1.1 Background and Motivation

The new epoch of information and technology has begun. The use of the internet is transforming how business is done locally and globally. Due to major technical developments, the internal information system development is moving to an external development and provision model, driven by the needs for lower costs, faster implementation, easier-to-use applications and effective use of scarce resources (Locket et al., 2006).

The internet has revolutionised the computer and communication world like nothing before. The invention of the internet has a worldwide broadcasting capability, it is a medium of collaboration and interaction between individuals and their computers without any limitation in their geographical location. The origin of the internet can be found in the United States department of defence's Advanced Research Project Agency (ARPA). The aim of the ARPA was to develop a nationwide computer system where military personnel could share message without any barrier irrespective of their location (Freedom, 2008). In 1960's United States funded researchers in California to explore ways through which computers could share information. In 1969, the research group connected the computers of some universities in the United States to share information being physically apart. The network was named as "ARPA network" or "ARPAnet" (Freedom, 2008).

The last few years have witnessed technological changes among which prominent is electronic commerce, or the exchange of products (tangible and otherwise) and payments via telecommunication systems (Kalakota & Whinston, 1997). Payment systems are a core group of strategic information system which contribute towards economic development, especially in emerging economies, and forms the foundation for financial sector. Most of the industries have been influenced in some way or the other by e-commerce, nowhere the effect of e-commerce is more apparent in online banking (e Marketer, 2000). The online banking overcomes the traditional banking and its way of queuing up to get the transaction done. Internet banking is no more taking out time from the schedule to go to the bank, it is the easiest and the safest way of banking. An individual can get reports about the account, statement etc. with just click of a button (Online banking question, 2008). Apart from ease of use there are some barriers in online banking. The main issue is that of trust. Customers may wonder if their transaction went through successfully or the clicked the correct button. Also online banking can take some time to start and can be difficult to learn at first for the beginners. Thus, the physical separation of the bank with the customers and that of the customer with the financial advisor, the overall perceived insecurity of the internet provides unique challenge to the bank to develop a safer internet banking (Mukherjee, )

The internet technology are rapidly changing the personal financial services are being delivered. Several banks in India have introduced internet banking to make the banking faster, easier and to reduce the costs. Despite such developments by the banks these facilities are largely unnoticed by the customers.

Online banking is the newest channel for retail banking services. Online banking refers to several types of services in which the customer can carry out most of the services balance reporting, inter-account transfer and bill payment (Sathe, 1999). Europe has been the leader in online banking technology (Schneider, 2001). At the end of 2000 only 20 percent of the United States banks offered online banking ad only 20 percent of the customers with internet connection used online banking. In Europe 75 million users used online banking by 2005.

Most popular Online banking Activities

Most Popular Internet Activities 2005

     Visitor Activities

  1. E-mail
  1. General web surfing/ browsing
  1. Reading news
  1. Shopping/ buying goods online
  1. Entertainment news
  1. Looking for and reading information about hobbies
  1. Online banking
  1. Looking for and reading medical information
  1. Instant messaging
  1. Looking for and reading travel information and making travel arrangements

Table: Most popular internet activities in 2005

Source: U.S.C. Annenberg School Center for Digital Future, 2005 cited in Laudon and Traver, 2007, p.220)

However, one of the major concerns regarding not using the internet has been highlighted by many authors and that issue is security. Chesher and Kaura (1998) points that the most important reason that has kept both consumers and business away from the internet is its security issue. Security is considered as the primary issue than any other issue. Nevertheless, efforts have been made to overcome this issue in the form of software, digital certificate, signed message, encrypted message and so on (Chesher ad Kaura, 1998 M)

As the organisation continue to invest in ICT, the usage behaviour of the consumer becomes very important topic in research on its implementation. To understand the usage behaviour of the consumers we will use technology Acceptance Model (TAM), this is an established model of computer usage and has been validated through testing with a number of technologies.

From the Asian market experience, it is clear that internet banking is here to stay and would be major way to acquire and provide service to the customers. The banks that have launched online banking products and services increased from 6% in 1998 to 75% in 2003. According to IDC, in countries like Korea and Singapore 10% of their population uses internet banking. These markets are way ahead of India both in terms of online banking penetration and internet penetration. India is a big potential market and is fast catching up with its counterpart (Kannaberan, Narayan, 2005).

Despite all the efforts and investment undertaken by the banks, e-banking facilities have been unnoticed by the customers of India. Therefore, customer's perception and trust is of utmost importance. The Indian market has been increasingly attractive for global marketers in the recent years. Although the overall per capita GDP (Gross Domestic Product) is low at $421 (Budhwar, 2001). There are 203 million middle class consumers who are well educated and with salaries more than $5000 in local purchasing power (Ramchandaran, 2000). As a result FDI (Foreign Direct Investment) flow to India increased from $103 million in 1990-91 to $5.1 billion in 2000-01.

1.2 Aims and Objective:

The aim of the study is to determine the importance of trust in relation to the online banking. This will lead to explore a range of issues related to trust, security and how well Indian banks adopted online banking. This research also aims to investigate the internet adoption strategy in established banks.

