Consumers Perceived Risks Towards Internet Banking Research Proposal

Introduction

The rapid technological advancement in communication and information technology and internet boom has caused major changes in the banking industry (Jiuan Tan, 1999). There has been a noticeable shift in users from traditional banking to internet banking. Internet banking has provided the users of banking services safe, secure and an easy way to access their accounts and to conduct transactions without any hassle (Mitchell, 1999). A new phase of retail banking is online banking service. DANIEL(1999), MOLS(1998)and SATHYE (1999) explained online banking as a types of service that does not require the customer to physically visit the bank rather the customer can request information and carry out their banking transaction such as balance inquiry, inter account transfers, utility bills payment, request check book etc. Through internet (Sathye, 1999).

Background of the study

KARDARAS AND PAPATHANASSIOU (2001) say that electronic commerce is very suitable for the banking sector as advancements in information and communication technology helps reduce the transaction costs of the banks by providing online functions to the users. Moreover, internet banking has created a very competitive environment for the banks and (Wang, Wang, Ling and Tang, 2003) identified through his research that banks who will not meet their customer’s need for online banking services will ultimately lose their customers. Therefore, now the banks are placing focus on providing much better and new services to the customers like virtual public and private networks, dial up connections, personal computers and atms. This will also help increase the customer base of the banks. According to CHAFFEY ET AL. (2006), an interactive website is the made through which the customers can interact. Quality of the services provided is very important in that regard (Nui Polatoglu and Ekin, 2001).
Regardless of the benefits that internet banking provides, there are some challenges like security, privacy and trust that affect the banking services. ALADWANI (2001) identified that trust will be a major challenge for the banks in the future. LEE & TURBAN (2001) determined that the security and privacy issues are a major threat for the customers due to which they hesitate in using the online banking services. Number of researches has been categorizes the risk perception in different ways.JACOBY AND KAPLAN (1972) have put risk dimensions into six groups: financial, performance, psychological, physical, social, and time (cases, 2002).LITTLER AND MELANTHIOU (2006) have given six types of risks perceived by the consumers of online banking financial, performance, time, social, psychological, and security risks.
This study will explore the risks that the customers are facing in using online banking and will identify ways through which these risks can be mitigated by the banks to provide efficient services (Gerrard and Barton Cunningham, 2003).

Problem statement

Investigating and assessing the factors affecting the risk perceptions of the users and non users of internet banking (Park and Jun, 2003).

Objective of the study:

The main purpose of this study is to review and asses the difference in the risk perceptions of the customers using internet banking and those who are not.
The study also assesses the affect of various risk perceptions of the consumers on their decision to use the online banking services or not.
This study is a quantitative study. The independent variable of the study are the risk factors i.e. Financial, performance, time, social, security risk factors and the dependent variable of the study are the perceptions of the users and non-users of internet banking.

Literature review:

Online banking is one of the most crucial and important sector in the banking industry (Akinci, Aksoy and Atilgan, 2004). With the rapid globalization and the expanded ecommerce industry, this sector has developed over the years providing convenience and ease to the consumers in making online transactions and accessing their accounts (Karjuluoto, Mattila and Pento, 2002). Now a day’s internet has changed the global environment. All the sectors of the economy are influenced by the internet emergence. Banking sector has adopted the information technology or internet over last decade (Mukherjee and Nath, 2003). Initially internet banking was seen as competitive advantage for banks but now for remaining in the competition almost all banks are providing internet banking services (Aldas-Manzano, Lassala-Navarre, Ruiz-Mafe and Sanz-Blas, 2009). However, the rate of embracing has been slower than originally predicted. In fact, in the early stages of the introduction of internet banking it was suggested that many people still gave preference to the physical branches and that a visit to the branch was the preferential method of banking. Online banking is defined as the use of electronic means to perform various virtual banking functions via personal computer by connecting to the bank’s website (Daniel, 1999). It includes several functions such as inquiry about the information of account, card accounts’ transfer, bank-securities accounts transfer, the transaction of foreign exchange, the b2c disbursement on net, client service, account management (VYAS, 2002).
The firm that are providing internet services to their customers, the consumer risk perception is becoming a significant concern for them because the transparency of the businesses are seems to be reducing with the development of information technology (CHEN AND CHANG, 2005). During the early stages of this innovation consumer have to face a lot of risk. Perceived risk is considered as main barrier for the customers in adapting internet banking. Online purchase and online banking are very different from each other as in the latter case there exist a long term relationship between the customer and bank. For complete understanding of the perceived risk, it is divided into five categories: performance, financial, time, social and security/privacy risks, as theorized by JACOBY AND KAPLAN (1972),in 1960 perceived risk theory was used to explain the consumer behavior.
BAUR (1960) first introduces the concept of risk perception as it is the perception of uncertainty and danger throughout the transaction (purchases). Number of researches and studies has given different categories of risk perception.perceived risk is defined as expected loss while considering the desired result (Grabner-Krauter and Faullant, 2008). It is actually the consumer feeling of the certainty that the results will not be according to their wish. The dimensions ofthese classifications of the perceived risk vary according to the product.
LIM (2003) defines the financial risk as economic risk that is the chance of occurrence of any monetary losses during the transaction online. LITTLER AND MELANTHIOU (2006) describes that the risk perception of the customers of online banking significantly increases by the information technology lapses and loses that are resulted from accounts access that occur fraudulently.
LAROCHE, BERGERON AND YANG (2004) define theperformance risk as the chance of failure or a fault that may occur during the transaction (purchases). According to LITTLER AND MELANTHIOU (2006), performance risk in online banking increases when money is timely transferred or when web pages are difficult to be access by the consumers or when not enough services are offered online (Tan, and Teo, 2000).
MURRAY AND SCHLACTER(1990) defines thetime risk as the is the chance of loss of time as well as effort of the consumer that is spent during an online banking transaction. The risk perception of the consumer increases as time required knowing how to access scrupulous services or a product increases. According to LITTLER AND MELANTHIOU (2006),when the money is not transferred on time, leads to the customers risk
LITTLER AND MELANTHIOU (2006) explains the privacy/security risk as the chance of worries that may occur when consumersare anxious that someone could access to the sensitive information or the money transfers from their accounts without their authorization fraudulently.
There are two models are given for the explanation of consumer perceived risk technology acceptance model was given by FISHBEIN AND AJZEN (1975) and it was formulated mainly for the user of internet technology. According to this model behavioral intention to use internet is influenced by users’ attitudes toward using the system and the perceived usefulness of the system. It is assumed that consumers will struggle to decrease the general efficacy related with a mode of behavior (Gerrard and Barton Cunningham, 2003).
Theory of planned behavior also supports perceived risk (AJZEN, 2002 AND AJZEN, 1991). This theory says that person’s actual behavior in performing some actions is directly inclined by his or her behavioral target and, then is jointly determined by his or her attitude. Research on perceived risk is based on the fact that consumers are able to make reasonable assessments of both the effects and the probability of these occurring. There is the existence of risks and the uncertainties associated with the consumer decision to accept internet banking during early stages of its market development when there was little knowledge of its use and there were new contestants into the market. There is enough information is available that allows the consumer to make a logical judgments (Rotchanakitumnuai and Speece, 2003).
ANKITKESHARWANII AND GAJULAPALLYRADHAKRISHNA (2013) have conducted an exploratory factor analysis as well as confirmatory factor analysis on the respondents in india to determine the factors that drive or inhibit the adoption of online banking. They determined seven factors other than perceived usefulness and perceived ease of use after conducting the research which include perceived benefit, hacking and fraud, risk, performance risk, computer self-efficacy, technology complexity, social influence, and pricing concerns.the study has suggested that major inhibitors for adoption on internet banking are perceived risk and the performance risk and that the banks need to invest majority of their funds in controlling these two factors.
REDELINGHUIS, A. &RENSLEIGH, C. (2010) through a survey found that, since 1996 the internet banking due to its convenience, safety and lower cost banking services online has attracted number of customers in south africa. The findings of this study help he financial institutions to build more value added relationship with their customers that will make their perception of internet banking and experience to be moving and enriching. Furthermore financial institutions should focus more on educating and making their customers more aware.
A study reveals that about 73 percent of the customers, due to their concerns regarding the security of the banking transactions, avoided the espousal ofonline banking SERVICES (SATHYE, 1999). ALSAJJAN & DENNIS, 2006; SUHAND HAN (2002) in another study describes that the online banking transactions, the trust factor is of more significance as compared to the offline banking, as online banking transactions involves more sensitiveand crucial information of the consumers involved in transaction, are concerned about the access of their critical information that is transferred through internet.
SAFEENA, DATE AND KAMMANI (2011) conducted a study on the students of an educational institute to find the impact of perceived usefulness, perceived ease of use and perceived risk on the adoption of internet banking and its acceptance. The authors also added that in order to reduce the risks perceived by the consumers the banks need to promote the benefits of adopting online banking through advertising. Also they suggested that the banks need to develop the trust of consumers by providing them a safe and secure transaction environment (Ribbink, Van Riel, Liljander and Streukens, 2004).
ABDULLAH BIN OMAR, NAVEED SULTAN, KHALID ZAMAN, NAZISHBIBI, ABDUL WAJID & KHALID KHAN (2011) have conducted an exploratory study to find out the consumer’s perception towards the usage of online banking in pakistan. The study was conducted in khyber pakhtunkhwa province of pakistan. The study determinedthat the major problems in the adoption of online banking are security issues, safety issues and absence of trust among the users. The lack of trust is majorly because of theft, fraudulent activities, erratic atms and unsafe transaction environment. The study also revealed that in order to attract and retain the users the banks need to focus completely on convenience, speed, safety and security. Moreover the study also identified major services which the users want like cash depositing facility through atms etc.
ASLIYÜKSELMERMOD (2010) conducted a research to examine the progression of the usage of internet banking. He used questionnaires and interviews of the users of internet banking as a survey method. He determined from his research that the internet banking usage had significantly increased over time and that there was an increase in educated users (De Ruyter, Wetzels and Kleijnen. 2001). This revealed that there was a string relation between the level of education and the level of usage of internet banking. No significant relationship of age and gender has been found with the level of usage. The most important aspect of internet banking is the ease of switching to another bank due to which banks have to be careful in providing efficient services. Ease of usage and security are the major concerns of the users which if eliminated can help the bank in expanding their consumer base.
KALEEM AND AHMAD (2008) in their research study determined the perception of the bankers towards the potential benefits and risks associated with online banking. They collected the data from the bankers by using an administered questionnaire as a survey technique. The study concluded that the potential benefits that bankers perceive are minimization of inconvenience, reduction in transaction costs and time (Luam and Lin, 2005). Whereas they believe that the potential risks in electronic banking are privacy issues, fraud and lack of information security (Guriting and Oly Ndubisi, 2006).
(Howcroft, Hamilton and Hewer, 2002) conducted a research to evaluate the consumer acceptance of online banking. The study concluded that the factors that significantly contribute towards consumer acceptance of online banking are usefulness, security and privacy. The other factor is the promotion and advertising through various mediums like print and electronic media.The study revealed that all three independent variables have significant relationship with the intention to use internet banking. However, perceived ease of use was not a significant factor in the intention to adopt internet banking (Pikkarainen, Pikkarainen, Karjaluoto and Pahnila, 2004).
YASIR HASSAN, FARZANYAHYA, MUAZZAM AMIN And UMAR FAROOQ ARSHAD (2011) conducted a research to check the level of awareness among the bank users. The results of this research show that most of the people of pakistan are well aware of electronic banking but they are not satisfied with the e-banking services provided by the banks. They want improvement in security level and services of electronic banking and that is why they prefer traditional banking vs. Online banking (Laforet and Li, 2005).
JAYSHREECHAVAN (2013) determined the potential benefits and challenges of internet banking in emerging economies. The benefits identified include reduction in cost and time quick access to information, better cash management, convenience, fund management and speed. The challenges identified are adoption of global technology, the ability to strengthen public support for e-finance, confidentiality, integrity and authentication, security, privacy, theft and robbery (Litter and Melanthiou, 2006).
AHMAD, RASHID, MASOOD & MUJEEB (2011) explained the operational issues related to internet banking as well as consumer usage of internet banking. The study revealed inadequate infrastructure for the support of internet banking, internet speed is not sufficient for the users to access online banking facilities customer technology awareness is very low and basic reasons behind this are rates of internet and computer literacy. Other factors include insecure transaction, slow speed of internet, high internet rates, low computer literacy rate and low capability to accept new technology, atm thefts, privacy and security. All these factors are contributing towards the low usage of the internet banking (Lee, 2009)

