Factors Influencing the Adoption of Mobile Banking

The following sample essay talks about the factors influencing the use of mobile banking. Read the introduction, body and conclusion of the essay, scroll down.

Factors influencing the use of Mobile Banking: The case of SMS-based Mobile Banking offered CHAPTER ONE INTRODUCTION Mobile banking is an application of mobile computing which provides customers with the support needed to be able to bank anywhere, anytime using a mobile handheld device and a mobile service such as text messaging (SMS). Mobile banking removes space and time limitations from banking activities such as checking account balances, or transferring money from one account to another.

In recent research and studies it was found that while mobile banking and more specifically SMS-based mobile banking applications have become popular in some countries and regions, they were still not widely used. This study identifies and investigates the factors which influence customers’ decision to use a specific form of mobile banking, and specifically focuses on the evaluation of SMS-based mobile banking in the context of Tanzania a case study at CRDB Bank plc.

The research model includes the basic concepts of the Technology Acceptance Model (TAM), as well as some constructs derived through a focus group discussion.

The model is tested to determine its predictive power with respect to individual’s behaviour when considering the use of SMS-based mobile banking. A survey questionnaire was developed and employed to collect data from 10 SAUT university students in Tanzania. The results of the data analysis contributes to the body of knowledge in the area by demonstrating that context specific factors such as service quality and service awareness are influencing user perceptions about the usefulness of SMS mobile banking which in turn affect intention to use and adoption.

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Secondly, the study demonstrates, on the example of SMS-based mobile banking, how a hybrid approach involving qualitative data collection and a subsequent quantitative survey can help investigate how user perceptions about usefulness and ease of use are formed. Although the study has its limitations, the implications of the results allow providing practical recommendations to the banking industry, and directions for further work. A number of new information and commercial technologies and applications have been explored in the past and mobile technology is one of them.

Mobile applications have been developed and used in different areas. Pervasive and ubiquitous mobile technology has penetrated both the personal and business domains. Mobile services have an impact on consumers because they allow ubiquitous and universal access to information and services, as well as a possibility for a unique and personalized exchange of information (Watson et al. , 2002). As a result, using mobile devices is now a part of daily life, and a way to keep in touch with the rest of the world as well as to communicate and network.

New technology is said to be inseparable from everyday life (Weiser, 1991). Newbery (2005) found that New Zealand ranks highly among OECD countries in terms of multimedia mobile phone saturation (69% compared to the global average of 53%). A survey done by the Vodafone New Zealand Ltd on November 23, 2008 found that the mobile phone was used to do everything from banking and paying for parking, to downloading music and finding (or dumping) partners (Hudson, 2008). Mobile banking is one developing mobile technique used in the commercial domain.

It has combined information technology and commerce applications together. Since mobile banking was introduced, consumers have been able to use it to obtain special services 24/7 i. e 24 hours a day 7 days a week without having to visit the traditional bank branch for personal transactions. Short message service (SMS) is used to support mobile banking service as the main medium. Reasons for mobile and SMS usage are largely saving time, varying location and convenience (Venkatesh et al, 2003).

It is quick and easy for users to become familiar with the mobile banking service. A recent survey done by the Vodafone New Zealand Ltd (Hudson, 2008) found that New Zealanders send messages using mobile phones at least 600 million times per month. It was found that texting is not only used for general conversation, and greetings in New Zealand, but also for solving embarrassing situations such as firing employees, marriage proposals, asking for a date, and even gathering evidence of cheating.

Paul Brislen, of Vodafone NZ said Kiwis were also world leaders when it came to downloading tunes to their handsets (Hudson, 2008). This implied that New Zealanders are more likely to use texting than many other populations in the world. This might make it quite easy for New Zealanders to use SMS-based mobile banking. In Korea, in a survey done by Yong and Gorman (2002) it was found that there was a nearly 400 percent increase in the level of mobile banking service use within 15 months, as shown in Figure Figure 1. : use of mobile banking in Korea Source: Journal of Online Information Review, Yong & Gorman (2002) The functionality of a mobile banking service increases user’s satisfaction. Furthermore, it creates the value for customers’ banking transaction as a wireless service delivery channel. However, it is a still minority of people using mobile banking in the market; a recent research has found that in Ireland approximately 1% of consumers use mobile banking while nearly 90% of the population have mobile phones (Foley,2005).

The use of mobile banking only focuses on basic functions provided by the mobile banking service rather than more complex ones. A recent Forrester research survey question asked: “What mobile banking activities would you mostly be interested in? ” as seen in Figure 1. 2 (Foley, 2005). Figure 1. 2 mobile banking activities Source: ireach, www. ireach. ie As figure 1. 2 shows, most consumers did not use mobile banking at all. Those that used this service used it only for simple functions like checking account balances.

More complicated functions of mobile banking have not been considered. This proposal consists of three chapters. Chapter one with the introduction that outlines the objectives, emphasizes the importance of the study, and formulates the research questions. Chapter 2 presents findings from a literature review with a focus on the issues and problems found in the research, shows how a research model is derived from the literature review, and briefly reviews the research approach of this study.

In Chapter 3, a hybrid approach (using both qualitative and quantitative methods) is applied and discussed in order to develop the research model. Furthermore, it outlines the research process, data collection method and questionnaire. BACKGROUND OF MOBILE BANKING IN TANZANIA: SIGNIFICANCE OF THE STUDY: Some prior work in the area of mobile business models and mobile services including mobile banking, has highlighted some of the more general issues related to the spread of mobile services and the shaping of the mobile business ‘landscape’ (Petrova, 2004; Petrova, 2005; Petrova & Qu, 2006).

However, there is a still need to explore factors which influence the use of mobile banking in Tanzania and more specifically, the factors limiting the use of the corresponding services available, as research results obtained in other regions and countries may not be entirely relevant to the Tanzanian context due to cultural and behavioural differences as well as to socio-economic factors. The outcomes of the study might serve to provide recommendations to the mobile banking sector and to the banking industry as well as the mobile phone industry.

