Ph.D Proposal -Factors influencing adoption & continual usage of e-banking by Corporate Customers in Sri Lanka

Chapter 1 - Introduction

1.1        Introduction to the study

The rapid development of information technology and telecommunication has revolutionized the world business industry. New market places are been created and the traditional industry boundaries are redefined. The world-class business organization started focusing on new dimensions of distribution channels to sell their goods and services to consumers. With the introduction of new concepts such as e-market place, e-business and e-cash, the traditional financial systems had become inefficient and ineffective to cater new customer demands. The e-commerce had given opportunity to develop unique one to one relationship between service providers and clients. Although bank branches and physical distribution channel was the cornerstones to make most banks market to success, the role of global banking industry has become turbulent and competitive. In order to survive in the electronic era banks had to diversify its service distribution channel. The banks had deviated from its brick and mortar business model to click and mortar business strategy that emphasized an online supplement to the conventional banking services.

This new concept is known as electronic banking. The electronic banking can be defined as transacting banking business using automated process and providing banking services via electronic devices such as personal computers, telephones, fax machines, Internet, card payments and other electronic channels. This new service distribution channel has helped banks to enhance its service to new customer segments. Further this new business strategy has helped banks to achieve competitive advantage over traditional banking service providers. The electronic banking had been introduced to the world in early 70’s. It is widely used banking service distribution channel in developed countries such as USA and UK. In year 2003 Bradely et al has predicted that nearly every bank will have online services available in year 2011. Moreover it had found out that the small banks have become more benefited from emergence of the Internet. Electronic baking especially Internet banking had changed the structure and amount of investment to develop banking systems in the world. Several studies had found out that online bankers are the most wealthiest and profitable segment to banks in the world.

The introduction of new technology and Internet had created new markets and new opportunities for banking sector. Most of the time all banks are providing same electronic banking services to cope with competition. In year 2000 Jayawardhena and Folly had defined banking service sector interaction with forces with rapid development of technology.  

   

Bank Service Sector Interaction with Forces

(Source: Karjaluoto Electronic Banking in Finland)

As shown in diagram above Jayawardhena and Folly had identified internal forces in to three classes. That is new entrants to banking industry, increase of consumer power with online banking services and volatile supply forces. The introduction of Internet had eased barriers enter in to banking industry of any country. Consumer power had been increased as electronic services had eliminated consumer switching barriers. People do not have to depend on a bank branch that is closest to them. Therefore retention of customer base and attracting new customers plays vital role bank’s success in Internet era.

The role of banks in information era had been expressed by vice president of City Bank, North America as follows.

“If you sell me nuts or I sell you bolts, someone has to complete that transaction. That is what banks do. They facilitate commerce. They help people buy, sell, trade and exchange value. The thing that we need to add to strengthen our relationship in the commercial space, is information, and banks must develop a set of value added systems that make the transactions occur in the context of information”.

This statement compounds whole idea of introducing information technology in banking sector.

With the growth of international trade and open economy policies, foreign banks had entered in to local banking industry. Further several domestic private banks started providing banking services to consumers while breaking down monopoly hold by state own commercial banks for decades. The banking industry in Sri Lanka has become more complex and competitive. To achieve competitive advantage in this turbulent business environment the private banks had introduced to electronic banking to Sri Lankan consumers. This had been introduced to Sri Lanka in late 1980s by launching automatic tell machines (ATM). Then telephone banking, commonly known as “telebanking” had introduced to the Sri Lankan consumers. In late 1990's with more sophisticated telecommunication infrastructure Sri Lankan banks has enhanced its electronic banking services by introducing the Internet banking. The Internet banking helps banks to cater new customer base via Internet.  

The increase use of electronic banking and commerce helps to establish an efficient world standard financial infrastructure in Sri Lanka while developing the financial and commercial sector. Electronic transactions, electronic billing and electronic payments are the main components of electronic banking and commerce.

The business community plays a vital role in countries economy. As a developing country whose economy mainly based on traditional exports, garments and other services it is very important to attract more foreign investors to Sri Lanka by providing more cost effective convenient sophisticated banking facilities. Therefore it is important that local business owners to be using cutting edge banking mechanisms when dealing with foreign investors. The corporate customer interaction has become more complex and intensive in electronic age as they involved in relationships between banks and business organizations. This consumer segment provides greatest profit opportunities to the bank.

Now the Internet has been treated as one of main fund transferring channel in international trade. The goods and services are exchanged with the use of electronic money or e-cash. It has been identified that the Internet banking can be used to improve corporate business process by elimination of paper work.

1.2. Problem Statement

Factors influencing adoption and continual usage of e-banking by corporate customers in Sri Lanka.

1.3        Problem Justification

Today all most all Sri Lankan banks had started providing banking services electronically. Although the banks had invested heavily on electronic distribution channel and it has been introduced some time back it seems be not very popular among Sri Lankan consumers especially among corporate customers. The corporate customer acts as the backbone of any bank. They are the main revenue source of the banks. Therefore it is very important banks to listen to its corporate customers needs and wants to retain the banks corporate customer base. In addition the infrastructure supports, has not reached to the rural industries. The Sri Lankan industries can improve its business opportunities with the aid of electronic banking especially by using the Internet banking for their day to day business activities. Further it has been identified that the Internet banking can be used for business development in rural areas. It helps rural business owners to attend day-to-day business related banking activities more easily. 

Hence most Sri Lankan consumers, especially corporate consumers treat the electronic banking as another banking service distribution channel. Moreover they are more preferring traditional branch banking. Only very few multinational companies and local companies use this facility more effectively. Therefore it is important identify the influential factors for adaptation of electronic banking among corporate customers. Further it is essential to find out whether these
e-banking services are used as intented by the service providers, what are the barriers that stop corporate customers from using electronic banking especially Internet banking, how the banks can improved its electronic banking services and how banks should develop their future promotional strategies to attract consumers for e-banking.

