Advances in electronic banking technology have created new ways of handling daily banking affairs, especially via the online banking channel. The acceptance of online banking services varies based on the customer perceptions’, this research measures the acceptance of online banking in the light of Technology Acceptance Model. On the basis of a TAM literature and e-banking studies, we modified and used a model indicating online-banking acceptance among private banking customers in Bahrain. The model was tested with a survey sample, which was analyzed by SPSS program. The results of the research indicate that perceived usefulness and information on online banking on the Web site were the main factors influencing Online-banking acceptance. Since the mid-1990s, there has been a fundamental shift in banking delivery channels toward using self-service channels such as online banking services. During the past years online banking acceptance has been rapid and currently 55 percent of the private banking customers in Bahrain have an online banking contract with their bank. A line with the rapid development of technology, consumers are attracted to this application because of it convenience and the way it ease their lives (Anguelov et al. 2004). Of course, Bahrain like other countries aims to cope with the rapidly changing technology in order to provide a better way of life in the future by moving from the traditional way of doing transactions to electronic applications for example e- government, e-learning, e-commerce and e-banking. Therefore we chose to present one of these topics which is the online Banking because as we are working in the banking industry in Bahrain we want to measure consumer satisfaction in online banking to provide a portfolio which would be valuable for banks to retain and gain more users of online banking. Online banking in this study is defined as an Internet portal, through which customers can use different kinds of banking services ranging from bill payment to making investments. Therefore banks’ Web sites that offer only information on their pages without possibility to do any transactions are not qualified as online banking services. The goal of this study is to detect of the most important factors that influence online banking acceptance in the light of the technology acceptance model (TAM). More precisely, online banking acceptance will be studied from the information systems acceptance point of view referring to the idea that consumers are using banks information system (online banking service) directly and hence more knowledge on the factors that affect information systems adoption is needed in order to better understand and facilitate the acceptance. 1.1 Research Problem The main problem of this study is to investigate and explore the application of Online Banking in Bahrain in terms of the customers. For more specification, the main problem was divided into the following two sub problems: The impact of individual differences among users of Online Banking. The advantages and disadvantages of online banking from the customer perspective. 1.2 Research Objectives This study aims to: Represent the impact of individual differences among users of Online Banking Highlight the advantages and disadvantages of online banking from the customers’ perspective. Find out which sector of the society is not satisfied of the online banking and what the reasons that stand beyond this attitude are. 1.3 Research Importance Online banking has been an important way of conducting business by satisfying potential customers and gaining a competitive advantage. Therefore, the need of understanding the impact of individual differences of the customers as well as the benefits that the customers get when using online banking will allow the banks who do not apply this technology to thing seriously about applying it. Furthermore, emphasizes on the application of online banking for the banks that already applied it and try to customize the functions and the layout of the application base on the customers’ feedback. 1.4 Research Methodology In order to measure the satisfaction of online banking consumers, and how different factors such as: (Age, Gender, Occupation, Income, Education and Culture) effect on it. One of the techniques we use to evaluate consumer satisfaction is a basic consumer questionnaire; we have conducted a sample of 200 consumers randomly. The participants were located at different regions within the country and worked for different organizations. The questionnaire consisted of some multiple-choice questions, while the majority of items were measured on a seven-point Likert scale, ranging from ”strongly disagree” to “strongly agree” and “very likely” to “very unlikely”. The survey was intended to elicit opinions of consumers regarding the use of online banking service. 1.5 Research Structure This study is divided into four parts: the first part contains an introduction a long with research problem, research objectives, research importance, a brief of research methodology, part two is literature review on online banking and information systems acceptance model (TAM). The third part discusses in details the research methodology used in this work gather the necessary data. The forth part represents the challenges & comprises of the results and analysis. In this part the data is analyzed using a factor, regression and correlation analyses. The final part consists of the conclusions and practical recommendation. 