The findings of this research also may be of potential value to the industry (e. g. banks) and to other researchers (e. g. social scientists). Based on the factors found to be influencing user decision on mobile banking, the study may provide recommendations for banks about changes needed in order to accelerate user adoption of the services offered. Social scientists may find the results useful for their study of human behaviour and motivation, and how they may affect attitudes towards the adoption and use of an innovative service. STATEMENT OF THE PROBLEM OBJECTIVE OF THE STUDY:

The main objective of this research is examine the factors influencing the adoption of mobile banking in Tanzania by focusing on SMS-based mobile banking in CRDB Bank Plc as a case study . Specific objectives: * To find out why SMS-based mobile banking is not as popular as it might be expected in Tanzania, * To identify the issues related to the slow adoption process, * To suggest ways of resolving them. RESEARCH QUESTIONS The study will be guided by the following on research questions: 1) What are the factors which influence the use of SMS-based mobile banking? ) How is it best to evaluate a mobile banking application or service in terms of its adoptability? LIMITATION OF THE STUDY 1. 7 LIMITATION OF THE STUDY Time constraint This study will be carried out for a short period of time because the requirement is to do so as to follow the deadline of the academic calendar of St. Augustine University of Tanzania. Time constraint may affect both, the quality and quantity of the data collected during the study. Financial limitation Lack of adequate funds for conducting the study may affect the quality and quantity of data collected during the study.

This may hamper the researcher to conduct the study effectively. Lack of local empirical literature Local empirical literature on factors affecting customer services in the banking sector in Tanzania is lacking. As a result, the researcher will have to use literature from other sources countries. CHAPTER 2 LITERATURE REVIEW This chapter reviews the existing literature on factors influencing user behaviour in regard to use and adoption of mobile banking services as well as some of the relevant research models used in Information system(IS) research.

In addition, it briefly reviews the research approach of this study. Overview of factors influencing mobile banking User adoption of mobile commerce applications has been hindered by many factors. Literature findings identify some of the issues and factors associated with mobile banking, which are also related to other IS/IT applications; these factors are further used to generate the constructs applicable to this research in order to build the initial research model and investigate the research objectives.

The factors can be organized into five categories: risk and security, socioeconomic background and culture, service characterization, cost of service and device, and device features. 1. Risk and security: Security and trustworthiness of a service was identified as one of the most important factors within every target customer segment when deciding on the use of a banking service delivery channel. Some agreed that “using mobile phone in banking is trustworthy” (Mattila, 2002, p. 10). Fain and Roberts (1997, p. 3) defined “risk is a perception of consumer, not a characteristics of a product”. It was found that the security factor could influence consumers’ attitudes towards online banking in China (Laforet & Li 2005). Furthermore, it was considered to be one of the greatest concerns in adoption of mobile banking services (Luarn & Lin, 2004; Brown et al, 2003), as individuals may worry about security issues during mobile banking service transactions such as data input and output mechanisms (Laukkanen & Lauronen, 2005), loss of connection risk (Kuisma et al. 2007; Black et al, 2001) and personal performance mistakes (Laukkanen & Lauronen, 2005; Kuisma et al. , 2007). As a result, many people may decide not to use this service and ignore the extra benefits of using mobile banking. However, some previous studies have argued that, on the contrary, security issues were not major obstacles for consumers in adopting mobile banking (Suoranta, 2003; Laukkanen & Lauronen, 2005). It can be concluded that the security aspect is to be investigated as an important element which influences the use of mobile banking.

As an example, Soroor (2005; 2006) focused on the security issue in mobile banking and proposed some evaluation techniques which could be used to improve the system in tanzania and elsewhere: 1) First, the establishment of a secure channel to provide data confidentiality and integrity between the client and the bank service. 2) Secondly, the authentication of the client at the beginning of a mobile banking session (e. g. entity authentication, transaction authentication). 2. Socio-economic background and culture:

Laforet and Li (2005) found that the lack of understanding of the concepts and benefits was a main barrier to consumers using mobile banking, subsequently, users of mobile banking were not intended to be highly educated and were typically younger people in China; this was in contrast to the situation in the western countries as discussed by Karjaluoto, Mattila, and Pento, (2002). As discussed by Trappey and Trappey (2001), the Chinese are used to carrying cash, and have little confidence in traditional financial management.

Compared other Asian consumers, Chinese consumers seem to be more traditional and less affected by new technology advancements. Heinonen (2004) and Forman and Sriram (1991) found that some customers simply prefer to deal directly with a bank clerk instead of utilizing “arms-length technology” (e. g. mobile banking). In addition, Singh (2004)outlined that males used mobile banking more than females, and mobile banking users tended to come from high-income groups such as small business owners, salaried employees and senior managers.

Furthermore, a negative, hard-to-use image (Fain & Roberts, 1997) of technologies and computers may have been perceived by consumers when thinking about using mobile banking. Therefore, the socio-economic background and culture of potential users could be factors that influence the usage of mobile banking. 3. Service characteristics The account balance service is one of the most promising mobile banking services, and is designed to help customers check their account balance and latest transactions immediately anytime/anywhere (Laukkanen, 2007).

Luakkanen and Lauronen (2005) found that location free access created convenience in requesting account balances. Furthermore, accessibility and portability are classified as dimensions of convenience in the consumer behaviour literatures (Yale & Venkatesh, 1986; Gehrt & Yale, 1993). Consequently the spatial and temporal distance between need recognition and need satisfaction can be considered important for doing banking via mobile phone. The ability to allow consumers to have more control over their financial situation is one attraction of mobile banking ervices (Laukkanen & Lauronen, 2005), as the consumer prefers to act for himself/herself when dealing with his /her own monetary transactions through the mobile device. Luakkanen (2005) found that the flexibility of being able to use the service wherever and whenever the users want enables immediate completion of banking tasks (transferring money or paying a bill). This would save time and be perceived as convenient and efficient. The bank provides several services through mobile media, information based, transaction–based and personal services (Laudon, & Laudon, 2002).