There were numerous studies are being carried out to investigate the retail consumer behavior towards adaptation of e-banking. However only very few literatures were published corporate customer behavior towards adaptation e-banking, around the world. There had been very less research work done about perception of corporate customers towards electronic banking in context of developing courtiers in dynamic Asian region. In Asian countries the information technology resources are somewhat less developed compared to western countries and role of personal relationships are stronger. Therefore the aim of this research is to study the influential factors among corporate customers towards adaptation and continual usage of electronic banking in Sri Lanka.   

Considering features offered by electronic channel, telebanking and Internet banking are more useful to business consumers for their business related activities. Therefore in this research influential factors for adaptation and continual usage of telebanking and Internet banking among corporate customers are analyzed.

Benefits of e-banking for corporate customers

As mentioned electronic banking especially Internet banking was introduced to Sri Lanka mainly focusing on corporate customer segment. The e-banking has reduced cost in accessing and using banking services. Because corporate customers do not have to visit to bank and wait in long queues for ages just to check the account balance or to get a cheque book.

The electronic banking permit quicker continues access to banking services. When doing fund transfer in branch banking user may have to retrieve money by waiting on queue and gain he may to wait in another queue to deposit money.  Can access the account information from anywhere in the world. 

Increase comfort and time saving as the transactions can be made 24 hours per day with physically interacting with the bank.

Better administration of funds as the history of the transaction is maintained electronically and can be analyzed before transaction initiated.

Therefore corporate customers can have more visibility about cash and that enables more informed decision making. It enables to optimize return on business surpluses.

According to present situation it is unwise to transport cash by hand. The use of e-banking services enhances level of security and control. Further payroll plays an important role in any business. Confidentiality of payroll is very important for company success especially in private companies where employees are not allowed to publish about their salary information. With the aid of e-banking business owners can maintain high level confidentiality about sensitive payroll disbursements.  The business owners can set access levels and customize the e-banking services based on their requirements.     

Electronic banking channel facilitates large variety of cash management instruments. Therefore it increases the efficiency of business process and cash management. 

Moreover customer can customized the e-banking services especially in Internet banking.

Concerns on Electronic Banking

Security of electronic transactions is the paramount concern most of customers as it involves financial information. The banks that offer electronic banking services in Sri Lanka are now using sophisticated encryption technologies to ensure customer privacy. Security is one of the barriers that discourage successful implementation of electronic transactions over the Internet.

Another main concern faced by consumers is that he/ she had to provide many personal information before accessing electronic services. This affects consumer privacy.

Another main concern of electronic banking is legal support issues. Still Sri Lankan law for electronic transaction is in primary stage. It’s not very clear who should be liable for transaction loss happened due hardware or software failure.

Readiness of infrastructure plays a vital role in success of electronic banking. Although the infrastructure is ready the critical question would be are there are large potential customer base to ensure critical mass for economic viability to provide e-banking services. If the critical mass criteria is not full filled, banks may not be able gain profits as expected. 

Another problem face by bank is retention of electronic banking customers. Most of the time lots of consumers are register with e-banking services. Hence after sometime they discontinue using it.

Although e-banking enhances banks revenue it weights high initial set up costs. Therefore in short term, banks have to negate benefit gained from low transaction cost. The main objective of any business organization is that shareholder wealth maximization. Other main concern is use of electronic banking does not reduce banking risk.     

1.4        Research Objectives

The aim of this research is to enrich the knowledge and understanding of influential factors for adaptation and continual usage of electronic banking among corporate customers in Sri Lanka. As stated in previous chapter there had been no research carried out to analyse the corporate customer behavior patterns towards electronic banking in Sri Lanka.

 Main objectives of this study are

·         Aim of this research is to identify significant factors that influence the usage of electronic banking services among corporate consumers based on technological acceptance model and other models identified in various studies conducted across the world. 

·         To investigate whether Sri Lankan corporate customers are satisfied with present electronic banking facilities. How banks can improve electronic banking services to attract more customers to obtain maximum return on investment.

·         To identify obstacles that prohibits Sri Lankan corporate users adopting electronic banking services especially telebanking and Internet banking for fair growth of electronic banking as an alternative to traditional banking services in Sri Lanka.

1.5        Significance of the study

Once Aman Metha, Chief Executive Officer of the Hong Kong and Shanghai Banking Corporation Limited (HSBC) stated that the major challenges to be faced by Asian banks are ‘5Cs’, namely Costs, Change, Culture, Credibility, and Conceit. Therefore success of electronic service distribution channel plays vital role for survival of Sri Lankan banks in highly competitive industry environment.

As Davis stated in year 1989 “Computer systems cannot improve organizational performance if they aren’t used properly”. Same theory applies to electronic banking systems. More the customers use electronic banking systems the more that contributes to improve banking services and also improve business organization performance in context of business banking consumers.

Some Sri Lankan commercial banks now charge fees for over the counter cash withdrawals in order to make electronic banking services popular among consumers. As mentioned corporate consumers are the main revenue makers for the banks. Therefore it is very important identify the influential factors that determines corporate consumer adaptation and continual usage of electronic banking. Hence it is the purpose of this study.

1.6 Scope of the study

As mentioned the study will be mainly focused on adaptation of electronic banking among corporate customers in light of Technology Acceptance Model. Therefore electronic banking acceptance among corporate customers will be studied considering corporate customers is been using banks information systems directly via electronic distribution channel. Hence more knowledge on acceptance was needed to identify the influential factors. Therefore a new model was derived considering the findings of studies conducted to find out corporate customer acceptance of electronic banking across the world. Considering the applicability of extended Technology Acceptance Model for corporate customer adaptation the research model was derived while including other identified variables from research papers published in other countries in similar context.  