2. Literature Review The global business environment witnessed many changes in the last decade of the 20th century, among which is electronic commerce, or exchange of products and services through Internet and telecommunication networks (Kalakota & Whinston, 1997). Most of the industries have been influenced by this emerging technology-based approach to business (Gunasekaran & Love, 1999). However, the impact of electronic commerce has been apparent in the banking and financial services industry when compared with other industry segments (Bughin, 2004; eMarketer, 2000). From the Asian market experience, it is clear that Internet banking is here to stay and will be a major channel to acquire and service customers. Recently, Internet usage and Internet banking has grown to more than 45.4 million in the Asia Pacific region (G. Kannabiran& P.C. Narayan, 2005). It has been found (Liao&Cheung, 2002) that individual expectations regarding accuracy, security, transactions speed, user-friendliness, user involvement, and convenience were the most important quality attributes in the perceived usefulness of Internet-based e-banking.Many researchers have argued that trust is essential for understanding interpersonal behavior and is relevant to e-banking. (Gefen, 2002; Jarvenpaa, Tractinsky, & Vitale, 2000). Online banking acceptance has gained special attention in academic studies during the past five years as, for instance, banking journals have devoted special issues on the topic (e.g. Karjaluoto et al., 2002; Waite and Harrison, 2002; Bradley and Stewart, 2003; Gerrard and Cunningham, 2003; Mukherjee and Nath, 2003). We can find two fundamental reasons underlying online banking development and diffusion. First, banks get notable cost savings by offering online banking services. It has been proved that online banking channel is the cheapest delivery channel for banking products once established (Sathye, 1999; Robinson, 2000; Giglio, 2002). Second, banks have reduced their branch networks and downsized the number of service staff, which have paved the way to self-service channels as quite many customers felt that branch banking took too much time and effort (Karjaluoto et al., 2003). Therefore, time and cost savings and freedom from place have been found the main reasons underlying online banking acceptance (Polatoglu and Ekin, 2001; Black et al., 2002; Howcroft et al.,2002). Several studies indicate that online bankers are the most profitable and wealthiest segment to banks (Mols, 1998; Robinson, 2000; Sheshunoff, 2000). On this basis, no bank today can underestimate the power of the online channel. Luxman (1999) for instance estimates that in the near future the online channel reinforces its importance especially in the countryside, where banks have closed many branches. Without the possibility of managing banking affairs directly from home or office, customers easily perceive troubles in managing their financial affairs such as paying bills. As noted, online banking offers many benefits to banks as well as to customers. However, in global terms the majority of private bankers are still not using online banking channel. There exist multiple reasons for this. To start with, customers need to have an access to the Internet in order to utilize the service. Furthermore, new online users need first to learn how to use the service (Mols et al., 1999). Second, nonusers often complain that online banking has no social dimension, i.e. you are not served in the way you are in a face-to-face situation at branch (Mattila et al., 2003). Third, customers have been afraid of security issues (Sathye, 1999; Hamlet and Strube, 2000; Howcroft et al., 2002). However, this situation is changing as the online banking channel has proven to be safe to use and no misuse has been reported by the media in Bahrain. Organizations invest in information systems for many reasons, for example cutting costs, producing more without increasing costs, improving the quality of services or products (Lederer et al., 1998). It has been noted that users’ attitudes towards and acceptance of a new information system have a critical impact on successful information system adoption (Davis, 1989; Venkatesh and Davis, 1996; Succi and Walter, 1999). If users are not willing to accept the information system, it will not bring full benefits to the organization (Davis, 1993; Davis and Venkatesh, 1996). The more accepting of a new information system the users are, the more willing they are to make changes in their practices and use their time and effort to actually start using the new information system (Succi and Walter, 1999). A system that satisfies user’s needs reinforces satisfaction with the system and is a perceptual or subjective measure of system success. Similarly, usage of a system can be an indicator of information system success and computer acceptance in some cases. Whether the system is regarded as good or bad depends on how the user feels about the system. Especially if the users do not rely on the system and its information their behavior toward the system could be negative. Success is not necessarily dependent of the technical quality of the system (Ives et al., 1983). Using the system is connected with the effectiveness of the system – systems that users regard as useless cannot be effective. Therefore it is important to find out the reasons why people decide to use or not to use information system (IS). This knowledge will help both systems designers and developers in their work (Mathieson, 