The SMS service is the easiest way to check account balances and latest transactions via mobile phone (Laukkanen, 2007). Laukkanen et al (2007) found that speed of data transmission and the user interface impaired the added value of mobile services. Therefore, the characteristics of the service as perceived by the user and provided by the banking institution and service provider are important factors influencing the usage of mobile banking. 3. Cost of service and device: According to Nah, Siau, and Sheng (2005), the cost of mobile devices and mobile services was identified as an investment concern.

Luarn and Lin (2004) argued that financial cost was one of the greatest concerns in adoption of mobile banking services. Furthermore, Ram and Sheth (1987; 1989) stated that it was not viable for consumers to change their way of performing their banking tasks without offering a strong performance-to-price advantage. The price of banking services may have an opposite effect with respect to the adoption of mobile banking, which may result in consumers preferring the traditional banking services (Laukkanen et al, 2007).

Users agree to pay a reasonable fee to use this service; however this would depend on the banking and service provider. Provision of a lower service cost is also a major benefit for users using mobile banking and performing banking transaction functions through a mobile device; so the “value for money” barrier may be another factor influencing the adoption of mobile banking services. 4. Device features The somewhat limited input and display capability of current mobile devices is seen as limiting the use of mobile banking applications (Pousttchi, & Schurig, 2004; Laukkanen, & Lauronen, 2005).

For example, a mobile phone’s small screen cannot accommodate enough information about an account, and scrolling up and down would be needed. However, the mobile phone device itself may have little effect; Laukkanen (2007) found that when customers had experience in using a mobile phone service, they did not stress the importance of screen size in the service, but rather focused their attention on the spatial issues in the service consumption. Therefore device features may not be an issue for bank customers when considering using mobile banking. 2. 3 Adoption models: TAM, Extended TAM and DIT

The Technology Acceptance Model (TAM) (Davis, 1989; Davis, Bagozzi, & Warshaw, 1989) has been widely used and adopted to understand user acceptance of IT/IS. TAM was adapted from the Theory of Reasoned Action (TRA) (Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975) which is a general theory of human behaviour. TAM is specific to IT/IS usage (Mathieson et al. , 2001) and valid in predicting the individual’s acceptance of various corporate IT systems (Adams, Nelson, & Todd, 1992; Chin & Todd, 1995; Doll, Hendrickson, & Deng, 1998; Segars & Grover, 1993). The Technology Acceptance Model (TAM) is an information systems (System consisting of the network of all communication channels used within an organization) theory that models how users come to accept and use a technology” (Mazha , 2006, p. 1). TAM focuses on IS use based on social psychology theory, and has valid and reliable instruments (Luarn & Lin, 2004). As defined by Davis (1989), two basic determinants – perceived usefulness and perceived ease of use are instrumental in explaining the users’ intention and behaviour towards the use of new technology (Figure 2. ). Perceived usefulness was defined as “the degree to which a person believes that using a particular system would enhance his or her job performance” (Ibid, p. 320), While perceived ease of use was defined as “the degree to which a person believes that using a particular system would be free from effort” (Ibid, p. 320). As noted by Davis (1989), future research of IS/IT usage has to address the other variables which affect usefulness, ease of use and user acceptance.

Consequently these two determinants may not fully explain the factors which predict the acceptance of a technology application such as mobile banking. Prior studies have extended the original TAM with added constructs such as perceived playfulness (Moon & Kim, 2001), perceived enjoyment (Koufaris, 2002) and perceived credibility (Wang et al. , 2003). Luarn and Lin (2004) added some constructs into the original TAM model to facilitate understanding of the intention to use mobile banking in Taiwan. The extended TAM (Figure 2. 2) was adopted and used in this research.

Luarn and Lin (2004) modified the original TAM by adding perceived credibility which was defined by Wang et al (2003), perceived self-efficacy which was confirmed by several prior studies (Agarwal, Sambamurthy, & Stair, 2000; Chau, 2001; Hong, Thong, Wong, & Tam, 2001; Johnson & Marakas, 2000), and perceived financial cost which was found in Mathieson et al (2001). Technology Acceptance Model (TAM): Davis (1989), Davis, Bagozzi and Warshaw (1989) Figure 2. 1: TAM Intention to use Actual Use Perceived usefulness Perceived ease of use Extended Technology Acceptance Model (Extended TAM): Luarn and Lin (2004) Figure 2. : Extended TAM Diffusion of Innovations Theory (DIT) was developed by Rogers (1995) to explain how the diffusion of innovations takes place in the social system. As defined by Rogers (1995), there are five stages of adoption process: knowledge, persuasion, decision, implementation and confirmation. Also, Rogers (1995) stated that three valuable insights – the quality of an innovation,peer to peer communication and understanding of the need of different user segments – might be useful to diffuse and adopt the innovation. Adopters of an innovation were classified into five categories: innovators (3. 4%), early adopters (12. %), early majorities (34%), late majorities (34%) and laggards (16%). The adoption of innovation curve can be represented in Figure 2. 3. DIT has been widely used to address the issues about the individuals’ adoption of various innovations (Moore & Benbasat, 1991; Tan & Teo, 2000). According to Rogers (1995), innovation compatibility with one’s usual way of working and behaving is a factor to make individuals more likely to adopt the innovation. In the further development of the model used in the research, all three models were considered when the dependent and independent variables were defined.

Perceived credibility Perceived self-efficacy Behavioural intention Perceive usefulness Perceived finance cost Perceived ease of use Figure 2. 3: Adopters of Innovation curve Source: Diffusion of Innovation, Rogers (1995) 2. 4 Research approach As mentioned in chapter one, the purpose of this project is to identify the factors which influence positively or adversely the use of mobile banking in New Zealand and more specifically, the factors limiting/promoting the use of the services available via SMS technology. In Section 2. , some of the literature related indirectly and directly to mobile banking adoption trends across different countries was reviewed. Prior research results obtained in other regions and countries indicate that mobile banking may be more widely adopted in those countries compared to New Zealand; however findings from other countries may not be entirely relevant to the New Zealand context. Consequently this project attempts to identify factors specific to New Zealand, in order to gain an understanding of the reasons for the adoption gap identified.