Chapter 2 - Literature Review

User Acceptance of Technology

User acceptance of technology has been studied for many years by different researchers in different countries. In electronic era many organizations expect their customers, supplier, employees and stake holders to use technology in day to day operations. Several models have been derived to analyse user acceptance or rejection of technology predicting different aspects. Hence most of these theories are mainly based on pioneering findings made decades ago. Theory of Reasoned Action (TRA), Theory of Planned Behavior (TPB) and Technology Acceptance Model (TAM) are the widely used theories to model user adaptation of technology. TRA and TBA are used mostly used for psychological studies. TAM and TPB models are derived considering TRA. 

2.1 Technology Acceptance Model (TAM)

The organizations had heavily invested in information systems to achieve cost cutting, increase units of output by same input quantity and to improve service quality. Hence successfulness of these investments strongly depends on user acceptance and adaptation of it. It had been identified that user attitude towards information system and acceptance has critical impact on successful information system adaptation.

Technology Acceptance Model (TAM) is one of the most utilized models in studying user acceptance of information technology. It was proposed by Davis in year 1989. TAM is an alteration of theory of reasoned action that specifically tailored to model user acceptance of information technology. TAM states that system use is determined by perceived usefulness (PU), perceived ease of use (PEOU) and these two factors relate to user attitude towards using or not using an information system.

Figure 2.1 describes the original Technology Acceptance Model proposed in Davis. PU was defined as the degree which a person believes that use of particular technology will enhance his or her job performance. People will tend to use or not to use particular information system based on their belief of usefulness towards it. The word useful is defined as “capable of being used advantageously”. When considering an organization context people are encouraged for good performance by giving raise of salary, bonus and promotions. Similarly a system perceived high in usefulness is one that believes in the existence of high user performance relationship. 

Figure 2.1 – Original Technology Acceptance Model

PEOU was defined as “the degree to which a person believes that using a particular system would be free form effort”. As shown in figure 2.1 attitudes towards (AT) using a particular information system is strongly depend on PU and PEOU. Behavioral intention (BI) is strongly influenced by PU & AT. The AT and BI were derived considering theory of reasoned action (TRA). When all other parameters are equal an information system that is perceived to be easy to use than other is more likely to be accepted by users. TAM had been well established as a robust, powerful and parsimonious model for predicting user acceptance. 

Original TAM was revised in year 1996 by Davis and Vankethash. It was empirically validated and proved that intention to use is only partially mediated by attitude.  Figure 2.2 below describes the revised TAM model. 

            Figure 2.2 – Revised Technology Acceptance Model

Drawbacks of Technology Acceptance Model

As shown above figure 2.1 and 2.2 any social variables were not included in TAM. The model originator Davis argued that social norms are not independent of outcomes. For an example an individual may pressurized to use particular system by his or her supervisor. Not using of it may be implied as poor performance evaluation. Therefore social norms have been taken in to account in to some extent. But it was not properly described in the model. However in Theory for Planned Behavior (TPB) consist of social variables that capture unique variance of intention. There could be social effects that do not directly linked to job related outcomes such as usefulness. The organizations may use information systems to show their users and coworkers that they are technologically sophisticated.

In TAM, PEOU is the only variable that refers to behavioral control, resources and necessary skills needed to use an information system. According to Davis PEOU is match between respondent’s capabilities and skills required by the information system. However external factors such as time, corporation from others, not having necessary resources to use an information system may affect user decision on accepting an information system. These parameters are not considered in TAM clearly. In 1987 Hill had found that general efficacy measure predicted intentions use of technologically advanced products. But some control variables were idiosyncratic to particular circumstances such as cell pone is essential to a sales representative but it is not that important to other people in other situations. Therefore it can be seen that TAM was not designed to identify idiosyncratic barriers in adapting information systems. But these issues will only be applicable for some special cases only. TAM is the most generalized model to predict user acceptance for information system for adaptation and continual usage.

Information system researches had been using TAM to study possible user behavior towards various information systems such as micro computer usage, telemedicine usage. It had proved the validity of TAM. However there were very few studies conducted to identify external factors that affect PU and PEOU. In year 1996 Davis and Venkathesh had identified that general computer efficacy significantly affects PEOU all the time. Further they had identified objective usability affects user perception with user direct experience with information system. Moreover it had identified that TAM usually explains forty percent of variance intention to use and usage behavior.

2.2 Technology Acceptance Model 2

The TAM was further extended and tested by Davis and Vankethash in year 2000. This model is known as TAM2. Figure 2.3 describes the TAM2 model proposed in year 2000. 

    

Figure 2.3 – Technology Acceptance Model 2

As shown in diagram above in this model perceived usefulness and usage were explained in terms of social influence process and cognitive instrumental process. Social influence process denotes subjective norms, voluntaries and image where as cognitive instrumental process defines job relevance, output quality result demonsratability and PEOU. Voluntaries is the context in which user will accept a particular technology. The image is defined as the degree to which accepting new technology is perceived to enhance user social system. For an example usage electronic banking will enhance organization image.

 This model had been tested based on data collected in four different organizations that spanned range of industries, organizational context, functional areas and types of system being used. It had been proved that user acceptance of particular system influenced by social influence process and cognitive instrumental process. Further it had identified that subjective norms positively influence image because if important person from user’s work group believes that he or she should perform behavior to accept new technology it will affect user’s decision on accepting technology.  

