bank They were found to have significant impact on M-banking adoption behavior The third contribution is a number of implications to support bank managers in increasing M-banking users It is vital for bank development in the context of digital banking boom Banks must focus on boosting the customers’ awareness of a low-risk, highly useful and trustworthy Mbanking service Bank marketers should accordingly create the image of services which hit the customers’ concerns 59 However, this research also contains some limitations Firstly, the research was conducted in Shinhan Tran Duy Hung branch in Hanoi so the generalization is limited It will be improved if this research is repeated in some big provinces/cities in Vietnam This is an orientation for next studies Secondly, the research was carried out with individual customers under specific criteria so its results cannot be applied for corporate customers If it can be conducted with corporates, we can generalize the factors affecting customers’ intention to use M-banking Thirdly, the study’s sample was chosen according to the convenience sampling method (which is one of the non-probability sampling methods) so the representativeness is low and the generalization ability for the crowd is not high enough Further research should apply the stratified sampling method (which is one of the probability sampling methods) If so, the generalization and statistical results will be more effective Moreover, although research was conducted by interviewing customers directly, their responses might be subjective and inaccurate due to the busyness of customers Besides, it did not explore the relationships among the factors influencing the intention to use M-banking service From the database of this research, future studies may apply the structural equation model (SEM) to research on these relationships Due to some constraints like time and experience in market research, the research shows some shortcomings and limitations apart from its contributions It is hopeful that future research will be conducted better to overcome the disadvantages and promote the advantages SUMMARY: The main content of this chapter is to recommend some solutions to improve the rate of M-banking adoption in Shinhan Tran Duy Hung in particular and Shinhan bank Vietnam in general These recommendations aim at increasing perceived usefulness and trust, and decreasing perceived risk, which are factors affecting the intention to use M-banking of customers in the branch In addition, other solutions to increase the intention to use M-banking as well as the actual number of people using the service have also been proposed on the basis of consideration between their feasibility to implement and the bank's resources The last part of the chapter briefly concluded the contributions of the research and mentioned some limitations which in turn opened the directions for further research in the future 60 Table of figures Figure 1: The original TAM (Davis, 1989) 15 Figure 2: TAM (Venkatesh and Davis, 2000) 15 Figure 3: TAM (Venkatesh and Bala, 2008) 16 Figure 4: The original TAM extended with trust and risk factors Figure 5: M-banking user proportions in Vietnamese banks (unit: %) Figure 6: Organizational chart of Shinhan Tran Duy Hung 17 22 24 Figure 7: Experience with M-banking service of customers in Tran Duy Hung branch 28 Table 1: Cronbach’s Alpha 43 Table 2: Statistics of Perceived usefulness 44 Table 3: Statistics of Perceived ease of use 45 Table 4: Statistics of Trust 46 Table 5: Statistics of perceived risk 47 Table 6: Statistics of Intention to use 48 Table 7: Correlations 49 Table 8: Coefficients (Dependent Variable: AveI) Table 9: Model Summaryd 51 61 50 REFERENCE Akturan, U., Tezcan, N., 2012 Mobile banking adoption of the youth market: Perceptions and Intentions Marketing Intelligence & Planning 30(4), 444 –459 Bankole, F O., Bankole, O O., Brown, I., 2011 Mobile banking adoption in Nigeria The Electronic Journal on Information Systems in Developing Countries 47(2), –23 Bauer, R., 1960, Consumer behavior as risk taking, in: D Cox (Ed.), Risk Taking and Information Handling in Consumer Behavior, Harvard University Press, Cambridge, MA Bhattacherjee, A., 2000 Acceptance of e-commerce services: the case of electronic brokerages IEEE Transactions on Systems, Man and Cybernetics, Part A: Systems and Humans 30(4), 411 –420 Cruz, P., Neto, L B F., Muñoz-Gallego, P., Laukkanen, T., 2010 Mobile banking rollout in emerging markets: evidence from Brazil International Journal of Bank Marketing 28(5), 342 –371 Cunningham S.M., 1967, The major dimensions of perceived risk, in: D Cox (Ed.), Risk Taking and Information Handling in Consumer Behavior, Harvard University Press, Cambridge, Mass Featherman, M.S., Pavlou, P.A., 2003, Predicting e-services adoption: a perceived risk facets perspective, International Journal of Human-Computer Studies 59, 451–474 Hanafizadeh, P., Behboudi, M., Koshksaray, A.A., Tabar, M.J.S., 2014 Mobile-banking adoption by Iranian bank clients Telematics and Informatics 31 (1), 62 –78 Hsu, C., Wang, C., Lin, J.C., 2011 Investigating customer adoption behaviors in mobile financial services International Journal of Mobile Communications 9(5), 477 –494 10 Kim, G., Shin, B., Lee, H.G., 2009 Understandingdynamics between initial trust and usage intentions of mobile banking Information Systems Journal 19 (3), 283 –311 11 Koenig-Lewis, N., Palmer, A., Moll, A., 2010 Predicting young consumers' take up of mobile banking services International Journal of Bank Marketing 28(5), 410 –432 12 Lee, K.C., Chung, N., 2009 Understanding factors affecting trust in and satisfaction with mobile banking in Korea: A modified DeLone and McLean’s model perspective Interacting with Computers 21(5), 385 –392 62 13 Lin, H., 2011 An empirical investigation ofmobile banking adoption: The effect of innovation attributes and knowledge-based trust International Journal of Information Management 31(3), 252 –260 14 Luarn, P., Lin, H., 2005.Toward an understanding of the behavioral intention to use mobile banking Computers in Human Behavior 21(6), 873 –891 15 Luo, X., Li, H., Zhang, J., Shim, J.P., 2010 Examining multi-dimensional trust and multifaceted risk in initial acceptance of emerging technologies: An empirical study of mobile banking services Decision Support Systems 49(2), 222 –234 16 Quy, V., 2010, Improvement on Internet Banking service quality in Vietcombank, “Young Economists” Contest for Students 17 Trong, H., Ngoc, C., 2008, Research data analysis in SPSS, no.1, no.2, Hong Duc publisher, Ho Chi Minh city 18 Venkatesh, V., Davis, F.D., 2000 A theoretical extension of the technology acceptance model: Four longitudinal field studies Management Science 46(2), 186 –204 19 Venkatesh, V., Morris, M G., Davis, G.B., Davis, F D., 2003 User acceptance of information technology: Toward a unified view MIS Quarterly 27(3), 425 –478 20 Wessels, L., Drennan, J., 2010 An investigation of consumer acceptance of m-banking International Journal of Bank Marketing 28(7), 547 –568 21 Zhou, T., 2011 An empirical examination of initial trust in mobile banking Internet Research 21(5), 527 –540 22 Zhou, T., 2012b Understanding users’ initial trust in mobile banking: An elaboration likelihood perspective Computers in Human Behavior 28(4), 1518 –1525 63 APPENDIX The questionnaire: Part 1: Demographic data Gender Male Female Age < 25 25 - 35 Job Employed Unemploy 36 - 45 46 - 55 56 - 65 > 65 10-20 21-30 31-40 41-50 >50 million million million million million University M.A Ph.D Money Card Bill Top-up transfer payment payment ed Income Level of