The study is based on the following two questions: 1) What are the factors which influence the use of SMS-based mobile banking? 2) How is it best to evaluate a mobile banking application or service in terms of its adoptability? The research will involve qualitative and quantitative studies to explore the research objectives and findings. The use of a “mixed-methodology” approach, both qualitative and quantitative methods, will benefit the researcher by giving a wider view and more evidence to analyze the issues. It may elicit more research 12 irections and provide more flexibility and guidance to the achievement of the objective, as well as contribute to the reliability of the results. A focus group and a survey were involved in the respective stages (qualitative and quantitative) of this research. Firstly, focus group findings serve the purpose of providing information for the next stage. The data gathered from the focus groups was analysed to identify how New Zealand specific themes match the variables in the adoption models identified in the literature.

These results were used to further refine the initial research question and the research model of the study and design a questionnaire addressing the variables of the research model. The discussion will be guided by questions about participants’ experiences and perceptions in the area of mobile banking, SMS usage, and also E-banking which is a popular way to bank in New Zealand (Appendix D). Secondly, a survey will be used to explore in depth the factors which influence the use of SMS-based mobile banking in New Zealand.

The research model and the survey questionnaire will be designed to follow up on the results from the focus group sessions, which will allow the researcher to highlight relevant behavioural and other motivational factors. Data will be gathered from a detailed questionnaire, which will be analysed in order to identify factors and issues related to SMS-based mobile banking usage and adoption in New Zealand and provide recommendations. 2. 5 Chapter summary

According to findings from the selected literature review, it can be concluded that the most important factors influencing the usage of mobile banking services are risk/security, quality of service, cost, and customer attitudes/habits. Building on literature findings from IS/IC research about models and factors influencing the adoption of mobile banking, the study will adopt the Extended TAM model as a starting point to create a research model with some added constructs. The initial research model and a detailed research approach are discussed in the next chapter. 3 CHAPTER 3 Developing the research model 3. 1 Chapter overview A mixed method of qualitative (focus group discussion) and quantitative (a survey with a questionnaire) approaches is applied to this study. An explanation and a description of the research design, data collection method and ethical considerations are presented in this chapter. Figure 3. 1 depicts the steps followed in this study. Figure 3. 1: Study approach Literature reviews Models Initial model Focus on discussion Constructs Emerging theorem Focus group Final model

Survey Results 14 3. 2 Stage one: Focus group and discussion A focus group method was used in this study to explore the research objectives because of its long history of use in market research, which has demonstrated it to be effective in identifying the participants’ or respondents’ attitudes, beliefs, feelings, experiences and reactions in a way that would not have been feasible using other methods (Gibbs, 1997). Calder (1977) suggested that focus group interviews or discussions were a suitable method for explorative studies.

Jarvenpaa and Lang (2005) have also demonstrated their feasibility in studying innovative mobile services. As discussed by Wilkinson (2004), it was found that the focus group’s value lies in the group dynamics and interactions, which provide researchers with ‘elaborated upon’ perspectives of the topic under discussion. Kontio, et al. (2004) mentioned that the benefit of the focus group was to produce mainly qualitative information about the object of study. Furthermore, focus groups could produce candid and insightful information, and it is also fairly inexpensive and fast to perform (Widdows et al. 1991). On the other hand, there could be some bias produced by the small sample size and group dynamics (Judd, et al. , 1991). 3. 2. 1 Methodology Four steps were conducted in the focus group stage of this study of mobile banking based on SMS, following prior research using focus groups (Edmunds, 1991; Krueger & Casey, 2000). 3. 2. 1. 1 Defining the research focus The objective of this study is to find out what influences the usage of mobile banking based on SMS and what factors currently exist in New Zealand society.

The focus group method is also used to categorize the factors and problems in order to further develop the questionnaires required for the survey phase. From a small population of participants in a focus group discussion, it will try to get an idea of what the factors are exactly as perceived by participants and how they affect participants’ decisions to use or not use mobile banking based on SMS. 15 The data collected from the in-depth discussions in focus groups is analysed and categorized into factors influencing SMS-based mobile banking use. 3. 2. 1. 2 Selecting the participants

Two main criteria were used in selecting the focus group participants. Participants were recruited from postgraduate students of computer and information sciences; they were eligible to participant and had a mobile phone and a bank account. Stewart and Shamdasani (1990, p. 33) found that “the usefulness and validity of focus group data are affected by the extent to which participants feel comfortable about openly communicating their ideas, views or opinions”. Bryman (2001) found that naturally formed groups were particularly relaxed and at ease in conversation.

To this end, the participants were recruited from peer participants in the Master of Computer and Information Science (MCIS) Student Research Forum, AUT University, Auckland, as they were used to discussing issues about a particular topic, had similar backgrounds and knowledge. Some authors, such as Krueger (2000) suggest that 7 to 10 participants is the optimum size of a focus group; Morgan (1988) recommended a size between 4 and 12 participants. Consequently the sample size was determined to be 10 participants in the group. The session was planned to last 30 minutes, made up of two parts: a brief pre-questionnaire, and a discussion. . 2. 1. 3 Planning and conducting the focus group session The focus group session was designed to consist of two parts (Appendix D). During the first part, participants were provided with questions to answer briefly. Closed-ended questions were used in the first part, and required participants to choose among a set of provided response alternatives (Krosnick, 1999) provided general information about participants in this focus group. It would take 5-10 minutes to complete the questionnaire. The second part involved a discussion among the participants lead by the facilitator.

There was free discussion about the given questions with some guidance in order to get feedback. Open-ended questions which respondents 16 answered in their own words (Converse, 1987) were applied in this part, which took about 30 minutes. The whole second part was recorded by audio-tape and note-taking was also employed to help the researcher analyse the discussion. The two focus group sessions took 40 minutes in total. Each session started with an overview of the objectives and aims of the research and explained how the participants could discuss and act within the session.