1991) One of the most utilized model in studying information system acceptance is the technology acceptance model (TAM) (Davis et al., 1989; Mathieson, 1991; Davis and Venkatesh, 1996; Gefen and Straub, 2000; Al-Gahtani, 2001) in which system use (actual behavior) is determined by perceived usefulness (PU) and perceived ease of use (PEOU) relating to the attitude toward use that relates to intention and finally to behavior. According to the TAM these two beliefs are of primary significance for computer acceptance. PU refers to the prospective user’s subjective likelihood that the use of a certain application will increase his or her performance. PEOU is defined as the degree to which the prospective user expects the potential system to be free of effort (Davis et al., 1989). According to DeLone and McLean (1992) system use as the dependent variable is acceptable, if system usage is not required. Although the TAM has been tested widely with different samples in different situations and proved to be valid and reliable model explaining information system acceptance and use (Mathieson, 1991; Davis and Venkatesh, 1996,), many extensions to the original TAM have been proposed (e.g. Venkatesh and Speier, 1999; Venkatesh and Davis, 2000; Venkatesh et al., 2002; Henderson and Divett, 2003; Lu et al., 2003). Recently, Venkatesh and Davis (2000) extended the original TAM by introducing the second generation of the model labeled TAM2 to explain how subjective norms and cognitive instrumental processes affect perceived usefulness and intentions. TAM is based on the theory of reasoned action (TRA) (Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980), which is concerned with the determinants of consciously intended behaviours (Ajzen and Fishbein, 1980; Davis et al., 1989). Development of TRA started in 1950s and the first research concerning TRA was published in 1967 (Ajzen and Fishbein, 1980). Since 1967 TRA has been developed, tested and used extensively and its extension, the theory of planned behaviour (TPB) (Ajzen, 1991) utilized widely. TRA has proven successful in predicting and explaining behaviour across a wide variety of domains. TRA is based on the assumption that consumers’ behave rationally and that they collect and evaluate systematically all of the available information. Additionally, TRA assumes that people also take into account the effects of their possible actions and based on this reasoning make decision whether or not to take action (Ajzen and Fishbein, 1980). Individuals would use computers if they have a feeling that there could be positive benefits (outcomes) associated with using them (Compeau and Higgins, 1995). From the information systems perspective one relevant element of TRA is its assertion that any other factor that influences behaviour for example systems design variables, user characteristics, task characteristics, political influences and organizational structure do so only indirectly by influencing attitude toward behavior, subjective norm or their relative weights (Davis et al., 1989). Although the TAM and the TRA share many issues they have some considerable differences. The first difference is that according to TRA beliefs are bound to context and hence they can not be generalised. Contrary to that, TAM states that PEOU and PU are issues that have an effect on acceptance of all information systems. The other significant difference is that in TRA all beliefs are summed together, but in the TAMboth beliefs are seen as distinct constructs. Modelling each belief separately allows researchers to better trace influences of all of the affecting factors on information systems acceptance (Davis et al., 1989). TAM has been tested in many studies (see, for example, Davis, 1989; Davis et al., 1989; Mathieson, 1991; Adams et al., 1992; Davis, 1993; Segars and Grover, 1993; Taylor and Todd, 1995), and it has been found that TAM’s ability to explain attitude toward using an information system is better than other model’s (TRA and TPB) (Mathieson, 1991). These studies have found that TAM consistently explains a significant amount of the variance (typically around 40 percent) in usage intentions and behaviour. The use of an information system has been understood in many studies as the user acceptance of the information system in question (Davis et al., 1989; Davis, 1993; Al-Gahtani, 2001). In other words the use of information system acts as an indicator for information system’s acceptance. 3. Research Methodology Our research was based on several related articles in respect to similar subjects that were searched from electronic library. Data for this study was collected by the means of a survey conducted in Kingdom of Bahrain in December 2009 to obtain opinions and examine the behavior of customers toward the use of online banking. A total of 200 questionnaire forms were delivered to respondents of which 120 were returned giving a response rate of 63 percent. Questionnaires were filled in three different places, at work place, at two well known banks who applies online baking, and at famous coffee shop. This resulted in a sample that was well distributed in terms of demographic information (e.g. age, income, and education). The questionnaire (shown in Appendix I) consisted of questions that were related to background, possible factors affecting acceptance of online banking and use of online banking services. Likert five point scales ranging from “strongly agree” to strongly disagree” were used as a basis of questions. Based on this information the questionnaire was modified and finalized. On the basis of previous studies on computer and information systems acceptance, the use of the information system was chosen to be the indicator for success. The use of online banking services was chosen as the dependent variable in the model. 