TAM was specifically designed to tailor acceptance of computer based technologies. Hence O’Cass and Fenuch 2003 suggested that TAM can be successfully utilized to help understand and explain information system technology acceptance situations in marketing context with necessary adjustments as TAM has parsimonious and robust structure. Addition of new external variables will improve TAM predictive power.

2.3 Technology Acceptance Model for electronic banking adaptation

A very few researches had used TAM to study acceptance of electronic banking. Hence Lai et. al 2001 had proved that TAM is well suitable instrument to evaluate Internet banking acceptance by conducting an invariance analysis. He concluded that suitability of the model is independent of respondent characteristics such as gender, age and information technology competence.       

Year 2001 Chan Siu Cheuge had reconstructed TAM2 to analyse adaptation and continual usage behavior of Hong Kong retail bank users towards Internet banking. The model was tested with Hong Kong university students. In his model he had not included variables such as job relevance and output quality as those variables were considered to be not relevant for Hong Kong banking context. The model was based on Theory of Planned Behavior (Ajzen,1985), TAM2 and social cognitive theory. Perceived risk had been considered as one of the determinants for construct perceived usefulness of Internet banking. He stressed that TAM must be extended to apply beyond organization limit. He had suggested that a similar kind of study must be used to analyse corporate customer behavior towards Internet banking. Subjective norm, image, result demonstrability, perceived risk, computer self efficacy, perceived ease of use and perceived usefulness of Internet banking were the significant factors for adaptation of Internet banking in Hong Kong retail banking consumers. Hence perceived usefulness had very strong relationship continual usage of Internet banking.

In year 2002 Bomil Suh and Ingoo Han enhanced TAM with trust variable to analyse influential factors for customer acceptance for Internet banking in Korea. They had successfully tested the new model with customers of five major banks in Korea via a web based survey. They had concluded that PU, PEOU and trust plays a vital role in acceptance of Internet banking by consumers. However in year 2003 Sundarraj et. al had stated that with trust construct in above proposed model would explain only 3% of variance in usage.  

Karjaluto had proposed a model in year 2002 based on TMA and TRA. This model has been emphatically tested with Finnish retail bank customers. They have concluded that prior computer experience, prior technology experience, personal banking experience, reference groups and computer attitude strongly affect attitude and behavior towards online banking among retail online banking users. Further they had found that referent had negative impact on online banking usage. It had been identified that more the users are familiar with Internet banking less they rely on social contacts with banking staff. This study had stressed out the importance of interactive online banking services. In year 2003 Sundarraj et. al had deconstructed TAM to measure importance of  ease of use and usefulness in online and telephone banking. The model had been successfully validated with Canadian university students. More over it had found out that Internet banking is more popular among users than telephone banking in Canada. Further this study had empirically validated that TAM can be applicable to analyse user acceptance of for banking technologies.

Sherif Kamel and Ahamed Hassan had assessed adaptation of electronic banking in Egypt using TAM. They had extended TAM with external variable trust. Their research was aimed to identify influential factors for adaptation of electronic banking while measuring salient beliefs and intentions of banking customers. The research sample was consisted of randomly selected professionals from different age groups. It had been found out that there is no significant relationship between trust and perceived usefulness of ATMs. However for use of credit cards they had found out that trust and perceived usefulness plays an important role in adoption among retail consumers. Further it had been found out that usage of telebanking and Internet banking was very low. Hence perceived usefulness and perceived ease of use had identified to play relative role while trust is the most significant variable that affects the adaptation telebanking and Internet banking among Egyptian consumers. The researches had validated that TAM is a very useful model to analyse customer acceptance of electronic banking delivery channels and identifying related aspects affect behavior of different users with respect to different technologies.   

In year 2003 Yi-Shun Wang, Yu-Min Wang, Hsin-Hui Lin and Tzung-I Tang of Taiwan had enhanced TAM to understand user acceptance towards Internet banking. They had enhanced TAM with introducing new external variables such as perceived credibility and self efficacy. The model had tested with cross section of Taiwan adult population who were completed high school education. They found out that perceived credibility had strong influence towards behavior intention towards Internet banking than perceived usefulness. They had successfully validated the relationship between self efficacy and PU, PEOU and perceived credibility towards Internet banking [26]. They had concluded that PU, PEOU and perceived credibility have significant influence on user acceptance on Internet banking. Eriksson et al had derived same conclusion in year 2004 by anlaysing meaning of trust in Estonian private customers towards Internet banking. It had been found out that trust have significant positive impact on PU and PEOU.     

Further Pin Luarn and Hsin-Hui Lin had combined TAM and Theory of planned behavior (TPB) to identify factors determining user acceptance of mobile banking in Taiwan. In this study TAM had been extended by adding one trust based constructs (“perceived credibility”) and two resource based constructs (“perceived financial cost” and  “perceived self efficacy”). This model was tested with 180 Taiwan banking users who had attended to ecommerce exposition and symposium. Hence it had been found that the model proposed had high predictive ability in determining behavioral intentions to use an information system.   Hence TAM had been successfully evaluated for its use to identify influential factors for mobile banking acceptance. 

Walfried M Lassar, Chris Manolis and Sharon S. Lassar had analysed consumer behavior towards electronic banking acceptance using TAM and adoption innovation framework in year 2004. They evaluated TAM in context of understanding consumer based phenomenon.  They had tested online banking adaptation in context of consumer innovativeness, Internet/technology self efficacy and experience, type of connection used and demographic characteristics. Their model had been tested with undergraduate students of western United States. They had concluded that level of consumer Internet related innovativeness had positive relationship with adapting and utilizing e-banking products and procedures. However general consumer innovativeness measure had significantly negative effect on online banking. Moreover they have found that income level had positive affect on use and adaptation of online banking. Further they had concluded that intensity of Internet use has significant influence on usage of Internet banking.