It was important to make sure all participants’ ideas and opinions were well represented in focus group discussion, which would facilitate the questionnaire design in the later stage. The researcher worked as facilitator to motivate and encourage the participants to contribute their ideas and opinions in the discussion. At the beginning of the discussion, the facilitator leads the discussion by introducing or addressing some issues regarding SMS-based mobile banking. The discussion was semistructured; some questions were included but were not too detailed.

Some questions were not entirely formulated prior to the focus group. Questions and answers were also recorded as they could be useful for the research. 3. 2. 1. 4 Data analysis and reporting Qualitative data analysis methods were used at this stage. According to the literatures (Bogdan & Biklen, 1982; Miles & Huberman, 1984; Patton, 1990; Taylor & Bogdan, 1984; Myers, 2004), qualitative data analysis methods were widely used to analyse the data in the qualitative study (i. e. face to face interviews, focus group discussions). 3. 2. Findings and results In order to better record information during the focus group session, two small focus groups with 5 participants each were conducted to discuss and debate the issues. All participants were students in the Postgraduate or Master program in computer and information science at AUT University. The sessions were held on 9th August 2008. There were two female and eight male students. Six of the ten students were international students; four students were domestic students. 17 The questions used in the focus group are shown in Appendix D.

The sessions were divided in two parts – five closed-ended questions (part 1), and four openended questions (part 2). The responses to questions 1-5 (part 1) are summarized below: Question 1: How often do you use text messaging by cell phone during the day? Four out of ten students (40%) use text messaging by cell phone once a day; one out of ten students (10%) uses text messaging twice in one day; five out of ten students (50%) use text messaging three times or more per day. Question 2: How often do you check your bank balance per week?

Three out of ten students (30%) check their bank account balance once per week; five out of ten students (50%) check their bank account balance three times per week; two out of ten students (20%) check their bank account balance over three times per week. Question 3: Which bank services are you using now? Four out of ten students (40%) currently use Internet banking and personal banking; one out of ten students (10%) currently uses internet banking and phone banking; three out of ten students (30%) currently use only internet banking; two of ten students (20%) currently use personal banking.

Question 4: In your own view, how good are you at starting to use new technology? Most of the participants (89%) perceived themselves as good as using new technology. Question 5: Please rank the potential benefits for you to use an electronic banking service (benefits: e. g. reduced cost, high security, convenience, high speed, high quality of service, big server coverage, and ease to use) 18 According to the rank, when deciding to use electronic banking, most of participants considered issues such as reduced cost, higher security and better service.

The points emerging from the discussion of the response to open ended questions 1-4 (part 2) are summarized below: I) Mobile banking would be more convenient and more accessible than other banking if they were in a situation with limited transport, no internet access and/or in an isolated environment such as a village or a suburb. II) Using the “code expired” function after a current transaction is complete. The code sent from the bank is only used for a transaction once after the current transaction is complete, the code cannot be used again.

III) Reasonable cost for mobile banking (SMS): The bank provides one or two free transactions a week using mobile banking (SMS), and charge extra 20-50 cents for more. IV) Mobile banking (SMS) is arguably better and faster (better performance) for simple tasks compared to other banking services such as phone banking. For instance, phone banking needs a complex process regardless of whether the task is simple or complex. In contrast, it is easier to use mobile banking (SMS) for simple tasks compared to phone banking.

V) Young New Zealanders would be able to use mobile banking easily because they are good at typing messages in the mobile device using a small keyboard. VI) Whether people have a knowledge of mobile banking or not, they seldom use mobile banking. People with no knowledge may not be using mobile banking because of their concerns about security. People with enough knowledge are even more aware of the security issues, as they know more about security, and they would like to have any potential security covered. 19

VII) Users would be able to access mobile banking services anywhere and anytime because of the higher coverage of mobile devices compared to broadband. VIII) Advertising of mobile banking (SMS) should be more widespread with more information distributed to customers. 3. 2. 3 Ethical approval for conducting a focus group An approval was granted by the Auckland University of Technology Ethics Committee (AUTEC) on 08/08/2008, reference number 08/54. 3. 3 Stage two: Survey 3. 3. 1 The research model and its development

To address the research questions, an initial research model based on the Technology Acceptance Model (TAM) (Davis, 1989) and the Extended TAM (Luarn & Lin, 2004) was built (Figure 3. 2). Some constructs from prior research were added (see Chapter 2. 3). The research model was informed by the information gathered from the discussions in the focus groups (stage one of this research). The constructs are discussed in the following sections. Initial research model for studying use of mobile banking (SMS) Figure 3. 2: Initial research model Intention to use Perceived risk Perceived ost Perceived credibility Perceived usefulness Self efficacy Perceived ease of use Customer Service Speed Mobility access 20 The initial model is based on the Extended TAM, with two added constructs: customer service and perceived risk (indicated by the dashed line boxes in Figure 3. 2). Customer service is used to indentify the characteristic of the service offered by banks and mobile service providers, to satisfy customer demands and needs. As also noted by Gefen (2002), customer service affects purchase decisions through vendor knowledge, responsiveness and reliability.

The vendor and service providers anticipate and respond effectively to customer needs and requests by providing customers with the knowledge necessary to make a purchase (Jarvenpaa & Todd, 1996, 1997). Customer service has two sub variables: speed and mobility access. Higher speed of service is considered important for customers using any new technology application: Time saving was identified in the four preference clusters for self-service technology in a prior study (Hale & Thakur, 2006). Mobility access is another necessary element for the use of mobile banking.

Laukkanen (2007) found that one of the most promising mobile banking services was that of checking bank account balance immediately anywhere at any time, to avoid, for example, queuing in front of an ATM to check an account balance. Perceived risk is still a major factor affecting user behaviour when using new technology applications such as mobile banking. Soroor (2005) noted the security issues in mobile banking and proposed some techniques to improve the system in Iran. It was also found that potential risks could affect consumer’s attitudes towards online banking in China (Laforet & Li, 2005).