4. Challenges In this study, we have challenged the customer satisfaction ambiguous view on online Banking. Therefore, we have referred to the model (as shown below) indicating online banking acceptance among private banking customers in Bahrain through using TAM literature and e banking studies. The Existing System Based on the literature review, a model indicating the acceptance of online banking was developed (Figure 1). The model consists of five factors that we posit to have an effect on acceptance of online banking. Source: Davis, F.D. (1989), “Perceived usefulness, perceived ease of use, and user acceptance of information technology”, MIS Quarterly, September, pp. 319-40. Perceived usefulness PU and perceived ease of use PEOU In TAM, PU is a significant factor affecting acceptance of an information system (Davis et al., 1989). Davis defined PU as “the degree to which a person believes that using a particular system would enhance his or her job performance” (Davis, 1989). PEOU is another major factor that affects acceptance of information system (Davis et al., 1989). PEOU is defined as “the degree to which a person believes that using a particular system would be free of effort” (Davis, 1989). Therefore an application perceived to be easier to use than another is more likely to be accepted by users. By applying this model into online banking: H1. Perceived usefulness (PU) has a positive effect on consumer acceptance of online banking H2. Perceived ease of use (PEOU) has a positive effect on consumer acceptance of online banking Perceived enjoyment Enjoyment refers to the extent to which the activity of using a computer is perceived to be enjoyable (Davis et al., 1992). Perceived enjoyment differs from Perceived usefulness, PU which can be seen as an extrinsic motivation whereas perceived enjoyment (PE) as an intrinsic motivation to use information systems. A number of studies on PE (Davis et al., 1992; Igbaria et al., 1995; Teo et al., 1999) have noticed that intention to use computers is highly affected by PE. Igbaria et al. (1995) found that PE correlates positively with time of use but not with frequency of use or number of tasks. In contrast Teo et al. (1999) noted that PE correlates positively with frequency of Internet usage and daily Internet usage. Definitions of perceived fun and perceived playfulness are almost similar to the concept of PE. These terms are all handled as the same. According to Igbaria et al. (1994) perceived fun refers to the performance of an activity for no obvious reinforcement other than the process of performing the activity. They found that system usage and the perceived fun were positively correlated with each other. Moon and Kim (2001) define perceived playfulness as consisting of three parts: concentration, curiosity and enjoyment. They discovered that the perceived playfulness had a significant impact on the intention to use the Internet. On this basis, it is expected that PE affects the acceptance of online banking: H3. Perceived enjoyment (PE) has a positive effect on consumer acceptance of online banking Amount of information on online banking The amount of information consumers have about online banking has been identified as a major factor impacting the acceptance of online banking. According to Sathye (1999) while the use of online banking services is quite new experience to many people, low awareness of online banking is a major factor in causing people not to get benefit from online banking. In an empirical study of Australian consumers Sathye (1999) found that consumers were unaware about the possibilities, advantages/disadvantages involved with online banking. Thus, this hypothesis applies: H4. The amount of information a consumer has about online banking has a positive effect on consumer acceptance of online banking Security and privacy One of the important points is security and privacy which has a direct affect to the acceptance of online banking (Roboff and Charles, 1998; Sathye, 1999; Hamlet and Strube, 2000; Tan and Teo, 2000; Polatoglu and Ekin, 2001; Black et al., 2002; Giglio, 2002; Howcroft et al., 2002) ( I suggest to remove some of the references from this part). To be more precise, privacy and security were found to be significant obstacle to the adoption of online banking (Sathye, 1999). Roboff and Charles (1998) found that people have a weak understanding of online banking security risks although they are aware of the risks. Finally they argue that although consumers’ confidence in their bank was strong, their confidence in technology was weak (see also Howcroft et al., 2002). As the amount of products and services offered via the Internet grows rapidly, consumers are more and more concerned about security and privacy issues. In general, many consumers refuse to give private information over the telephone or the Internet, for example credit card information- card number and password (Hoffman and Novak, 1998). According to many studies (e.g. Westin and Maurici, 1998; Cranor et al., 1999) privacy issues have proven important barriers to the use of online services. Gathering and recording user data without consumers’ awareness concerns them (DePallo, 2000). Users