In year 2004 Pikkarainen had again evaluated TAM by investigating online banking acceptance among retail consumers in Finland. He had enhanced TAM by introducing new variables such as perceived enjoyment, amount of information in online banking, quality of Internet connection and security and privacy issues. The study had resulted that perceived usefulness (PU) and information on online banking site have significant impact on acceptance of online banking among consumers. Moreover results indicated that there is weak relationship between security issues and acceptance of online banking in Finland. It had contradicted results obtained for security and privacy issues previously.

Most of the above mentioned TAM related studies had verified that TAM can be applied to investigate influential factors for user adaptation of electronic banking. Most of these studies had extended original TAM proposed by Davis in 1996. These studies had concluded that perceived usefulness (PU), perceived ease of use (PEOU) and perceived credibility are the most significant factors that influence usage of electronic banking.     

2.4 Electronic banking adaptation and corporate customers

Although there were numerous studies been carried out to investigate influential factors for retail consumers, very few studies had been focused corporate customer behavior. In most of above mentioned researches it had been proposed to extend model to analyse influential factors for corporate customer adaptation. 

As mentioned during their research on ecommerce readiness of Sri Lankan SMEs they had identified SME’s use Internet banking because it is economical, best available facility, reliability and advance technology over other banks and user friendliness. During the survey of the Internet and Internet banking usage security concerns and non availability of cash were identified as main influential factors affects adaptation of Internet banking in Sri Lanka. This was the only survey that had considered about electronic banking usage of corporate customers in Sri Lanka

Impact of trust in adaptation of electronic banking

Thailand and Singapore are among the technology leaders in Asia. Compared to other Asian countries these countries had adapted technology very early. These countries are considered as emerging markets. They earn foreign exchange by exporting various consumer goods, high tech items and tourism. Several studies had identified that, trust relationship between bank and the business organization is a major fact that affects electronic banking adaptation in Asian countires.

Nexhumi Rexha, Russel Philip John Kingscott and Andrey Shang Shang Aw had identified that trust was the key factor that influence adaptation of electronic banking among Singapore corporate consumers. Commercial enterprises, those business mainly depends on bank-customer relationship was targeted in this research. It had stated that “The cumulative effects of customer satisfaction were found to have positive impact on trust directed towards bank had greatly impact on propensity to use electronic banking”. Further it had identified that consumer satisfaction indirectly impacts customer intention on continual usage of electronic banking. 

Similarly in year 2003 Rotchanakakitumnuai and Speece had also identified that trust between the bank and business consumer plays a vital role in adaptation and usage of Internet banking among corporate customers in Thailand. In this study trust had represented as worries about security of the system, low reliability of transaction and distrust of banking service provider. These three factors were identified as main barriers for adaptation of Internet banking among corporate consumers in Thailand. Most of the time corporate consumers were more willing to user Internet banking services provided by a bank that had been well established for many years. This may be due the reputation of bank. Doney and Canoon defined reputation as “Extent which customers believe supplier or service provider honest and concerned about its customer”. The customers who use electronic services do not believe in privacy statements from every service provider. Further several researchers had stated that strong concerns about security were one of the main reasons not to use Internet for transactions. In year 2002 Walker had stated that customers do not believe that technology based service delivery systems will work as expected. Therefore customer’s lack of confidence towards these systems was an obstacle for adaptation of electronic based services.

Further Rotchanakakitumnuai and Speece had defined trust as a key determinant of bank to consumer relationship as relationships are primarily about trust building. During their study on corporate consumer perception about Internet banking they stressed that adopters and non adopters can be distinguished by trust barriers. According to them consumer who does not trust technology, security and business practices in electronic era would not adopt Internet banking.

Similarly role of trust in developing and maintaining successful relationship especially in financial products had stressed out Rexha, Kingscott & Shang Aw study on adaptation of relational planning in  electronic banking among corporate consumers in Singapore.  

Aravinadan Mukherjee and Prithwiraj Nath had concluded that extent which bank and customer share common beliefs for critical issues such as privacy, security and ethics (shared value) were significant determinants of trust in online banking. Further it had identified that communication derived from speed of response, openness and quality of information also influence in building trust relationship between bank and consumer in context of Internet banking.

The relationship between PU, PEOU, perceived credibility, customer’s attitude and consumer adaptation of electronic banking in the context of HSBC Bangladesh Limited had been analysed in the end of year 2005 by Bangladesh research student. Data was collected from HSBC customers in Bangladesh. It was found out that perceived ease of use (PEOU) and perceived credibility had significantly and positively related to adaptation of electronic banking among Bangladesh HSBC corporate consumers. Perceived credibility had more effect than PEOU in adaptation of electronic banking.  

As mentioned in previous section perceived trust had been identified as important variable in TAM related electronic banking adaptation studies conducted for retail electronic banking consumers. Therefore consumer trust on bank can be considered as an important variable that affects adaptation of electronic banking.

Security concerns

Although in some researchers had considered security concerns was part of trust towards electronic banking some researches had defined security concerns as a main barrier in adaptation of electronic banking. In year 1999, an empirical investigation was carried out to identify factors for retail and business consumer that affects slow adaptation of Internet banking in Australia. The researches had defined security concerns, ease of use, awareness of services and benefits, reasonable pricing, resistance to change and availability of infrastructure as influential variables for adaptation. Research data was collected from personal consumers and business organizations in main cities of Australia. Security concerns had been identified as second obstacle for adaptation of Internet banking among corporate customers. Because most of the time average user does not understand technical terms in security. So users were reluctant to use electronic banking services. O’Connel also had defined security concerns as important reason for slow growth of Internet banking Australia. Similarly in Latin America it had found out that security concerns were top ranking obstacle for non adaptation of Internet banking. Moreover security concerns had been identified as one of the reasons for not adopting electronic banking by SME’s in Ireland.

