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If financial institutions are to successfully integrate new technology into their service delivery platform, it is essential that they should understand the impact of technology based delivery channels on customer perceptions and behaviour. The industry buzz has driven many financial and non-financial institutions in the Netherlands to take a tactical, ‘just try something and get it up and running quickly’ approach to mobile banking and payments over the last decade. The research focused on the theoretical framework explored in chapter 3 discussing various constructs that affect users’ intention to adopt mobile phone banking and payments. The previous chapters have shade light on the major research question of this study which was as follows: what are the factors that could influence the use of mobile phone banking? Various variables such as self-efficacy, perceived cost, perceived risk, perceived usefulness and perceived ease of use have been discussed and compared to the data analysis. The Netherlands shows different trends in adoption of mobile banking and payments, the population has all the requisites to implement mobile financial services but there are a number of hurdles that need to be overcome or taken into consideration by any financial institution wanting to setup such a venture.
5.2.0 Model Variables
The intention to use mobile banking service is affected by a number of variables as discussed earlier. Speed has indirect influence on intention to use mobile banking. Consumers using mobile banking can perform the simple transactions easily and quickly. The variable speed implies that mobile banking and payment users seek a simple, easier and faster performance. Speed was one of the factors that users put on their wish list as a prerequisite for uptake of mobile banking. With advance of the 3G and 4G networks on newer mobile phone models makes speed a reality. Most users preferred to use SMS as it provides a speedier service.
From the data analysis the respondents are not especially concerned with the number of functions provided by a mobile banking and payment functions. The above reason could be that simple functions may be enough for users to meet their mobile banking needs. Most banks in the Netherlands such as Rabobank, ING and ABN AMRO offer basic forms of mobile banking which range from simple transactions to complex tasks.
Mobility access is an important feature of mobile banking and payment. This helps overcome time and space limitations of banking. It was obvious that respondents agreed with the importance of mobility access to mobile banking and payment.
Perceived usefulness is another important variable that affect mobile banking and payments. There are very many alternatives /competitors to mobile banking in the Netherlands for users to choose from. Most users are reluctant to change their banking methods in the Dutch as they see no perceived usefulness in the mobile banking services provided by the financial institutions. One of the respondents views were as follows:
“I’m choosing the bank which is safe and offer more attractive %. And I don’t care about additional services, which are the plus, but not complementary.” [sic]
Perceived cost also has an impact on users’ intention to adopt mobile banking in the Netherlands. Mobile banking cannot compete in terms of lower costs. Consumers keeping funds in cash or in a pre-charged card e.g. Chipknip find it cheaper as compared to mobile banking. Most banks provide this service free for specific services.
There is also the common end-user perception that many mobile payment solutions are fraught with insecurities.
The above table 7 shows variables with negative effect on the adoption of mobile banking and payments in the Netherlands. Perceived cost, credibility, usefulness and risk were found to contribute to slow adoption of mobile banking and payments in the Netherlands. Other factors which come beyond the scope of this study will be discussed in the following sections.
5.3.0 General Issues relating to Mobile Banking and Payment adoption
From the data analysis it can conclusively be deduced that mobile banking and payments in the Netherlands can only succeed when they extend the technology and behaviour consumers have already adopted and when their costs are in line with their benefits. The researcher asked the respondents who have mobile phones but don’t use mobile banking and payment. The main reasons are as follows:
They see no value. There are a number of alternative self-service channels like online banking, ATMs, cards (debit, credit, Chipknip) that allow consumers do most of their banking tasks by themselves already, it is not clear to many of them what additional benefits the mobile channel offers. This can be seen from the comments of one of the respondent as follows: “I’m choosing the bank which is safe and offer more attractive %. And I don’t care about additional services, which are the plus, but not complementary.” [sic]
They do not know about it. When asked whether the respondents’ bank offered mobile banking, 26% said they do not know whether their bank even offers mobile banking services, or that they do not know enough about it. The researcher can conclude that retail banks’ mobile banking and payment marketing efforts in the Netherlands have been less effective.
They don’t think it is safe. 51% of the respondents agree that mobile banking and payments is risky. Risk could have a considerable effect on the adoption of mobile banking and payment. Most of the respondents still consider the plastic cards as the convenient method of settling their bills as they have never encountered any problems with them. Since there is low awareness and the fact that mobile banking is still in its early stage acceptance among the consumers has been very low.