The research problem chosen of a great importance especially in developing country like India where banking sector witnessed a major revival in the last decade. The research question is important because the entire multinational bank that came to India tried to persuade people to use online banking but still people don't use it because they don't trust online banking. The research will basically deal with customers trust in online banking and factors that affect it. This is one of the major areas where the bank should concentrate and work upon it.

TAM is one of the models that are used widely to explain the factors that affect user acceptance of Information System (Suh, Han). However traditional information system is different from Internet Banking, which uses emerging technology like WWW and internet. With the advancement of WWW and internet, various researches have adjusted TAM to WWW environment to overcome TAM's lack of task forces. Recent studies of user acceptance of WWW have paid attention to perceived playfulness, because WWW is used both for pleasure and play. The studies have verified that perceived playfulness has a significant impact on user acceptance of WWW.

In spite of the recent boom in electronic commerce, customers are reluctant to provide sensitive information to websites. Generally the customers are comfortable in providing general information but they are uncomfortable in providing sensitive information like credit card details, personal details. Internet banking sites are one location where most personal information is carried out, that is, financial information. This inhibits the usage of internet banking by customer. Therefore unlike traditional information system, the perceived usefulness and perceived ease of use may not fully reflect customer's acceptance of internet banking. Research on customer's acceptance of internet banking may therefore enhance the understanding of a customer's belief to use internet banking.

TAM is an established model of computer usage and has been validated through testing with a number of technologies (Davis et al., 1989; Igbaria et al., 1994, Lederer et al., 1998). And it has also been found that TAM's ability to explain attitude towards using an Information System is better than other models like Theory of Reasoned Action, Theory of Planned Behaviour (Mathieson, 1991 (CP)). The studies have proved that TAM explains around 40% of the variance in the usage extension ad behaviour. We will use Technology Acceptance Model (TAM) as a base model for this research, and adjust the model to reflect the characteristic of Internet banking and Trust.

2. Literature Review

2.1 Introduction to ICT

The world is it the midst of general purpose technology revolution. Information and communication technology has developed in the context of rapidly changing business environment. For several years, there have been talks about topics like new global political and economic orders, liberalization of trade, growing environment concerns, deregulations, rapid technological developments especially information and communication technology and terrorists attack and so on. For business perspective only few are driving forces while others are just facilitating or inhibiting factors (Li, 2007 M). Two changes that have contributed to the current transformation are the changing nature of the economy and rapid development and proliferation of the ICT's.

ICT in general and internet in particular are changing the way businesses are done all over the world. The internet is a source of data and information and its value depends on the provider, its relevance timeliness and accuracy (Lany and Powell, 2003 M). The internet has created new communication channel that is bringing people together cheaply, efficiently and presenting many opportunities and challenges for the business community. People around the world are using the internet to service their need and wants and thus the internet is presently the potential for extending markets, developing new products, services and achieving profitability (Combe, 2006). Due to this the worldwide number of internet users has increased from record 16 million in 1995 to 1.5 billion in 2008 (Internet worldwide stats, 2009).

The ICT revolution has already led to some profound changes and many more yet to come. The internet is particularly important as it is acting as a contemporary platform on which many of the new important developments are taking place.

2.2 Internet Banking and India

Internet banking has witnessed wide acceptance internationally and catching up fast in India with more and more banks entering into fray. The British legacy left behind large and small privately held banks. In the late 60's all the private banks were nationalised, which led to the emergence of the public sector banks. In 1960's banks used latest technologies in massive way, led in particularly by new private or Multinational Banks. In the context of online banking private banks have been early adopters whereas public banks are lagging behind.

Reserve Bank of India's survey in 2001 revealed that 46 major banks operating in India, around 50% of them either offered internet banking services or planned to offer in the near future. Only 1% of the internet users utilised internet banking services in 1998, the internet banking user base increased by 16.7% by 2000 (Icmrindia,). Major Banks like ICICI bank, HDFC bank, IDBI, Bank of Punjab etc were offering online banking services. The banks began to collaborate with utility companies to provide online services to the customers. ICICI bank collaborated with 'Infinity', which was already a leader in online banking in India to pay their online bills. HDFC through 'payment gateway' allowed its customers to make online payments. As more banks entered into online banking fray, the competition between the banks deepened. This forced the banks to search for new market, customers and adopt new technology.

Multinational and private banks have been very successful in India in setting up internet banking, this is because they already had automated banking environment. Most of the multinational banks have already have internet banking in other countries that can be copied in India. Unfortunately nationalised banks or public sector banks have been unable to evolve as fast as private banks because in many organisations there may be a mix of both automated and manual system, both the system runs parallel created by the small vendors. This creates chaos and makes network management a nightmare.