In TAM related studies for adaptation of e-banking security concerns had not been included as a determinate for user acceptance of these electronic channels. However considering the above mentioned studies carried out for corporate customer segments it can be seen that it is a key influential factor for adaptation.

Legal Implications

Rotchanakakitumnuai and Speece (2003) had quantitatively analysed barriers for adaptation of Internet banking among corporate customers in Thailand. It had been found out that legal support issues such as consumer belief on inability of courts to resolve Internet banking related cases, fair liability for bank consumers for banking mistakes and privacy and protection were main concerns of Thai corporate customers about Internet banking. At that time Thailand was in early stages of developing its e-commerce law. Therefore corporate customers did not believe that the law will protect them in case of financial losses in Internet banking transactions and trace of online evidence. Further Thai customers were not happy about legal protection provided by privacy policy statements.

However during their next study on perception of  Thai corporate customers towards Internet banking they had stated that although the respondents perceived that legal system was not ready for transaction it was not a distinguish factor for adaptation. This contradicts the results they obtained in their previous study. This may be because with time as consumers get familiarized with e-banking services, their confidence towards it had increased.

Bank – customer relationship implications

Unlike in western countries, interpersonal relationship in business adds much more value for successful business dealings in Asian culture. According to Rotchanakakitumnuai and Speece (2004) Thai business as much of Asia depends more on strength of interpersonal relationships than legal structure. Hence in 2000 Hiwcroft and Durkin stated that technology will not be able to fully substitute people in bank customer relationship in west. This theory applied to Asian countries with more weight. Tayler and Stanly had stated that “corporate banking market is considerably more valuable and more complex in terms of frequency of multiple banking relationships than more frequently examined retail banking market”.  In the study conducted by Marr and Prendergrast about ATM usage it was found that key factor for not using technology was preference for dealing with humans. In year 2002 O’ Donnell, Durkin & Quinn had analyzed importance of personal interaction for corporate banking. It had found that more than any technological interaction corporate customer’s value personal interaction despite of the business turn-over. Hence smaller companies value more personal interaction with bank than large companies. However large companies had embraced importance of new technology channels such as Internet banking.

The Irish SME’s stated that banks had supported for their business success and local manager’s sympathatic nature and understanding of business had helped them achieve success. Ibbotson & Moran had identified that users were happy with current electronic banking arrangements whereas non users had defined necessity of interpersonal relationship with bank was the main determinate of not using e-banking services. Hence they have stated that main element of relationship marketing was high customer contact and commitment but in electronic form of banking advocates contact-less form interaction. Therefore these two strategies cannot be used concurrently in a successful manner. Hence the e-banking users did not felt that use of electronic channels had distant their relationship banks. However at the time of research Irish SME’s were treating electronic banking as an alternative channel to obtained banking services.

Further it had been identified that information quality, information accessibility and transactional benefits of web services has positive effects on strength of customer bank relationship. However it was found out that web barrier do not have any impact on bank corporate customer relationship in Thailand.  Moreover during their research Rotchanakakitumnuai and Speece had found out that Internet banking did help to enhance the relationship between bank and corporate customer relationship. However it was not as strong as interpersonal interactions.

The relationship between bank and customer was not considered in TAM related studies on electronic banking. Hence when considering corporate customers in Asian context bank-consumer relationship issues with respect to electronic banking as an important fact that affect adaptation and continual usage.

Organizational barriers

Chircu & Khuffman 2000 and Farhoomand et.al in 2000 had identified organization’s ability to utilized web technology capabilities was a major barrier to adopt ecommerce. Few studies had identified that management perception towards electronic banking, resistance to change in to new technology, influences the adaptation of Internet banking.

Rotchanakakitumnuai and Speece (2003) had defined three aspects of organization barriers in context of Thai corporate customers. Those are management negative attitude, lack of IT resources and lack of knowledge to use Internet banking services effectively. During their study the non users had determined lack of management support as key barrier for adaptation. Furthermore organization’s reluctance of investing on Internet technology also had identified as a barrier for adaptation of Internet banking.

During their study on electronic banking & Irish SME’s Ibbotson & Moran found out that some SME’s were not using e-banking services because they didn’t that it was relevant for their business.

In TAM related studies job relevance was defined as a determinant of perceived usefulness. Hence relationship between organizational barriers and electronic banking adaptation has not been analysed so far, as TAM related studies were more concerned on electronic banking adaptation of electronic banking among retail consumers.  

However Vainio (2005) had found out that organization support for Internet banking did not significantly affected the usage of Internet banking among corporate customers in three Scandinavian countries. 

Ease of Use

In Sathey’s study on Australian consumer acceptance of Internet banking difficulty in use was one of the key obstacles for adaptation. This was due to need of technical expertise when downloading banking software. In 2005, Vainio had found out only perceived ease of use plays as a key determinant for adaptation of Internet banking among Scandinavian trade & finance consumers. Further it had been identified that PEOU strongly influences perceived usefulness (PU).

During Nushrat study he had identified perceived ease of use as a key determinant of accepting electronic banking by Bangladesh corporate consumers.