As discussed by Bhatnagar et al (2000), Jarvenpaa and Todd (1996) and Vijayasarathy (2002), privacy risk affected the degree to which a customer may sacrifice their privacy when they were requested to provide confidential details in making a security related retail transaction. Performance risk could cause consumers to fear “not getting what they want” when performing a retail transaction (Cox & Rich, 1964, p. 33). After completing the focus group sessions, it was found that the initial research model could not fully describe all possible factors and constructs.

The model was developed further to include new constructs. Constructs which were not 21 well supported by the findings from the focus group discussion were removed. All constructs (Figure 3. 3, p. 27) in the developed model are discussed, and the hypotheses formulated, in the following section. Customer service Derived initially from the literature, this variable is relevant to the New Zealand context as seen in the focus group results. All four sub-variables were mentioned during the focus group discussion, expressing specific concerns about mobile banking (SMS). Speed It is easy, convenient and faster process for mobile banking to do a simple task such as balance checking”; “Doing banking with mobile banking (SMS) costs more minutes than phone banking”; “I could use a phone to make a request to do any transaction immediately” (Appendix O). Hung et al (2003) found that connection speed was a significant determinant in users adopting WAP services in Taiwan. In prior studies (Hale & Thakur, 2006) and within the focus group discussions, greater speed enhances the user’s belief in the usefulness of mobile banking. The following hypothesis was formulated:

H1a: Speed will have a positive effect on the perceived usefulness of mobile banking. Mobility access “When we are in the village with no ATM machine, and no transport, we could use mobile banking as a main option to do banking”, “I think mobile banking should be good for elder or disabled people to use, because they are not able to walk and drive in a long distance to find ATM machine or banks”, “I think we can access mobile banking service anywhere/anytime through mobile device, however, we need a work station to do banking for internet banking”( Appendix O).

Laukkanen and Lauronen (2005) suggest that mobile banking offers customers additional value in terms of location-independent access. According to the discussion in the focus group and prior studies, mobility access improves 22 the usefulness of mobile banking services. The following hypothesis was formulated: H1b: Mobility access will have a positive effect on the perceived usefulness of mobile banking. Advertising “I think the bank and server provider should post more advertising about mobile banking.

I have not heard any information about mobile banking from the bank site”, “I think some of the bank staffs do not have some knowledge about mobile banking, they should get more training for that and introduce mobile banking service to customers”, “I know about the balance checking in mobile banking service, but I do not know more than this” (Appendix O). According to the focus group, appropriate and specific advertising would enhance user belief in the usefulness of mobile banking. The following hypothesis was formulated: H1c: Advertising will have a positive effect on the perceived usefulness of mobile banking. Functions I think the more functions added in Mobile banking should allow users to perform more functionality of banking”, “as considering the competitive benefit of adaptation of mobile banking (SMS), the mobile banking should provide the more services and functions which could not found in the other banking service such as pay or transfer money to someone who is in overseas” (Appendix O). According to the focus group, more functions would enhance the usefulness of mobile banking in the users’ mind. The following hypothesis was formulated: H1d: Enhanced functions will have a positive effect on the perceived usefulness of mobile banking.

Functions and advertising were clearly seen in the focus groups as constructs and the participants were interested to see how they would affect the results of the research. As a result these two variables were added into the developed research model as constructs of the New Zealand context, fitting the research objective. 23 Alternatives This variable was defined based on the focus group discussion. As mentioned by some participants, “Alternatives” could be used to efficiently express the current environment or situation of consumers in regard to mobile banking. If it is urgent or you can’t reach to ATM machine or go to Internet, you might want to use it”; “I do not think I need mobile banking service at this stage, I usually use the Bank card to pay my bill and make an expense”. “I think users satisfy the current internet banking or other banking service at this stage, users are still learning how to accept and use this new technology at the moment”, “I think mobile banking will be better for people who could not access internet and catch the transport”, “there are a lot of other options chosen to do banking such as internet banking, phone banking et” (Appendix O).

There are grounds to assume that “Alternatives” could be one of the possible factors to enhance user beliefs about the usefulness of mobile banking, where mobile banking is one of the many possible ways to conduct a transaction. The following hypothesis was formulated: H2: Alternatives will have a negative effect on the perceived usefulness of mobile banking. Compatibility This variable was defined in prior studies and the literature (Rogers, 1995).

Individuals are more likely to adopt an innovation when they find it compatible with their past experience, beliefs and the way they are accustomed to work (Agarwal & Prasad, 1998; Tornatzky & Klein, 1982). Compatibility is viewed as an indicator of how well the service or technology fits with the way the customers manage and control their finances and how it suits their lifestyle. Lifestyle compatibility (Ratchford et al. , 2001) encompasses the consumers’ lifestyles as well as shopping habits (Vellido et al. 2000), and may reflect consumers’ opinion of other e-commerce options (Goldsmith and Bridges, 2000). Compatibility is described to capture the consistency between an innovation and the experiences, values, as well as needs of potential adopters 24 (Rogers, 1995). It is an important aspect of compatibility that consumers are able to integrate services and technologies into their daily life (Jayawardhena & Foley, 1998; Lee et al. , 2003; Shon & Swatman, 1998). The compatibility construct has provided a consistent explanation of technology adoption decisions (Tornatzky & Klein, 1982).

Perceived compatibility was found to indirectly influence the user’s intention to use mobile banking through perceived ease of use, so compatibility was added into the research model and the following hypothesis was formulated: H3: Compatibility will have a positive effect on the perceived ease of use of mobile banking. Self-efficacy This variable is referred in prior research (extended TAM, Luarn & Lin, 2004). The concept of “perceived self-efficacy” is concerned with judgments of how well one can execute courses of action required to deal with prospective situations (Bandura, 1982).