ICICI Bank started banking way back in 1996 and other banks soon followed it. During 1995-99 ICICI Bank invested Rupees 50 million in online banking technology solutions. Year 1996 to 1998 marked the adoption phase because of the increased usage of internet in 1999 due to the lower internet service provider charges. The industry estimates the cost of internet banking at Re. 0.10 per transaction whereas the charges of other conventional methods such as ATM at Re. 0.45 per transaction, phone banking at Re. 0.35 per transaction. Thus, this shows that internet banking is more cost effective. State Bank of India (SBI), which is one of the oldest bank of India launched internet banking in July 2001 and it has 18,000 registered customers across 150 branches. Some of the reason why public sector banks are lethargic because there is a lack of zeal and mindset towards adopting new technology , second reason is the highly politicised unions which act as a barrier as they feel that internet banking will expose their low productive levels. The list of the Indian banks includes:

  1. Allahabad Bank
  2. Andra Bank
  3. Axis Bank Ltd.
  4. Bank of Baroda
  5. Bank of India
  6. Bank of Maharashtra
  7. Canara Bank
  8. Central bank of India
  9. City Union Bank Ltd.
  10. Corporation Bank
  11. Dena Bank
  12. Development Credit Bank Ltd.
  13. HDFC bank Ltd.
  14. IDBI Ltd
  15. Indian Bank
  16. Indian Overseas Bank
  17. Indusind Bank Ltd.
  18. Ing Vysya Bank Ltd.
  19. Kotan Mahindra Bank Ltd.
  20. Nainital Bank Ltd.
  21. Oriental Bank of Commerce
  22. Punjab National Bank
  23. Punjab & Sindh Bank
  24. SBI Commercial and International Bank Ltd.
  25. State Bank of Bikaner & Jaipur
  26. State Bank of Hydrabad
  27. State Bank of Indore
  28. State Bank of Mysore
  29. State Bank of Patiala
  30. State Bank of Travancore
  31. Syndicate Bank
  32. Tamilnad Mercantile Bank
  33. The Bank of Rajasthan Ltd.
  34. The Catholic Syrian Bank Ltd.
  35. The Dhanalakshmi Bank Ltd.
  36. The Jammu & Kashmir Bank Ltd.
  37. The Karnataka Bank Ltd.
  38. Karur Vysya Bank Ltd.
  39. The Lakshmi Vilas Bank Ltd.
  40. The Ratnakar Bank Ltd.
  41. The Sangli Bank Ltd.
  42. The South Indian Bank Ltd.
  43. The United Western Bank Ltd.
  44. UCO Bank
  45. Union Bank of India
  46. United Bank Of India
  47. Vijaya Bank
  48. Yes Bank

(Financial Technologies, 2009)

The services offered by the banks on the internet are:

  1. Information Kiosks: In this the bank provides information about various products and services offered by the banks. The bank solves the queries of the customers through emails.
  2. Basic Internet banking: In this the banks allows the customers to open the account and pay bills.
  3. E-Commerce banking: Banks acts as a e-market place and enables the customers to transfer the money from their account, bill payment, sale and purchase of securities etc.

The Wallis report (1997) stated that "consumers will use those financial products and suppliers which offer best value for money and they are educated about it. Hence, in case of adoption of internet banking, it is necessary that bank should make consumers aware about availability of the product and how it adds value to the products. The perceived usefulness and in electronic banking according to Trethowan and silicone (Daniel, 1999) was sales orientation, convenience and low costs. The importance of perceived usefulness has been recognised in the field of internet banking (Gwiting, Ndubisi, 2006; Ericson et al. , 2005; Polatoglu and ekin, 2001). According to them usefulness is probability that technology can improve how user completes a task. However, Gerrard and Cunningham (2003) stated that perceived usefulness depend upon the services offered like checking bank balance, applying for a loan, paying bills, transferring money abroad and obtaining information on mutual funds. The greater the perceived usefulness of electronic banking services, the more electronic banking will be adopted.

Threats to information security and fraud related to electronic transaction have increased at an alarming rate, resulting in reduced trust in transactions online (The Hindu, 2009). In online banking in India not many fraud activities have taken place. But in internet banking one cannot depend heavily on luck. No institution or bank can afford to depend on luck. The institutions have to adopt security procedures to suit the environment, in order to increase the trust ad faith in the user of online banking.

Trust in online banking is new and emerging field of internet in management research. Literatures on online banking are focussed more on general (main). For example Khiaonarong (2000) examined electric payment system and discussed laws supporting electric payment system, risk reduction method. Tan and Teo (2000) explored intentions to use internet banking services through attitude subjective norms and behavioural controls. Daniel (1999) examined online banking issues like culture of innovations, market share and organizational restrictions. Mole (1998) examined behavioural issues pertaining to online banking, such as satisfaction, price sensitivity. Sathye (1999) studied the effect of security, ease of use, awareness and pricing.

Trust has been defined in various ways. Trust is "willingness to rely on an average partner in whom one has confidence" (Moorman et. al ., 1993). Morgan and Hunt (1994) felt trust exists "When one party has confidence in an exchange partner's reliability and integrity". Mc.Knight and Chervany classifies the definition of trust in four types: deposition of trust, institution-based trust, trusting belief and trusting intention. Deposition of trust means the extent to which one displays consistent willingness to be dependent in general in any situation. This is primarily derived from psychology. Institution-based trust means that one believes that conditions conducive to situational success in an endeavour or aspect of one's life are in place. This type of trust is derived from sociology. Trusting belief is one where one beliefs that the other party has one or more characteristic beneficial to oneself. Trusting intention means that one is willing to depend on the other party even though one cannot control that party. Thrusting belief and trusting intention are primarily derived from social psychology.

Husted (1989) states that the trust is a complicated construct because of wide spectrum of approaches that defines it, makes it difficult to define ad operationalise. Trust can be defined in three perspectives Cognitive, economic and social.