Hence in most of TAM related studies perceived usefulness (PU) had been identified as the key determinant variable for user acceptance of electronic banking. However recent research by Vainio had found out perceived usefulness did not have significant affect on trade & finance consumer acceptance of Internet banking in Scandinavian countries. This results contradict most of TAM related finding in context of electronic banking. He had concluded that it was evidence for corporate consumers do not function same way as private banking consumers. Hence most of other TAM related studies mainly concern on retail banking consumers.  Further he had identified perceived ease of use (PEOU) was the only variable that strongly influence the perceived usefulness.

Pricing of electronic banking services

Unlike brick and mortar banking services the banks had invested heavily for click mortar banking services. Therefore while providing e-banking services banks need to recover implementation cost. Although e-banking provide immense of benefits to corporate as well as retail consumers, consumers were more concerned about e-banking service charges. During Sathye’s study, he had identified that most of Australian corporate consumers were reluctant use Internet banking because of pricing and cost. Most of non users had stressed that pricing was unreasonable. Hence the users were seems to be happy with service they gain for the cost.

Ibbotson & Moran had identified charges and fees were the major reason for discontent with in banking relationship among SME’s in Ireland.  

In TAM related studies of electronic banking adaptation pricing aspect was not considered. This may be due to TAM studies were done related to retail consumer adaptation and most of the time e-banking services provided for retail consumers in free of charge.

Awareness of Benefits

When considering Thai business consumers main determinant for adaptation of Internet banking was the quality benefit. Rotchanakakitumnuai and Speece (2005) had stated that “customers who perceived better information quality are more likely to use Internet banking”. Furthermore it had been identified that transaction benefit was a key determinant of Thai corporate consumer perception towards Internet banking. Polatoglu and Ekin (2001) had defined time saving, responsiveness of service, service customization and cost savings for financial transaction were components of transactional benefit dimension. Although perception of accessibility was considered to be one of the major benefits for Western e-banking consumers, however in Thailand it did not influence for corporate consumer adoption.  Thai business consumers didn’t support the idea of sharing information in cyber space. This had been identified as major barrier for adaptation of Internet banking among Thai corporate consumers. Thai business success secrets would never shared with other business counterparts. Because of that benefits of e-banking for corporate consumers had not spread among business community.   

During Sathye’s study on Internet banking adaptation among corporate consumers it was found out that most of the business consumers were not aware of Internet banking services, especially its benefits. Moreover Sathye (1999) had stated that corporate consumers felt unreasonable pricing because they were not aware of the benefits. He had concluded that lack of awareness about Internet banking and its benefits was dominating all the other identified influential factors are results of it.

TAM related studies for corporate customer acceptance of technology other than e-banking

In year 1995 Igbaria & Ivari had analysed effects of self efficacy on computer usage among Finnish companies using TAM. They incorporated organization support and experience as determinants of self efficacy that influences perceived ease of use and perceived usefulness. It had proved that there is a direct relationship between previous experience and organizational support towards use of computer. Igbaria & Ivari had concluded that “Perceived ease of use plays important role in mediating the relationships between experience, computer anxiety, self efficacy and perceived usefulness while self efficacy, computer anxiety and perceived ease of use and usefulness partially mediate the effect of experience and organizational support on self-reported usage behavior”.

Therefore it can be seen that TAM is one of most appropriate models to analyse user adaptation and continual usage of electronic banking services among corporate customers as well as retail consumers.  Hence these mentioned literatures verify the applicability of Technology Acceptance Model in different contexts and also its flexibility for enhancements.

Chapter 3 - Research Methodology

3.1 Theoretical Framework

Technology Acceptance Model is most widely used framework to analyse user acceptance of technology. As mentioned in previous section it had been verified by many researches for its suitability for measuring user adaptation & continual usage of technology. Moreover the model had been extended to study user acceptance of electronic banking in many countries. 

 In this research Technology Acceptance Model proposed by Davis in year 1986 is extended to analyse Sri Lankan corporate consumer adaptation and continual usage of electronic banking. Considering the variables identified in similar studies research frame work is derived using TAM as the foundation.

Figure 3.1 – Original Technology Acceptance Model proposed in 1989 

As shown in above figure 5.1 perceived usefulness and perceived ease of use are the key determinants for user attitude towards adaptation and continual usage. Further Davis had evaluated attitude towards adapting certain technology and perceived usefulness determine user behavioral intentions. Actual system use is an outcome of user behavioral intention to a particular information system.   

Moreover perceived usefulness is determined by perceived ease of use and external variables.

Perceived usefulness and perceived ease of use are considered as key determinants of user acceptance of technology in Technology Acceptance Model. In 1989 Davis conducted many studies to validate the model. He had found out perceived usefulness (PU) was significantly correlated with self reported current usage and self predicted future usage. Moreover he had identified that PEOU is an antecedent of PU rather than a key determinate of actual system usage.

3.2 Conceptual Framework

Based on above mentioned factors the conceptual framework is derived as follows.

3.3 List of Hypothesis

Based on the above conceptual framework the following hypothesis can be identified.

H1: Perceived usefulness positively influence the adaptation and continual usage of electronic banking among corporate customers.

H2: Perceived ease of use positively influences the adaptation and continual usage of electronic banking among corporate customers.

H3: Awareness of benefits positively influences the adaptation and continual usage of electronic banking among corporate customers.

H4: Trust positively influences the adaptation and continual usage of electronic banking among corporate customers.  

H5: Legal implications negatively influence the adaptation and continual usage of electronic banking among corporate customers.      

H6: Organization support influence the adaptation and continual usage of electronic banking among corporate customers.      

H7: Bank consumer relationship concerns negatively influence the adaptation and continual usage of electronic banking among corporate customers.      

H8 Image positively influences the adaptation and continual usage of electronic banking among corporate customers.       

H9: Pricing concerns negatively influence the adaptation and continual usage of electronic banking among corporate customers.