The self efficacy of mobile banking (SMS) is defined “as a judgment of one’s ability to use a mobile banking service” (Luarn & Lin, 2004, p. 879). Self efficacy could include the knowledge, ability and skills needed to use the new IT. The existence of a relationship between perceived self efficacy and perceived ease of use was proposed by Davis (1989) and Mathieson et al (2001). Regarding the experience and ability, there was some discussion in the focus group sessions. For instance, “Mobile banking is particularly suitable for New Zealander. A lot of New Zealanders have a faster speed to text Message even without watching the keypad. (Appendix O). Perceived self efficacy may indirectly influence the user’s behaviour to use mobile banking through perceived ease of use. The following hypothesis was formulated: H4: Self-efficacy will have a positive effect on the perceived ease of use of mobile banking. Perceived cost 25 This variable was used in prior research on mobile banking adoption (extended TAM, Luarn & Lin, 2004). The cost consideration may prevent many people from choosing this mobile banking service (Luarn & Lin, 2004). Moreover, hardware/software and financial resources were important for users of an information system (Mathieson et al, 2001).

It was also mentioned in the focus group discussion that “mobile banking has a higher cost to receive and send the request based on Text format” (Appendix O) meaning that the users would accept a reasonable cost charge for frequent usage of a mobile banking service. For example, it costs 20-30 cents for any additional transactions using mobile banking per week, otherwise it is free. This is one way to get more customers to use this new m-commerce technology. Based on the literature and the focus group, perceived cost was likely to directly influence the user’s intention to use mobile banking.

The following hypothesis was formulated: H5: Perceived cost will have a negative effect on behavioural intention to use mobile banking. Perceived risk This variable is defined in prior studies and focus group discussion. Wong and Chang (2005) posited that risk usually arises from an uncertainty that consumers face when they can not foresee the consequences of their purchase decision. It is obvious that users’ intention or adoption to using new technology is affected by their perception of risk, whether or not such risk actually exists. Featherman (2002) found the service performance risk (i. e. he risk related to the service) is the prime determinant of e-service adoption. From the focus group discussion, the risk in mobile banking (SMS) is a major factor influencing customers’ adoption behaviour, and their decision whether or not the service is suitable for their needs. “If the mobile banking has a high security, I might trust it and have an opportunity to use it”. “I think the mobile banking is not secure enough to keep passwords or codes safely”; “if I lost the mobile phone, I would lose the money, because all codes to access my bank are stored in my mobile phone”; “short message service (SMS) is a main 26 echnology and medium used in mobile banking service, this would easily allow other people to read these messages in mobile phone” (Appendix O). Participants preferred other means of banking to mobile banking. “Internet banking is more security than mobile banking, because it has a security layer to protect the risk on internet. ” (Appendix O) Based on the literature and the focus groups, perceived risk may directly influence user intention to use mobile banking and the following hypothesis was formulated: H6: Perceived risk will have a negative effect on behavioural intention to use mobile banking.

Perceived usefulness Several prior studies have shown that perceived usefulness is an important antecedent to intention to adopt and use a technology (Davis et al, 1989; Venkatesh, 1999, 2000; Venkatesh & Davis, 2000). The following hypothesis was formulated: H7: Perceived usefulness will have a positive effect on the behavioural intention to use mobile banking. Perceived ease of use Prior studies have also shown while the direct effects of perceived ease of use remain important over time, the indirect effect of perceived ease of use becomes stronger (Venkatesh & Morris, 2000).

A system which is easier to use will facilitate more system use and task accomplishment than systems that are hard to use (Venkatesh & Morris, 2000). The following hypothesis was formulated: H8: Perceived ease of use will have a positive effect on the behavioural intention to use mobile banking. Perceived credibility Perceived credibility was not mentioned in the focus group for these participants. It has apparently little power to influence the use of mobile banking in New Zealand. However it was mentioned in prior studies in Taiwan (Luarn & 27 Lin, 2004).

In regard to the New Zealand context, credibility was eliminated from this study. It may be reused and tested in further studies. Figure 3. 3: Proposed research model In summary, the research model used in this study was initially based on the TAM and Extended TAM models, as used in prior literature. It was modified to reflect the focus group discussions and the New Zealand context. The hypotheses linking independent and dependent variables as formulated are further tested and analysed. 3. 3. 2 Data gathering In the previous section the constructs and the hypotheses for the research model were introduced.

Next the data gathering method (survey) is described. 3. 3. 2. 1 Overview A survey is a powerful and effective tool that can be used to collect data about human attitudes, behaviours, and characteristics. The survey questionnaire is often adopted by researchers as an effective hypothesis testing method Perceived risk Alternatives Customer Service Self efficacy Intention to use Perceived Perceived cost usefulness Compatibility Perceived ease of use Speed Mobility access Advertising Functions H1a H5 H7 H8 H4 H3 H2 H1b H1c H1d H6 28 (Cavana et al. , 2001).

For example, in their prior study on mobile banking in Taiwan, Luarn and Lin (2004) used a questionnaire in the data collection phase. 3. 3. 2. 2 Data collection method Data was collected via personally-administered questionnaires from different sources such as classes, students’ lounges, students’ labs, and the AUT library and study groups. The advantage of this method was that both the cost and the time required were low (Cavana et al. , 2001). Data collection was conducted in October 2008 at Auckland University of Technology. Different students with different backgrounds were randomly invited to volunteer to do the survey questionnaires.

The sample exclusively considered of AUT students. 3. 3. 2. 3 Survey instrument Reviewing prior studies on mobile banking, e-commerce and information systems, it was found that many studies used questionnaires to collect data for analysis and research objective investigation. In this study a survey with questionnaires was implemented to explore user behaviour and intention to use mobile banking (SMS) (refer to Appendix F). In order to facilitate participants’ understanding of this research, a brief introduction of the research purpose and a definition of mobile banking (SMS) were provided at the beginning of the questionnaire.