A cognitive definition of trust represents an optimistic expectation for an outcome of an event. To be specific it is a confidence I the result of an uncertain event. Zand (1972) defines trust as it is a positive expectation about the outcome, with a lack of control over the actions of others. The transaction-cost theory of trust states that a potential trustor examines the cost and benefits inherent in trusting abother party. The cost of trust is examined because the trustee may ivolve opportunistic or detrimental behaviour to maximise self interest (RBSir). The social perspective states that the trust can arise irrespective of economic consideration. When a number of people share common values, beliefs are known as reference groups. This helps in building trust in the group. Howard (1994) states that the group has a strong influence on individual's beliefs and their valuation of products and services.

The question of trust may be even more important in online banking environment than in offline banking environment. Because building trust is particularly important where there are risk and uncertainty. In the internet environment all the users are spread around the world that access critical files on computers and information via internet. Therefore, internet becomes risky from the view point of security because parties involved in the transaction that is customer and the bank are not at the same place. Customers cannot depend on physical activity, handshakes and body signals because the customer cannot see the teller. Because of this, customer trust is of major factor enhancing the growth of internet banking (Shu, Han). The growth of online e-commerce activity has encouraged a lot of research on user trust in online environment. Researchers in this area have generally used institutional trust developed by Zuker (1986). Institutional trust refers to the development of trust within an economic framework and using third party mechanism such as certification ad regulation to establish trust.

2.3 Dimensions and antecedents of Trust

Now we will discuss about trust and its dimensions, antecedents and consequences.

The dimensions of the trust are:

  1. Reputation
  2. Perceived Risk

Reputation: Reputation is one of the dimensions of trust. Reputation is defined as "Overall quality character as seen or judged by people in general" (Malaga, 2001). When customer's uses online banking they would have banks reputation in mind. Reputation is very important for trust worthiness. The more the reputation of the bank the more it will encourage people to do online transactions. And if the people think that a bank has a poor reputation, then they will be discouraged to use online banking. Reputation arises from a particular brand name, previous interaction, endorsement from trusted third parties (Egger, 2000).

Perceived Risk: Perceived risk is a key dimension of trust. The issue of trust arises as the bank and the customers are physically apart, difficulty in predicting problems, relationships are difficult to maintain and also the cyber laws are not well defined (main). The issue of trust also arises because economic transactions involve risk (main). Experienced online banking users have more information about online banking, thus leading to less risk and more trust in online transactions (Ba, 2001).

The extent to which they trust the electronic system is likely to co-relate with trust when engaging in online banking (lee, Turban, 2001). When customers assess their trust certain issue that arises in their mind are competency of electronic system, network and download speed, reliability, connectivity and availability (Lee and Turban, 2001). The main issue to the customers would be reliability of the network because when customer transfers important financial data over the network there are provision that unauthorised parties ca intercept the transfer of information.

Antecedents of Trust

  1. Shared Value
  2. Communication
  3. Opportunistic Behavior

Shared Value: Extent to which both the partners have common belief about goals, policy and behaviours whether they are wrong or right important or unimportant (main). In online banking environment shared value means extent to which they have common beliefs on ethics, security and privacy.

Ethical value means chances of being given incomplete or wroEthical value means chances of being given incomplete or wrong product information and selling customer's information to the third party. Honesty and Ethics help build trust (Huemer, 1998, main). A number of surveys have found high level of customers concern about privacy in online banking (Ackerman et al., 1999, main). The main concern for customers is privacy violation which means misusing personal information of the customers. Due to technical development and low cost of data transmission, now it had become easier for companies collect data from the customers and sharing it with the third party (Clay and Strauss, 2000).

Security is one of the most important factors in building trust. Customers believe that internet payment channel are not secure and can be intercepted, this reduces customers trust in online banking and discourages them in using it (main). However, recent development in the internet environment has made the customers less concerned about internet security (Swaminathan et al., 1999).

Communication: Communication can be defined as "sharing of formal as well as informal and timely information" (Anderson and Narus, 1990). The variables of the communication are openness, speed of response and quality of information. Trust is build by openness in communication and their relationship with the bank. Geten and Straub (2001) research found that electronic system plays an important role in building trust with the customers. The ability of the site to communicate with the customer in terms of openness, speed of response and quality of information will influence the site to address the need of the customers, who in turn will respond to it. Thus, the higher the degree of communication displayed by the banks site, the greater will be the influence on the customers trust. Ways to increase online communication by the sites include fast response, personalized message and real-time interactions (Geten and Straub, 2001).

Opportunistic Behaviour: Opportunistic behaviour can be defined as "self-interest seeking guile" (Williamson, 1975). The integrity of the online banks and obligations depend on the extent of regulatory control, which is a major determinant of the customers trust in online banking environment (Lee and turban, 2001, main). Customers have low level of trust due to high risk of opportunistic behaviour by online banks and poor developed rules (Clay and Strauss, 2000, main). Online identities can be forged (Ba, 2001, main), sites can be counterfeit (bailey and Bakes, 1997, main). Because of the lack of adequate regulatory control customers believe that their personal information may be used without their consent during or after navigation (Li et al., 2001). Klang (2001) stated that customer's first access banks interest and then judge its integrity. Thus, it can be seen that integrity of the online bank is very important in gaining the trust of the customers.