3.4 Population

The population for this research is all the Sri Lankan business organizations that maintain corporate bank accounts. One way to obtain information on population of interest is through banks. However banks as a policy do not provide information about its customers to general public.

The sampling frame can be constructed based on judgmental sampling from company listing of Sri Lanka Company Registrar, Listing of BOI approved companies and company listing of Sri Lanka stock exchange. Sample unit is a business organization.

3.5 Sample

A sample is proposed to be selected considering large and medium scale companies that represent different industries. Some of these companies involve in import export oriented business. Since most of the multinational companies operate based on western province and most of the companies have its head office situated in western province the sample selected from business organizations operates in the western province. Considering the convenience of data collection a sample of 120 companies will be selected.  The questionnaires are intended to be distributed through personal contacts. Therefore number of non usable questionnaires can be minimized as contacts tend to make respondents more corporative in completing questionnaires.

3.6 Proposed Statistical Method

The statistical analysis is proposed to be carriedout using SPSS statistical package. The validity of proposed research model and hypothesis will be tested with the aid of statistical measures. Further the data will be measured in ordinal scale. Moreover population mean and standard deviation is not known. Distribution of the population that sample drawn is not known. Therefore non parametric statistical methods can be selected for hypothesis testing. Hence the study is to identify relationship between influential factors for adaptation and continual usage of electronic banking. Spearman rank correlation is a proven non parametric technique used to test the direction and strength of the relationship between two variables.

The spearmen correlation coefficient can be used to measure whether there is a relationship exist between two variables and the strength of the relationship. The coefficient is calculated using formula described below.

.         

Where n is sample size, d is the difference between ranks given for independent variable and dependent variable. Depending on the value of the R relationship of two variables are defined as follows.

·         If r is -1, there is a perfect negative correlation.

·         If r falls between -1 and -0.5, there is a strong negative correlation.

·         If r falls between -0.5 and 0, there is a weak negative correlation.

·         If r is 0, there is no correlation

·         If r falls between 0 and 0.5, there is a weak positive correlation.

·         If r falls between 0.5 and 1, there is a strong positive correlation

·         If r is 1, there is a perfect positive correlation, between the 2 sets of data.

3.7 Operationalisation

Based on the model questionnaire was designed. The questionnaire is divided in to three parts. Part A was designed to capture demographic information while part B designed to handle current banking background of the company. In part C Likert scale and close ended questions enclosed to test the hypothesis.

The first six questions were designed to capture the general information about business of the participant. The question 7 to question 9 designed to capture current banking status of the organization. The question 9 is specifically designed check whether user is satisfied with current banking service provided by the bank. The question 10 is designed to measure corporate consumer awareness of e-banking facilities provide by commercial banks of Sri Lanka.

Consumer awareness on electronic banking services provided by Sri Lankan banks is measured by question number 11. Question 12 and question 15 are designed to identify the respondent is an electronic banking user or not. Questions 13 and 16 were designed to elaborate widely used e-banking facilities among corporate consumers. 

Corporate consumer suggestion on electronic banking future is captured by questions 14, 17 and 21.

The following table elaborates questions designed to measure each research variable.

Variable	Questions that measure
Perceived Usefulness	18a,18c,18d, 18h,19
Awareness of benefits	11, 27
Perceived Ease of use	18b, 18e
Trust	18f, 18g, 18j, 24, 26
Legal Implications	20, 29
Organizational Support	18i, 25, 31
Consumer - Banking Interaction Concerns	21, 32, 33
Image	22, 23
Pricing concerns	28, 30

Question 34, 35 included to identify other factors that affect cooperate consumer adaptation of e-banking services.

A five point Likert scale was used to ensure statistical viability among survey responses for all constructs. To ensure the measurements scales were adapted and developed appropriately to the current context, qualitative interviews conducted with industry specialist banking sector and academic professionals. The questionnaire was revised accordingly. 

All yes and no answers were coded in such a way that yes represents value one while answer no represents value zero. The likert scale answers were coded as follows.

Strongly agree = 5, Agree = 4, Neutral = 3, Disagree = 2, Strongly Disagree = 1

Chapter 4 - Conclusion

The banking sector plays a vital role in the economy of any country. It is one of the most vibrant and dynamic sectors in the economy of Sri Lanka. The use of
e-banking services has become a vital aspect of a banks competitive advantage. It is important that a bank updates and provide enhanced e-banking solutions to its customers to attract a higher customer base. In addition to the revenue gained
e-banking solutions provide cost advantages in terms of low transaction costs, low stationary cost and also it reduces the staff cost and the overhead cost due to the lesser number of counter transactions.

Electronic banking provides various benefits to customers and it is important to make use of this technology. Although e banking involves a high initial investment to the company the benefits in terms of lower cost and the revenues through a higher customer base with a larger number of online transactions will overweigh the initial investment cost. It reduces the human errors involved in processing transactions and is much quicker and convenient to the customers. However there are security issues, delays due to system breakdowns and unintended transactions due to wrong inputs by the customers which will require manual reversals and losses to the customers. In this context it is important to identify the loopholes in the systems and introduce security measures to prevent errors and frauds.

Overall the e-banking services is the way forward in the banking sector and all banks in Sri Lanka have identified the importance of providing efficient e banking services to reduce internal processing costs and to add value by attracting a greater customer base through innovative e-banking products.

The study focuses to identify the factors that influence adoption and continual usage of e-banking by corporate customers in Sri Lanka. The literature review provides insights to the research done in this area of study. The conceptual framework has been developed based on the literature review and considering other possible factors which could influence the usage of e-banking facilities by corporate customers. Based on the results derived from the questionnaire the factors will be analysed according to the importance of each factor identified in the conceptual framework.