Furthermore, confidentiality and anonymity were afterwards. The demographic questions for this research were placed at the end of the questionnaire. According to Sudman and Bradburn (1982), it was better to keep participants’ minds on the purpose of the survey at the beginning. There were no technical jargon or difficult words in the questions, and closedended questions were used throughout the whole questionnaire. This was quite helpful as respondents could make a quick decision when answering (Cavana et al. , 2001), and it provided greater uniformity, thereby making data processing easier (Babbie, 1990). . 3. 2. 4 Items and measurement The questionnaire items were selected from previous research and the results of focus group sessions, and were rephrased to suit the context of the study and to represent the variables in the research model. 29 Items measured on a scale for perceived usefulness, perceived ease of use and intention to use were adapted from the original TAM instrument (Davis, 1989) and their subsequent applications on mobile banking or other technology applications (Luarn & Lin, 2004; Davis et al. , 1989; Agarwal & Prasad, 1997; Lederer et al. 2000; Tan & Teo, 2000; Venkatesh & Davis, 2000; Wang et al. , 2003). Items for the speed sub-construct were adapted from prior studies (Agarwal & Prasad, 1997; Plouffe et al, 2001; Tan & Teo, 2000) and the focus group discussions. Items for mobility access, advertising, functions and alternatives were adapted from the focus group session and further developed. Items for self efficacy were adapted from the original instrument (Compeau & Higgins, 1995) and from other studies on mobile banking or other technology applications (Luarn & Lin, 2004; Tan & Teo, 2000; Wang et al. , 2003).

The items measured for perceived cost were adapted from a prior study on mobile banking (Luarn & Lin, 2004). Measures of perceived risk were adapted from several prior studies in different commercial areas (Tan & Teo, 2000; Jarvenpaa & Todd, 1997; Pavlou & Featherman, 2002) and the discussions in the focus group sessions. Items for compatibility were adapted from the studies of Taylor and Todd (1995), Moore and Benbasat (2001), and Agarwal and Prasad (1997). A five-point Likert scale, with anchors ranging from “strongly disagree” to “strongly agree”, was used for all questions except the demographic ones.

Pretesting of the items and their measurement was conducted by going through the results of the focus groups and by asking the opinion of academics in the IS/IT area. All developed items were relevantly matched to the mobile banking context in New Zealand (Appendix E and Table 3. 1). 30 Table 3. 1: Variables list with prior studies Variable Sub-variable Item Source Customer service Speed Three items: SP1, SP2, SP3 (Agarwal&Prasad,1997), (Plouffe et al, 2001), (Tan&Teo,2000),focus group Mobility access Two items: MA1,MA2 (Agarwal&Prasad,1997), focus group

Advertising Two items: AT1,AT2 focus group Functions Two items: FN1,FN2 focus group Alternatives Two items: AL1,AL2 focus group Self efficacy Six items: SE1,SE2,SE3,SE4,SE5,SE6 (Compeau&Higgins,1995) (Luarn&Lin,2004) (Tan&Teo,2000)(Wang et al. ,2003) Perceived cost Three items: PC1, PC2, PC3 (Luarn&Lin,2004) Perceived risk Three items: PR1, PR2, PR3 (Tan&Teo,2000),(Pavlou &Featherman,2002),(Jarv enpaa&Todd,1997), focus group Perceived usefulness Three items: PU1, PU2 (Davis,1989),( Davis et al. , 1989),(Venkatesh &

Davis,2000),(Lederer et al,2000),(Luarn&Lin,2004 ),(Wang et al,2003) Perceived ease of use Four items: PEOU1,PEOU2,PEOU3,PEOU4 (Davis,1989),(Davis et al, 1989),(Venkatesh&Davis, 2000),(Luarn&Lin,2004)( Moore&Benbasat,2001),( Tan&Teo,2000) Compatibility Three items: COMP1,COMP2,COMP3 (Moore&Benbasat,2001),( Taylor&Todd,1995a), focus group Intention to use One item: INT1 (Davis,1989),(Venkatesh &Davis,2000),(Lederereta l. ,2000),(Luarn&Lin,2004) , (Wang et al,2003) 31 3. 3. 2. 5 Data collection procedure

A brief invitation and introduction to this research was provided to participants before they started filling out the questionnaires. If they accepted the invitation, questionnaires were handed out to them. Otherwise, they would not receive any questionnaires. After 30 minutes, the completed, anonymous questionnaires were directly collected by the researcher. 3. 3. 2. 6 Ethical consideration in the survey Ethical approval of the survey process was granted by Auckland University of Technology Ethics Committee (AUTEC) on 15/09/2008. The reference number is 08/54. 3. 3. 2. 7 Sample selection

Selecting a sample is a very important step for a positivistic study. Hussey and Hussey (1997) note the sample should be unbiased and large enough to satisfy the needs of the research. It is impossible to survey the entire population of a particular study because of limited funding and time. Therefore it is necessary to survey a sample of the population as an alternative in order to formulate predictions about the entire population. University or college students were chosen as participants in most prior studies on IS/IT because they were easy to access and highly responsive to survey questionnaires.

More importantly, prior studies showed that students were the most active mobile application users (M: Metrics, 2006). Subsequently it was decided that AUT students who had a mobile phone and a bank account were to be involved in this research as participants. A complex process is normally involved in determining the sample size for a survey. If a sample size is small, the results may not properly represent the entire population. If the sample size is large, the survey may not be able to be carried out due to cost and time restraints.

Taking cost and time into consideration, Newton and Rudestum (1999) suggested the following calculation to decide the sample size. 32 Sample size= Total response required Response rate*(1-r2) (Assume: a multiple regression analysis with r2 (effect size) of 0. 1) Following the above calculation, the research requires 300 subjects in order to get 250 responses, with 90% response rate and r2 value of 0. 1. The sample size of this research was estimated at 300 participants. In fact, a total of 260 questionnaires were returned.

Six incomplete questionnaires were discarded, 254 questionnaires were found usable for later data analysis. 3. 3. 2. 8 Data analysis method Quantitative data is analysed by using descriptive statistics and other standard quantitative methods (Kontio, Lehtola & Bragge, 2004). Data collected from the survey is entered into the statistical package, SPSS (statistical package for social science) for analysis, discussion and presentation of the results in this research. Q-Q Plot for raw data was used to test the data distribution.