2.4 Technology Acceptance Model

Organisations invest in Information Systems for many reasons. For example cutting costs, producing more at the same cost, improving quality of services and products (lederer et al., 1998 (CP)). Users attitude towards the acceptance of new Information System plays an important role in successful adoption of the information system (Venkatesh and Davis 1996 (CP)). The more accepting the new information system the user are, the more they are willing to accept changes in their practices (Succi and walter, 1999 (CP)). Thus, the usage of a system can be an indicator of information system success. If the user does not rely on the system their behaviour would become negative for the Information System.

One of the most widely used model for studying Information System acceptance is Technology acceptance Model (TAM) which helps in determining the use of system. The TAM model is an information system that shows how the users accept and use a technology. The model reflects that when a user is give or provided with a new software package, a number of factor will influence their decisions.

They are:

  1. Perceived Usefulness: Fred Davis defines perceived usefulness is the extent to which a person believes that using a particular system would enhance their job performance. Finally perceived usefulness is influenced by ease of use and external variable, which could be training, documentation and user support.
  2. Perceived Ease of Use: Davis defined this as a "the extent to which a person believes that using a particular system would be free from effort (Davis 1989).

According to Technology Acceptance Model (TAM) the two factors are very important in determining computer acceptance. TAM is an adoption of the TRA (Theory of Reasoned Action) which was developed by Ajzen and Fishbein. TAM was developed by Fred Davis (1986, 1989) to explain software adoption based on TRA. Theory of Reasoned Action (TRA) is based on the assumption that consumers behave rationally and they evaluate systematically all the available information. TRA also assumes that people take into account the effect of their actions ad based on this reasoning make decision to whether take action or not (Ajzen and Fishbein, 1980 (CP)). Individuals will use computers if they feel that there would be positive benefits associated with it.

Technology Acceptance Model hypothesises that:

  • The more the perceived usefulness of the technology the more is the adaptation.
  • The more is the ease of use of technology, the more is the adoption.
  • The lower the benefit of the innovation the less is the adoption.

In addition to individual characteristics like age, gender, qualification and previous experience in adopting technology, there are some social factors. They are:

  1. Apprehensiveness: it refers to the anxiety of using a new medium or technology (Rao, ). The adoption of the telephone in early years led to apprehensiveness. A firm would never risk by adopting indigenously developed technology as it involves cost and chances of failure are enormous (Rao, ). For example, bank employees are always worries about computerisation of data.
  2. Intrinsic Motivation: It leads to activities where there is no reward for the work but the activity itself. Intrinsic motivation arises from people need to feel satisfied and competent in dealing with their environment. There is an inner motivation to learn. For example: in case of new recruits, learning for them is an investment.
  3. Compatibility: it is the judgement of the decision makers to evaluate the compatibility of the new technology. The more the new technology is similar to the existing one, the higher is the confidence to learn the new technology.
  4. Social pressure: Social norm have most significant affect on system usage. Norm is the most frequent occurring and observable for the members of a particular society. For certain products, the social message that the product conveys to its users is the only benefit that the adopters receive (Rao, ).
  5. Enhanced Value: Apart from the benefits derived directly, there could be some benefits that are derived indirectly such as generations or enhancement of quality image. Such benefits can create extra value for the user. Therefore, adopting a new technology may not only be from the firms utilisation point of use but also the extra value added with the new technology. The more experience an adopter has, the better will be the understanding of a new technology. This will lead to the appreciation of the added value with the new technology by the user or the adopter.
  6. Technology suppliers' commitment: new technology teds to carry high risk. A good commitment from the supplier can help reduce the level of risk related with it. It can be done through providing adequate information to the user. Resource commitment from the supplier can help the adopter to accept the new technology. In this world when the technology is changing rapidly the buyer is worried about the life of the technology that he is adopting. This problem can be delt by the supplier by promising to upgrade their product or buy back of hardware and change of the software.
  7. Adoption experience: adoption experience is the accumulated knowledge of the user and working relationship with the suppliers. Any previous experience with the technology helps the adopters to collect all the relevant information related to technology. The adopters know the needs and the requirements of the new technology and can understand the support required from the supplier of the technology.

2.5 Some other Information System

Some other Information Systems are:

  • Theory of Reasoned Action: Theory of reasoned Action (TRA) was developed by Martin Fishbein and Icek Ajzen (1975, 1980). Theory of reasoned action consists of three components:
    1. Behaviour intention
    2. Attitude
    3. Subjective norm.
    Behaviour intention is a measure of one's intention to execute a specified behaviour. Attitude is defined as an individual's positive or negative feelings for behaviour (Warshaw, Bagozzi and Davis, 1989). Subjective norm is a person's perception of what people think that the individual should do. Subjective norm is a type of pressure. A person's participation in any behaviour is influenced strongly by people around them. In this theory person's behaviour consists of two factors:
    1. Belief that certain behaviour would lead to some outcome.
    2. An evaluation of the outcome of the behaviour. Thus, if an outcome is beneficial for the individual then he/she tends to participates in the behaviour (Mischigan State University, 2008).
  • Theory of Planned Behaviour: The theory of planned behaviour (TPB) was proposed by Icek Ajzen. Theory of planned behaviour helps us to understand how we can change the behaviour of the people. TPB is an extension of Theory of Reasoned Action of Ajzen and Fishbein (1975, 1980). There are three considerations that guide human behaviour.
    1. Behavioural belief: behavioural belief is an individual's belief about consequences of certain behaviour.
    2. Normative Belief: It is the perception about certain behaviour which is influenced by the judgement of others.
    3. Control Belief: Control beliefs are the belief that facilitate or impede the performance of behaviour.
    Behavioural Beliefs generates favourable or unfavourable attitude towards behaviour, normative belief results in social pressure and control beliefs gives rise to behavioural control. Thus, in combination attitude towards behaviour leads to the formation of behavioural intention. If the attitude is more favourable, the perceived control will be greater and the persons intention to perform the behaviour will be stronger (12 Manage, 2009).
  • Task Technology fit Model: Task technology fit model was developed by Goodhue (1995), Goodhue ad Thompson (1995) at individual level. At group level it was developed by Zigrus and Buckland (1998). TTF model states that a good fit between technology, task and team can lead to better performance (Dennis et al, 2001, Goodhue, 2005, Zigrus and Buckland, 1998). In TTF Goodhue examines three factors: 1. Individual ability 2. Technology characteristic 3. Task requirement. He evaluates the influence of these three factors on performance and user evaluation of information technology system. Goodhue argues that TTF is the extent to technology functions, matches task requirements and individual abilities. Goodhue and Thompson (1995) developed a measure for TTF that consists of eight factors. They are as follows:
    1. Quality
    2. Locatability
    3. Authorization
    4. Compatibility
    5. Ease of use
    6. Production timeliness
    7. System reliability
    8. Relationship with the users.
    Each factor is evaluated between two to ten questions with responses on seven point scale from strongly agree to strongly disagree. However TTF focuses only of fit between user and technology and task and technology. It ignores the interaction between user and task (Mehlan et al, 2006). Goodhue argues that user evaluation is a substitute of TTF and it is appropriate for both mandatory and voluntary user information technology system.

TAM is one of the models that are used widely to explain the factors that affect user acceptance of Information System (Suh, Han). However traditional information system is different from Internet Banking, which uses emerging technology like WWW and internet. With the advancement of WWW and internet, various researches have adjusted TAM to WWW environment to overcome TAM's lack of task forces. Recent studies of user acceptance of WWW have paid attention to perceived playfulness, because WWW is used both for pleasure and play. The studies have verified that perceived playfulness has a significant impact on user acceptance of WWW.

Technology Acceptance Model 2 (TAM2) is the extension of TAM and it includes additional constructs like social influence process (Subjective norm, Voluntariness and Image) and cognitive instrumental process (job relevance, perceived ease of use, output quality). TAM2 reflects three interrelated social forces faced by an individual to adopt or reject a new technology. They are: Subjective norm, Voluntariness and image.

Subjective norm can be defined as "persons perception that most people who are important to him think he should or should not perform the behaviour in question" (Fishbein and Ajzen, 1975, p.32). Subjective Norm is included as a direct determinant of behavioural intention in Theory of Reasoned Action (Fishbein and Ajzen, 1975). The reason for the direct effect of subjective norm is that people may choose behaviour even if they do not agree towards the behaviour or its consequences, but if one or more referent thinks that they should then they are influenced to do so.

Voluntariness and compliance with social influence: mixed findings regarding subjective norm was discovered by Hartwick and Barki (1994). After separating the respondents into mandatory and voluntary usage, they found that the subjective norm had a great effect on mandatory but not on voluntary setting. Casual mechanism is referred as compliance. TAM 2 theorizes that the direct compliance based effect of subjective norm on intention, perceived usefulness and perceived ease of use will occur on mandatory but not on voluntary system usage setting (Venkatesh and Davis, 2000). Voluntariness as a moderating variable defined as "the extent to which potential adopters perceive the adoption decision to be non-madatory (Agarwal and Prasad, 1997, Hartwick and Barki, 1994).

If the users do not accept the information system the organisation will not be benefitted from the information system (Davis, 1993. Davis ad Venkatesh, 1996). The more willing to the information system users are the more willing they are to make changes in their practices and time to start using new information system (Succi and Watler, 1999). Usage of a particular system is an indicator of information system success and acceptance of computer. If the users do not trust the system and its information then their behaviour towards could be negative. Therefore, it is important to find out the reason why people use or do not use the information system. This information will help both the designer and the developers in their work (Mathesion, 1991).

According to Technology Acceptance Model (TAM), the two factors, Perceived usefulness and perceived ease of use are of primary significance for computer acceptance. This is because if a user feels that using a particular information system will enhance his job performance and would require less effort, then only the user will use the information system. In case of online banking and Technology Acceptance Model, Perceived Usefulness is the degree to which individual feels that using online banking will enhance his/her performance and perceived ease of use refers to the degree to which an individual feels that using online banking would be free from effort. Thus online banking involving complex procedures or requires customers to learn new software will discourage people from using online baking. The case to TAM will arise only when people trust online banking and use it, TAM will be not used when people are not using online banking. TAM comes into play or use only when people use online banking. Thus, this shows that trust is the centre to online banking and TAM and it is a basic foundation for the use of online baking and Technology Acceptance Model.