want to control what kind of data is collected, for what purposes, how long data is recorded for, how and for what purposes their data is processed (Kobsa, 2001; Kobsa, 2002). As trust, in this article it has been concentrated only on level of confidence in the technology which online banking service provider. Thereby it is proposed that: H5. Security and privacy have a positive effect on consumer acceptance of online banking 5. The Proposed Solution In accordance to the result base on the survey, it was found that online banking is widely and mostly used by customers with middle and high level income aged around 32 years. Consequently, banks have to find the reason behind that online banking is used by a certain portion of customers and not all. They need to enhance the web page and make it user friendly and easy to use. In addition, the main reason of not using online banking is that customers do not know how to use it. This means that way of using online banking service is not well explained by some banks. Therefore, banks need to make it clear for their customers by advertising for this service by making a manual available on their web site of how to use online banking starting by the way of getting the password ending by the way of doing inquiries and financial transactions. 6. Analysis & Results The average age of respondents was 32.74 years. 57 percent of the respondents were male. Approximately 20.7 percent of the respondents belonged to the lowest income level (under BD400 per month). About 45.5 percent of the respondents fell into middle income level (between BD400-799 per month).The rest fit into the highest income level (over BD800 per month). Factor analysis ** A positive factor analysis was conducted on the items comprising PU, PEOU, security and privacy, and PE. The factor analysis was conducted using SPSS program (Please refer to Appendix II for Tables). The first factor, PEOU, consists of four variables. The second factor, PU, contained four variables. The third factor, security and privacy, was loaded with three variables .And the forth factor refers to PE and was loaded with five variables. We run a correlation analysis in order to test our hypothesis. The result indicate that Income, PEOU, PU, Security & Privacy, and PE have a strong positively correlated with use (p<0.05). In the regression analysis was conducted to reveal how different factors affect the use of online banking. The results of ANOVA indicate that the regression and residual sums of squares are not approximately equal, which indicates that most of the variation in use is not explained by the model. As a result only Income, PEOU, and PE seems that have a strong relationship with the use. Based on our data analysis, it seems that Income, PEOU, PU, Security & Privacy, and PE statistically significantly & clearly have a positive effect on the use of online banking. Background variables age, years of experience in computer usage, education, and gender are also statistically non-significant. This means that most of the research model (H1, H2, H3, and H5) was supported. The rest of the hypotheses were not supported by the data. ** Please refer to Appendix II for SPSS Tables. 7. Discussion In this section the discussion performed on theoretical contributions, managerial contributions, limitations & further research, and a compression between the literature review & the results. In details as follow: 7.1 Theoretical contributions From a theoretical standpoint, the results presented contributed to the existing literature in a number of ways. First, the research makes a contribution to electronic banking literature by providing insights on the factors that seem to affect online banking acceptance. The results hint that information about online banking services and its benefits is a critical factor influencing the acceptance. Moreover, security and privacy were found to have a relatively weak relationship with the acceptance. Secondly, the research contributes to the technology acceptance literature by suggesting that PU as well as perceived enjoyment (PE) were found to have some effect on technology acceptance. Furthermore, we found that PU was more influential than PEOU in explaining technology acceptance. 7.2 Managerial contributions The results of the research provide managers information that will help them to take decisions about the planning of online banking Web sites and service selection. In the planning and development of online banking services, software developers should pay attention to informative content that is above all perceived useful and with relevant information and services. In the marketing process of online banking services marketing experts should emphasize the benefits its adoption provides. Banks should now concentrate in their advertising more to informative issues rather than in building only brands with less informative advertisements. 7.3 Limitations and further research Although the results can be considered statistically significant in most parts, the research has several limitations that affect the reliability and validity of the findings. The research was limited mainly by the time factor; choosing to complete the research in one academic course fostered us to limit the number of the distributed surveys. Time was not the only limitation, but reaching the targeted sample and convincing them to respond to the surveys as soon as possible was another major problem that had a critical reason in delaying the project progress. The other limitation of this work concerns the measures for user acceptance. TAM studies have found that PU and PEOU are not the only predictors of technology acceptance. Furthermore, another interesting avenue for further research could be a detailed study on online banking usage in firms. We should also measure online banking acceptance with other possible factors derived from different sources of literature. 