They think it is expensive. Confusion about the cost of mobile banking and payment is also another hurdle affecting its adoption. Each provider of mobile financial services comes up with their own cost structure. The researcher believes most consumers are not clear about what their bank will charge them or other financial institutions. It could be argued that price has certainly been an obstacle for mobile financial services to become a mass market application in The Netherlands. The reason given is that because it is quite expensive compared to other banking and payment methods, currently it is not adding any value for the customer.
Users are young: according to the respondents, mobile banking adoption is highest among ages 21-35 year olds; these are young consumers, using their phones more for texting than talking. They are referred to as general Y. Many of them mobile banking is becoming a key criterion for where they choose to bank. Most of them said they conceived to switch banks if their bank does not offer mobile banking services. This generation Y is often described as the Mobile Generation because of their obsession with all things mobile and digital, and they are likely to embrace mobile banking and payment in large and ever growing numbers. It can be deduced from the data analysis that younger generations are now beginning to use banking services and traditional banking rules and behaviour may no longer apply.
Cash, the first mover advantage: although the Netherlands has the highest debit card penetration in Europe, cash is still the preferred payment method of choice for almost all low-value transactions. There has been a push for more debit card transaction leading to the decrease in cash transactions. Various electronic purse initiatives have been pursued leading to one ‘standard’ electronic chip-based purse called Chipknip. Its usage however is relegated to specific use cases e.g. parking machines, coffee machines and has not had a wide uptake in traditional retail environments, where it was intended to decrease the number of cash transactions for smaller ticket items.
5.3.1 Create awareness of useful applications among young consumers
Mobile banking and payment still faces considerable hurdles in Europe, including consumers’ diverse mix of handsets and low adoption of mobile Internet services in general. But many financial institutions are shooting themselves in the foot by developing costly mobile banking services, only to launch them without a clear strategy, and then failing to promote them adequately. Remarkably, only a few banks like Rabobank, ING, ABN AMRO even mention mobile banking on their retail banking home pages. Banks and other financial institutions who want to encourage wider mobile banking adoption need to do the following:
Firstly, broaden awareness
Potential mobile banking users are confused about the benefits, the offer, the cost, the security, and the technology. More marketing needs to be emphasized before and after launching of these new innovations. One way which is easy and inexpensive vehicle for this is the financial institution’s own Web site and within the online banking application. They should lay out relevant usage scenarios and use rich media like online video to educate potential users about scenarios where mobile banking and payment adds value. This could be very relevant in enabling the users be well informed about the new offerings and objectively weigh the perceived value over other channels.
Secondly, targeted at the young technology-savvy online bankers
The study has clearly shown that the mobile banking and payment is most popular among the young generation. As already indicated, most of them said they conceived to switch banks if their bank does not offer mobile banking services. This generation Y is often described as the Mobile Generation because of their obsession with all things mobile and digital, and they are likely to embrace mobile banking and payment in large and ever growing numbers. The typical early adopters according to this research are young males with above-average incomes who use the Internet daily. European banks and other financial institutions should think along these lines.
Thirdly, focusing on simple applications with timely and location-relevant benefits
What applications should banks and other financial institutions stress? Forrester research (2009), has long argued that to create compelling value for customers, companies should deliver mobile content that is timely, location-aware, and actionable. The first mobile banking services people in the Netherlands have adopted are simple and timely mobile services like balance checks and SMS alerts. It is important that mobile financial providers focus on simple transactions such as SMS about ATM locations, ticketing, parking, vending machines, customized video application (pay per view) among others.
As discussed in Chapter 2, the literature review, the Netherlands are a typical “giro” country that heavily relies on the use of credit transfers and direct debits in retail banking and payments. It can also be reiterated that existing banking and payment methods (e.g., cash, cards) already meets consumer needs. In order to persuade consumers to change their behaviours the offerings will need to have some essential benefits over currently available alternatives: more convenient, cheaper, quick, secure and efficient. In Europe and specifically the Netherlands, there is a strong interest by key stakeholders in making mobile banking and payment successful. Exploring the factors influencing the use and adoption of mobile banking and payments is quite important for the key stakeholders who might need to improve and validate their services in order to satisfy more customers and eventually make profits.