Therefore, we hypothesise that as trust increases the use of online banking also increases.


Stated in formal fashion, my study two five hypothesis.

There is a positive relationship between ease of use and trust.

There is a positive relationship between perceived ease of use and trust.

3. Research Methodology:

3.1 Research Design:

The research design for this study investigates the factors that have an influence on customers' acceptance of internet banking. I present an additional belief, trust and its dimensions to the Technology Acceptance Model to reflect the importance of trust in online banking environment.

Online banking is of great use to the customers. It helps in saving time, cost, it can be used at anytime of the day irrespective of the location. All these benefits enhance the performance of the customers banking activity. A customer will therefore expect these services when he/she uses online banking. Trust is identified by three main antecedents. They are shared value, communication and opportunistic behaviour whereas Technology Acceptance Model is identified by two main characteristics like Perceived ease of use and Perceived usefulness. Verifying the TAM-Trust related hypothesis in the context of Online Banking will help us determine the importance of trust in Online Banking.

Shared value is the extent to which the customers and bank share a common belief about what goal, policies are important or unimportant, right or wrong (Morgan ad Hunt, 1994). Based on the operational definition of Perceived usefulness, I assume that Perceived usefulness will help establish trust or shared value if the customers believe that online banking is useful. (Suh, Han).

H1. Perceived Usefulness has a positive impact on Shared Value of the customer.

Trust id negotiated through openness in communication. Communication has various variables like speed of response, quality of information and openness (Mukherjee and Nath). A customer will trust online banking only when his/her communication with the bank is fast, open and useful. Slow communication and low response rate from the bank will discourage people from trusting the bank. Thus, more the communication will be useful and open to the customer the greater will be the trust between the customer and the bank.

H2. There is a positive relationship between communication and Perceived Usefulness in building trust.

Opportunistic behaviour is conceptualised as regulatory control and information asymmetry. Due to high risk of opportunistic behaviour by online banks and poor developed rules and regulations, customers have low level of trust in online banking (Mukherjee and Nath). Thus, less opportunistic behaviour showed by the bank will increase the level of trust and usefulness from the customer's point of view.

H3. There is a negative relationship between Opportunistic Behaviour and Perceived Usefulness.

Perceived ease of use is the extent to which using of a system would be free from effort (Davis, 1989). If the terms and conditions of the shared value of the bank is easy and free from effort then it will enhance trust and encourage customer to use online banking.

H4. There is a positive relationship between Perceived ease of use and shared value.

The customers trust also depends upon his/her communication with the bank. Communication is directly related to Perceived ease of use. If the communication of the customer with the bank is effort free and comfortable, customers would be encouraged to use online banking. So we hypothesise

H5. There is a positive relationship between communication and Perceived ease of use.

3.2 Research Method

This chapter covers the operational description of the research explaining the methodology strategy used in this study. In order to achieve the research objectives, the most appropriate method to collect the data. Data is collected both by primary and secondary research. The reasons for using these methods and how the overall study was conducted will be explained in this section. The methodology used has some limitations which will be discussed at the end of this chapter.

Research is a systematic study on a particular matter employing facts investigation and data collection (Collins, 1989). Research can also be defined as "a systematic and methodical process of enquiry and investigation with a view of increasing knowledge (Collins and Hussey, 2009). The objectives of the research can be summarized as follows:

  • To provide solution to the problem.
  • To explore and analyse more general issues.
  • To generate new knowledge
  • To explain new phenomenon.

(Collins and Hussey, 2009)

Research is conducted using two main strategies. They are Qualitative and Quantitative. (Bryman and Bell, 2008). Quantitative method is a phenomenon which concentrates on phenomena of measurement. In this the data can be shown in mathematical format or in statistical software by producing different charts and graphs. In simple words quantitative method can be measured.

3.2.1 Choosing Quantitative method

This research mainly used quantitative method because quantitative method can be construed as a research strategy that emphasizes quantification in the collection and analysis of the data and also because:

  • It involves a deductive approach between theory and research in which the accent is placed on the testing of theories.
  • It involves a view a social reality as an external, objective reality.
  • It incorporated the practices and norms of the natural scientific model and of positivism in particular (Bryman and Bell, 2008).

Quantitative Data Analysis

There are two types of quantitative data analysis.

  1. Descriptive analysis
  2. Inferential analysis

Descriptive data analysis is also called as exploratory data analysis. It is concerned with describing data, it is also useful for summarising data and presenting it in tables, charts, graphs and other diagrammatic forms which enables us to comprehend pattern and relationships which are not apparent in raw data. Graphical presentation does not only present data in more compact form but the form that positively aids hypothesis confirmation (Hussey and Hussey, 1997). The four main groups of techniques which can be used are: presenting frequencies, measuring location, measuring dispersion ad measuring change.

Inferential data analysis is also known as confirmatory data analysis. It involves using quantitative data collected from a sample to draw conclusions about a complete population (Hussey and Hussey, 1997). Four groups of inferential statistics which are used while conducting confirmatory data analysis are: estimating form samples, measuring associations, measuring difference, forecasting.


