Factor Influencing Internet Banking Adoption Students In Malaysia

1. 1 Research background

Internet is convenience and usefulness in our lives. Internets are usable for customers to do transaction through online, collect or search the latest data and information, online market research as cause the organisation and people to adopt internet banking. In year 2000 – 2010, Malaysia user growth is up to 356.8%. Malaysia internet banking penetration rate is 64.6%. (http://www.internetworldstats.com/stats3.htm#asia ). Nowadays, people start to use internet frequently. Internet offers useful links through the information technology. Information technology has highly increased for customers directly access the website.

Internet banking refer that banks provide services via secure website which operated by the bank. Banks offer banking transaction in two different ways for customers. It’s traditional banking which establishes physical offices and the through internet only for banking transaction. Internet banking allows every customer systematically manage their finances. It’s convenience for users and efficient at office, house and anywhere to do online transaction. Through the internet banking customers may save time and minimize the problem. Malaysia starts to adopt internet banking since year 2000 by Maybank. Maybank is one of the largest commercial bank in Malaysia which offer internet banking services known as (www.Maybank2u.com ) including investment, pay bill, funds transfer, pay wave cards, and customers service.

Internet banking is ease of use for customers to process their payment. Previously, bank customers were lack of confidence to use internet banking and prefer traditional banking. This is due to the internet connection between users and banks. Advanced of information technology and system emerge the bank to provide the real time electronic transaction to bank customers. Banks secure the clients detail and info through online transaction. Bank customers begin to presence on the internet online transactions. Customers save time and do not install any software program to their personal computer. It’s ease of use for customers to do online transactions.(David Gefen & Detmar Straub 2000).

According to (Caalin Guraau 2002) internet banking is one of the newest technology internet applications. Internet gives financial institutions and customer’s benefits through website. Banks offering online banking services to customers. The digital system was relatively smooth in the develop countries. Electronic banking (e-banking) provide variety of services to bank customers. In addition, the use of internet banking has grown rapidly such as automatic bill payment (ABP), electronic transfer of funds (FET), phone banking and computer banking (PC banking). Internet increased the efficiency of banking industry and convenience for bank customers to be realized. The organisation business will be influence the acceptance of new products to create climates in technology. Savvy consumers will be advantage in internet banking transaction. (Jane M. Kolodinsky & Jeanne M. Hogarth and Marianne A. Hilgert 2004)

According to (T. Ramayah, Muhamad Jantan, Mohd Nasser Mohd Noor, Koay Pei Ling 2003) bank customers are always attentive about the security, availability, and usefulness and information technology. Customers begin to start from traditional banking to internet banking.

Ease of use and usefulness of internet banking influence the intention of use. The usefulness has grabs bank customer’s intention to adopt in internet banking. Internet banking is not only to enhance cost efficiency but also for greater outreach and customer user friendly services. Internet banking is available of 24 hours access, funds transfer and payments of bills is convenience for the banks clients. Online transactions have greater accessibility and web security. As the penetration of computers is growing so internet banking are benefits for customers.

Internet banking service has significantly improved and the website content is rich. Users may retrieve and search information from the website. In the future the download speed of home page and web site accessibility are developed efficiently. The number of user increase by adopting internet banking. In addition, internet banking is competitive in the Middle East and Africa ( Yazan K.A. Migdadi 2008).

University students are of the main users for internet transaction especially in the learning process to gain knowledge. They are target by the bank as they spend most of the time for online transaction and others online activity. The previous studied are focus on overseas internet banking transaction. Basically there is no research about the internet baking adoption among the university students in Malaysia. This report is about the factors that influence the group are adopting in internet banking or not. Furthermore, banks are also benefit from this report as they may understand the customers by the behaviour and attitudes. In order to satisfied customers need and wants to improve their information technology system.

Finally, these researches are able to benefit from findings info in various ways. Moreover, this research can be also use as guidance and references for future research.

1.2 Problem statement

Study on internet banking has different types of limitations among the university students in Malaysia. This report is to identify the problem appear and how to control these problem as good as possible.

In Malaysia there are only few studies has been done in this research area. Although some of researchers has done this research area about internet banking. But they do not focus on university students. The most similar research is internet banking among the young intellectuals (Hanudin Amin 2007). In addition, some of research is about the strategic online banking adoption (Ruben Hernandez-Murillo Gerard Llobet Roberto Fuentes 2006). The adoption of electronic banking technology by U.S consumers (Jane M. Kolodinsky 2004). The influence of trust on internet banking acceptance ( Khalil Md Nor & J Michael Pearson 2007). Factor influencing the adoption of internet banking (Margaret Tan & Thompson S. H. Teo 2000). As above mention some few research. The researchers are focus on the developed country to search information rather than developing country such as Myanmar, Vietnam, Cambodia and others. The result from the research area might not be relevant due to the respondents, education background, culture, and personal preferences.