7.4 Compression between the literature review & the results: The impact of electronic commerce has been apparent in the banking and financial services industry when compared with other industry segments (Bughin, 2004; eMarketer, 2000). However according to the results of the research it was found that 77.7% of respondents their banks have online banking. Also, it has been found (Liao&Cheung, 2002) that individual expectations regarding accuracy, security, transactions speed, user-friendliness, user involvement, and convenience were the most important quality attributes in the perceived usefulness of Internet-based e-banking. Many researchers have argued that trust is essential for understanding interpersonal behavior and is relevant to e-banking. (Gefen, 2002; Jarvenpaa, Tractinsky, & Vitale, 2000). But most of the researches’ respondents who don’t trust the online banking for several reasons such as they are afraid of security issues, they have a negative idea about all other aspects of online banking. However, several studies indicate that online bankers are the most profitable and wealthiest segment to banks (Mols, 1998; Robinson, 2000; Sheshunoff, 2000). While as a result of the research the two largest sectors of online bankers nowadays (2009) are 47% within the middle income level and 39% within the highest income level form the respondents which are using online banking. On this result, no bank today can underestimate the power of the online channel. Luxman (1999) for instance estimates that in the near future the online channel reinforces its importance especially in the countryside, where banks have closed many branches. Without the possibility of managing banking affairs directly from home or office, customers easily perceive troubles in managing their financial affairs such as paying bills. But only 2.5% of the researches’ respondents don’t have internet at home, so it’s not a problem in the new millennium anymore. As noted, online banking offers many benefits to banks as well as to customers. However, in global terms the majority of private bankers are still not using online banking channel. There exist multiple reasons for this. To start with, customers need to have an access to the Internet in order to utilize the service. Furthermore, new online users need first to learn how to use the service (Mols et al., 1999). But this is not the case anymore as 97.5% of the research respondents have an internet connection at home, and 61.5% of the respondents find the online banking easy to use. So it’s not a major problem anymore. Second, nonusers often complain that online banking has no social dimension, i.e. you are not served in the way you are in a face-to-face situation at branch (Mattila et al., 2003). But as a result for the research only 5% of the respondents who are not using online banking complained about this point. Third, customers have been afraid of security issues (Sathye, 1999; Hamlet and Strube, 2000; Howcroft et al., 2002). However 9% of the researches’ respondents (who are not using online banking) only afraid of security issues. Therefore, time and cost savings and freedom from place have been found the main reasons underlying online banking acceptance (Polatoglu and Ekin, 2001; Black et al., 2002; Howcroft et al.,2002). And this is what the results of the research indicated as 62% of the respondents find the online banking as a time saving, 51% of the respondents think that it gives them more freedom, and 50% of the respondents find it helps in cost saving. Also, it has been noted that users’ attitudes towards and acceptance of a new information system have a critical impact on successful information system adoption (Davis, 1989; Venkatesh and Davis, 1996; 8. Summery and Conclusion The primary objective of the study was to study consumer acceptance of online banking in Bahrain in the light of the technology acceptance model (TAM) added with new variables derived from online banking acceptance literature. The model we developed proposed that online banking acceptance can be modeled with the variables derived from the TAM (PU and PEOU) and three other variables referring to perceived enjoyment (PE), information on online banking, and security and privacy. In the results section the model was tested with 200 consumers and revised. With the use of a factor analysis, five factors were identified suggesting that PU, PEOU, PE, information on online banking, and security and privacy have an impact on the acceptance of online banking. The results of the regression analysis conducted on the five factors indicate that PU and the amount of information on online banking were found to be the most influential factors explaining the use of online banking services. This finding refers to the fact that consumers use online banking for the benefits it provides in comparison to other banking delivery channels. Furthermore, the findings indicate that while consumers get more information about online banking the more informative they become about the benefits it offers.
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