3.2.2 Primary Data

Primary Data Collection:

Primary Data is the information that is collected first hand by the author (William, 2003). The data is original and is used for the first time in the research. There are many methods of collecting Primary data for example interview, questionnaire and observations. This research adopted self-completion questionnaire. It is sometimes referred to as self-administered questionnaire. In self-completion questionnaire the respondents answer the question by completing the questions themselves (Bryman and Bell, 2008). Self-completion questionnaire can be done in several forms. One of the most used methods is mail or postal questionnaire. In this the questionnaire is sent to the respondents through the post, who in turn after filling the questionnaire is asked to return it by post.

In many ways self-completion questionnaire and interview are similar methods of business research. The basic difference between them is that there is no interviewer to ask the question, the respondent must read the questions and answer themselves (Bryman and Bell, 2008). As there are no interviewer to ask the question must be simple and easy to follow.

As compared to interview the self-completion questionnaire should be:

  • The questionnaire should have fewer open questions and more closed questions because they are easier to answer.
  • Questionnaire should have easy-to-follow to reduce the risk that the respondents will fail to answer (Bryman and Bell, 2008).

3.2.3 Why Questionnaire

In this research the author has use questionnaire to collect primary data. Some advantages of self-completion questionnaire over interview are:

  1. It is cheaper to Administer: The cheapness of the self-completion questionnaire is especially advantageous if you have a sample that is geographically widely dispersed (Bryman and Bell, 2008). Interviewing can be expensive. The postal questionnaire will be much cheaper because interviewing involves a lot of time as conducting personal interview is a long process. Thus, the postal questionnaire enjoys cost advantage.
  2. Quicker to administer: questionnaire can be sent out by post or distributed in large numbers at a same time but in interviews conducting personal interview takes a lot of time. Many questionnaires can be sent out by post in one batch. Also, it is very important to note that all the sent questionnaire do no t come back immediately ad they may take several week to be returned. There may be a need to send a follow up letter to those who fail to return the questionnaire.
  3. No variability of the interviewer: Self-completion questionnaire do not suffer from the problem of question being asked in different ways by the interviewer.
  4. Convenience for respondents: Completing a questionnaire is convenient for respondents because they can fill the questionnaire whenever they want and at the speed that they want.

3.3 Sample

Selecting a sample is a fundamental element of a positivist study. A sample is made up of some members of a population. A population may refer to a body of people under consideration for research purpose. (Hussey and Hussey, 1997). A good sample is one in which the result obtained for a sample can be taken as true for the whole population. A sample technique is broadly classified in two categories: probability and no probability sampling technique. In probability sampling technique sample is selected randomly from a sampling framework. In a non probability a sample is drawn based on the personal judgement of the researcher (Malhotra, 2007)

This study has used non probability sampling technique to collect data because of the restriction of time, unavailability of sample framework of online banking users in India. The study conducted online surveys to collect data. For online surveys a snowball sampling technique was to distribute questionnaire online. An initial group of 20 respondents were identified from personal sources. These respondents were asked to suggest people and questionnaire was distributed among them. The final valid respondent sample to the structured questionnaire consisted of 120 internet surfers in India. The respondents chosen were students, professionals, self-employed and housewives.

Reliability and Validity

A research is evaluated using two most prominent criteria namely reliability and validity from a methodological point of view.

Reliability refers to a consistency for a measure of a concept in a piece of research (Finn et al., 2000). Reliability has greater importance in a quantitative research. For example: if you ask the same question to a respondent repeatedly, the answer would be same (Bryman and Bell, 2008). According to Bryman and Bell (2008, p.165) "Validity refers to the issue of whether or not an indicator that is desired to gauge a concept really measures that concept". Validity is the most important criterion of research. It is also concerned with the integrity of the conclusion that are generated from research.

There are different types of validity. There are mentioned below:

  • Measurement Validity: It is also known as Construct Validity. Measurement validity primarily applies to quantitative research and to the search for measures of social scientific concept. It is generally related to whether or not a measure that is desired of a concept really does reflect the concept that it is supposed to be denoting. Measurement validity is very much related to reliability. If a measure of a concept is unstable, fluctuates then it is unreliable. It cannot provide a valid measure of the concept (Bryman and Bell, 2008).
  • Internal Validity: It is concerned with a question of whether a conclusion that incorporates a casual relationship between two or more variable holds water. For example: In our study shared value causes trust, can we be sure that it is only shared value that is responsible for causing trust and nothing else. Thus, Internal Validity raises question: how confident can we be that independent variable is responsible for the change identified in dependent variable.
  • External Validity: External Validity refers to the question of whether the result of a study can be generalised beyond specific research context. How people or organisations are selected to participate in research becomes very crucial in this issue. It is because of External Validity that the quantitative researchers are so keen to generate samples.
  • Ecological Validity: The issue of Ecological Validity relates to the naturalness of research approach and has considerable relevance to quantitative research. The criterion is concerned whether social scientific findings are applicable to peoples every day, natural social setting. Thus, business research may sometime produce findings that are technically valid but little to do with the happenings in the people's everyday life. Furthermore, result deriving from a study using questionnaire the unnaturalness of the fact of having to answer a questionnaire may mean that the findings have limited Ecological Validity, but the questionnaire may have measurement validity and reasonable level of internal validity. (Bryman and Bell, 2008).