Factor influencing adoption in internet banking has produced different result. Research on internet banking is still remaining inconclusively. Internet banking has missed out some of the potential and benefits in the website. Example: characteristic of internet, services, and complexity ( Aungkana Wungwanitchakorn 2002)However, there are few conflict appear to explain internet banking adoption. The relationship between traditional banking and internet banking for the financial service delivery ( Nicoletta Corrocher 2002). It’s a substitute or complementary for the bank.

In Malaysia there are relatively low and less researches about the internet banking adoption. Although there are few researches is related to the online banking, electronic commerce, mobile banking and electronic business. So, internet banking research in Malaysia is still in the stage to progress further. Bank and others parties are still excited to intervened the

usefulness, services, and efficiency of internet banking (T. Ramayah, Muhamad Jantan, Mohd Nasser Mohd Noor, Koay Pei Ling 2003)

Hence, it is important for the banks to improve their service quality by understanding the customer’s perception and expectation in order to create satisfied customers. Internet banking failures cause the banks to lose their customers if the banks fail to deliver according to the customer expectation which will affect customers’ satisfaction. Therefore, further understanding on the internet banking will help to improve the market share of this industry.

This research is essential for the university students to understand the Malaysian structure environment and perceived of internet banking in Malaysia population

1.3 Research Question

Internet banking adoption leads several questions for user and the service providers. Therefore, it’s important to generate few general questions. The question can be divided into few questions based on the research. This is to update for the latest question and accuracy respondent to the study. The answer will be analysed and tested by hypothesis and conclude the theory of this research study.

What are the factors influence internet banking adoptions among university students?

How bankers encourage university students to adopt internet banking?

Are Malaysia internet banking is similar to others country to adopt internet banking?

1.4 Research Objective

After figuring out the problem statement, next up will be the research objectives of this research paper. The research objectives are as following:

To determine what is the factors that influence university students to apply internet

banking.

University students use internet banking for their banking transaction. Banks required understand the factors as it’s also helpful for the banks and government. Thus, banks can easily implement through internet banking among the university students to satisfy the users. Thus, this can meet the user’s expectation to adopt internet banking. Generally, consider about the factors when university students adopting in internet banking is important.

To indentify whether the speed will affect the usability and availability of internet

banking.

The purpose of the research is to determine whether the speed will affect the usability and availability of internet banking. Before, banks begin to implement internet banking, they need to ensure the website is user’s friendly and ease of use. The website required faster speed to perform efficiently. Banks sometime do not aware the speed it’s important for customers. Internet banking is not only for transaction purpose but it’s to protect customers info and profile safely.

To investigate whether satisfied customers will benefit the bank in future.

Customers’ satisfaction always influence by the speed, feelings and perception but banks

are concern to pay more attention about it. Customers’ satisfaction will directly influence to adopt internet banking in the future. So, if the customers are satisfied through internet banking services then it will be benefit for bank in the future.

1.5 Significant of the research

There are 4 parties that will benefit from these studies which are:

Bank

With the high competition from competitors, it’s important for banks to reformulate a better strategy to attract university students to adopt and retain internet banking services. Through this research study on university students, it will benefit the banks as they are able to identify the factors, strength, weakness, threat and opportunity to improve their services. Banks may know the customers satisfaction and perception toward internet banking services.

Government

From this research study, government will understand the factors influencing internet banking adoption among university in Malaysia. Government can also evaluate the pros and cons as adopting in internet banking.

Customers / Users

This research study is important for users to further in internet banking adoption. The outcome from this study helps users to understand the features, usability, availability and others. Actually,

Internet banking helps users to save time, convenience and advance in information technology. This is because customers are able to save time for banking transaction through online.

Researcher

This research will help to obtain various information and resources, which not fully mentioned by the previous researches. In addition, this research can be use as a reference in the future research. This study is useful and helpful for those who conducted this area of research.

1.6 Scope of study

The research will be done in Malaysia where university students will be the main respondents in this research. The selected respondents will be adults at the age group of 18 and above. The survey will be done in the university compound and also banking street areas in Bukit Beruang. Moreover, this study will only focus in Malaysia and it’s not worldwide. This is because there are lacks of research study in Malaysia. Lack of information is hard to know the diffusion of internet banking.

Understanding factors influence to adopt internet banking will help banks to improve their service performance, it’s also strengthening the relationship between banks and customers in order provide better services and contribute in future developments. Moreover, nowadays advanced information technologies help banks easily to keep track of customers’ preferences, detail, and history profile.

1.7 Definition of terms

Internet Banking: Enable customers to electronically carry out of their banking transactions through a safe website, which is operated by their respective banks.

University Students: Is a learner, or someone who attends an educational institution, university and college.