The research adopted TAM in the Netherlands context to investigate the research questions and achieve the objectives. It can be concluded that the research constructs of perceived ease of use, perceived usefulness, perceived risk, convenience, speed, cost and self-efficacy were successfully used to explain the variance in the intention to use mobile banking and payments in the Netherlands. In order to attract mass market banks and service providers should improve the quality of these services. To take advantage of consumer willingness to use new mobile banking and payment mechanisms, the banks and financial institutions of devices enabled for mobile payment at the physical POS must be able to support mobile transactions that are convenient and easy to use to compete with plastic cards. The Dutch consumers are aware that they have alternatives and they are also more sensitive to security and privacy issues. Mobile banking and payment scenarios can enhance security and privacy. However, if consumers perceive that mobile banking and payment potentially involves loss of privacy, they will not accept it.
The study has revealed that there is no compelling value attached to mobile banking and payments in the Netherlands to warrant mass market adoption. Amid the excitement and hype surrounding mobile financial services in the Netherlands, the question remains as to how these offerings will achieve mass market, especially in light of the fact that most of the Dutch find their current banking and payment options quite satisfactory. A number of factors have been pointed out from data analysis that hinder mass market adoption of mobile baking and payments in the Netherlands such as cost, low perceived value, density of banks, security and privacy issues, credibility, lack of cooperation among the stakeholders and the general Dutch banking and payment culture. Most of the Dutch are currently comfortable with their current offerings.
In order to persuade customers to change their behaviour in the Netherlands – which is always a difficult proposition – and embrace mobile banking and payments, the offerings will need to have some essential benefits over the currently available alternatives. There are a number of new niches that financial providers should consider and which are experiencing positive response such as ticketing, vending machines, transport, loyalty programs, coupons, and ringtones among others. There is a huge potential in the Netherlands which has not been tapped, there are all ingredients for successful deployment of mobile banking and payment such as high penetration of mobile phones, high literacy levels, good infrastructure and high speed Internet connectivity all when combined with positive consumer attitude can easily turn a mobile financial service into a mass market. In order to determine whether a new offering represents a market opportunity, financial institutions should consider projected market size, the maturity and complexity of the offering, and the number of stakeholder relationships that the institutions will be required to manage, this has always been one of the hurdles in successful implementation of mobile financial services.
Mobile banking and payment, as has been demonstrated in this study, has gained non-negligible relevance for banks and other financial institutions today. For example, developments in the banking sector, e.g. increased competition on account of technological developments coupled with the process of globalisation have produced new challenges for banks. Mobile Banking therefore, presents an opportunity for banks to retain their existing, technology-savvy customer base by offering value-added and innovative services which might even help attracting new customers.
5.6.0 Research Limitations
This study was conducted to find the factors influencing intentions to adopt mobile banking services in the Netherlands. As such, there is still room for further investigation into the adoption of mobile banking services especially focusing on other aspects apart from the consumers.
There are some limitations associated with this study. The main focus of the research model cannot conclusively explain whether there is a market for mobile banking and payments in the Netherlands. The variables self-efficacy, perceived cost, perceived risk, perceived usefulness and perceived ease of use only focuses on the consumer but in reality there are many stakeholders in the market who also need to be investigated such as the government regulations, interoperability, competition, infrastructure and technology among other factors.
Another limitation could be the type of respondents utilized in the research. In as much as the study utilized questionnaire, most of the respondents were from Maastricht which might not be a representative of the mobile banking and payments consumer population in the whole Netherlands. The researcher had limited time and resources to explore the general Netherlands population. It can also be stated that the researcher was also biased to the student community in Maastricht as they were more likely to use and adopt mobile banking and payment. The participants were randomly selected which helped reduce bias towards the research outcome thereby increasing the credibility of the feedback.
5.7.0 Future Research
It will be interesting to investigate the kind of result similar studies would produce in other Western European nations in modelling users’ attitude towards mobile banking and payments. Since the introduction of the European Union and Euro currency it could be interesting to investigate what factors could be hindering the uptake of mobile banking and payment in other Euro member countries. Mobility and one currency could be a key reason to undertake similar studies in the European Union for mass market adoption.
A further study could also be carried out to investigate the role of other stakeholders such as merchants, government, banks and mobile operators among others in influencing the adoption of mobile banking services among the consumers. The role of government is considered as one of the most important contributing factors to the slow uptake of mobile financial services. Further research is required here.
Since Mobile banking and payment is still relatively new in the Netherlands, more research needs to be carried out to measure the actual adoption rate of mobile banking and payments. Consumer behaviours and technology are not static; they keep on evolving hence more research need to be carried out to establish the adoption trends over time which can be used to predict the future that will be useful especially for potential investors.
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