Research questions:

What is the impact of financial risk on the perception of the users and non-users of internet banking?
What is the impact of performance risk on the perception of the users and non-users of internet banking?
What is the impact of social risk on the perception of the users and non-users of internet banking?
What is the impact of time risk on the perception of the users and non-users of internet banking?
What is the impact of security risk on the perception of the users and non-users of internet banking?
Hypothesis:
H1: financial risk has a negative impact on the perception of the users and non-users of internet banking.
H2: performance risk has a negative impact on the perception of the users and non-users of internet banking.
H3: time risk has a negative impact on the perception of the users and non-users of internet banking.
H4: security risk has a negative impact on the perception of the users and non-users of internet banking.
H5: social risk has a negative impact on the perception of the users and non-users of internet banking.
Research methodology
For the purpose of our study we are utilizing the model developed by DEMIRDOGEN, O., YAPRAKLI, YILMAZ, M. K., & HUSAIN, J. IN 2010. We are conducting deductive research. And our research will focus on realism approach to conduct our research.

Data collection method:

We will collect the data through questioners. Our target market will be the people who have bank accounts and use internet banking methodology for transactions. We will get 300 responses and then analyze the data through putting the responses into spss.

Limitations:

The previous researches have been done within limited settings. The previous and current studies focus on the overall perception of the consumers towards the internet banking. Not much work has been done with respect to the risk factors that impact the consumer’s perception about internet banking. Our study will completely focus on the risk perceptions of the consumers and therefore we will be able to identify key risk factors that are affecting the consumers and ascertain which risk has the strongest impact. This will not only help the managers in coping with the problems faced in the internet banking sector but will also help them in developing new products and services for their consumers (Stone and Gronhaug, 1993).

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