Adoption to internet banking: This refers to the acceptance of using internet banking.

1.8 Structure of project

Chapter 1: Introduction

This chapter discuss about the foundation research which include the summary of the research study, research background, problem statement, research question and objective, significant of research, scope of study and the term definition.

Chapter 2 : Literature Review

Chapter 2 is about literature review regarding internet banking adoption among university students. This is also related to previous researcher limitation and conclusion on their result. Variable are identified based on the previous research.

Chapter 3: Methodology

Chapter 3 is to identify the methodology that used for the research framework, and also briefly explain the independent and dependent variables. Hypothesis developed and also the method of collection data. In addition, this chapter will also discuss some of the questionnaire development, sampling size, data analysis techniques.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

In this chapter will further discuss the factor that influence internet banking adoption by the university students in Malaysia. The chapter will begin with the definition of internet and internet banking. Thus, this chapter will also further explain about the development of internet banking in Malaysia, Asian country and Europe. Furthermore, it will contain the literature review by previous researcher. This is to explain the problem statement and how previous researchers have done their study, findings and limitations. Lastly, the dependent variables that influence adoption to internet banking will discuss in detail too.

2.2 Internet banking

Internet banking defines as to the use of the Internet as a remote delivery channel for banking service. The services transaction include online transaction banking, such as opening a deposit account or transferring funds among different accounts, and new banking services, such as bill payment through online, personal banking, investment or exchange rate. Online banking is available of 24hours a day, fast and convenience. Customers can access the services anywhere via telephone or the Internet connection. Internet banking has attracted the attention from bankers, business partners, customers and other financial institution all around the world. Internet banking has growth from the beginning of 2001. The largest national and commercial banks offered internet banking to customers but only 7% of the smallest banks offered it .So, larger banks are offering broad range of service through internet customers as compare to a smaller banks.( Karen Furst, William W. Lang, and Daniel E. Nolle 2000)

The usage and popularity of the Internet and electronic banking is increasing rapidly around the world. In year 1995 information technology and internet has growth well in USA. Moreover, internet banking has been fairly popular in U.S as compare to traditional banking. The launching of Security First Network Bank has marks a new beginning in banking through the advent of a secure online financial transaction environment. (Electronic Networking Applications and Policy. Volume 6 · Number 1 · 1996 · 31-32). Internet banking appear consumers stop or skip over telephone banking and go straight to personal computer banking (PC banking). In order to meet customers demand banks offer electronic alternatives to financial services. It’s also help banks to save significant amounts of money. Customers can have self service online banking at home and everywhere.

According to (Minjoo Jun & Shaohan Chai 2001) the growth of internet has change the organization to conduct business with customers. The banking industry has no exception that providing financial services over internet. The increases in technology usage of banking industry have become important in modern banking services. It is expected that 60 % of retail banking dealings will be online in ten years’ time (Barwise, P. 1997). Banks has several of customers around the world therefore customers need internet banking to access their transaction. In the advanced country, customers start to shirt from traditional banking to online banking form of deliverance of banking services.

2.4 Internet Banking Development

There are several bank in Malaysia is also offering internet banking services to the customers. The list below is the bank which provides the internet banking services to customers.

List of Banks Offering Internet Banking

Banks

Affin Bank Berhad

Al Rajhi Banking & Investment Corporation (Malaysia) Berhad

Alliance Bank Malaysia Berhad

AmBank (M) Berhad

AmIslamic Bank Berhad

Bank Islam Malaysia Berhad

Bank Kerjasama Rakyat Malaysia

Bank of America Malaysia Berhad

Bank of Tokyo-Mitsubishi UFJ (Malaysia) Bhd

CIMB Bank Berhad

Citibank Berhad

Deutsche Bank (Malaysia) Berhad

EON Bank Berhad

Hong Leong Bank Berhad

HSBC Amanah Malaysia Berhad

HSBC Bank Malaysia Berhad

Malayan Banking Berhad

OCBC Bank (Malaysia) Berhad

Public Bank Berhad

RHB Bank Berhad

RHB Islamic Bank Berhad

Standard Chartered Bank Malaysia Berhad

United Overseas Bank (Malaysia) Berhad

Kuwait Finance House (M) Berhad

J.P. Morgan Chase Bank Berhad

Bank Muamalat Malaysia Berhad

(Source: Bank Negara Malaysia www.bnm.gov.my)

2.5 Prior Research on Internet Banking

Moreover, in year 1998 people are still prefer tradition banking but when time go by online transactional activities become popular. Nowadays, more and more people rapidly adopt their personal information to the website. By Harris in year 2005, customers paying bills through online has increase up to 38% as compare in 1998 was only 13%. (Susannah Fox and Jean Beier 2006)

(Source: Pew & American Life Internet Project)

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