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Users’ Loyalty towards Mobile Banking in Malaysia


Faculty of Management, Universiti Teknologi Malaysia, 81310 Johor Bahru, Malaysia


Faculty of Management, Universiti Teknologi Malaysia, 81310 Johor Bahru, Malaysia


Faculty of Management, Universiti Teknologi Malaysia, 81310 Johor Bahru, Malaysia


Faculty of Management, Universiti Teknologi Malaysia, 81310 Johor Bahru, Malaysia

*Corresponding Author:
Faculty of Management, Universiti Teknologi Malaysia
81310 Johor Bahru, Malaysia
Tel: 60167420987

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Electronic banking emerges as perhaps the most prominent development trend in the Malaysian internet economy. Thus, it is vital to explore customer loyalty in using electronic banking industry. The study is aimed to investigate the determinants of customer loyalty of mobile banking. A survey questionnaire approach is adopted in this study. Our findings show that subjective norms, perceived convenience and perceived usefulness positively and significantly influencing loyalty. The findings offer important implications to policy makers to understand customer loyalty on mobile banking in Malaysia.


Mobile banking, Loyalty, Consumer behaviour, Malaysia


With the proliferation of informational technologies and the internet, online banking has become an important element in the Malaysian economy. Currently, it is reported that there are 31 banks are offering online banking services to their customers although online banking was introduced less than a decade in Malaysia. Central Bank of Malaysia reported that there were 19.8 million internet banking subscribers and 7,279,000 mobile banking subscribers in December 2015. These figures show that percentage of penetration of mobile banking to reach 63.7% of the total population.

While the number of mobile banking subscribers has grown rapidly in Malaysia, but the understanding of customer loyalty on mobile banking remain inadequate. The empirical evidence of customer loyalty on mobile banking is relatively scarce compared to the behavioral intention literature. This knowledge gap is important because subscribers to mobile banking may not be active users. Such problem remains a significant challenge to establish pure online banks in Malaysia. Some pure online banks try to complement their online services by establishing branch services. However, they cannot sustain main business operation, i.e. online banking, if lacking customer loyalty on online banking [1]. Furthermore, mobile banking service is a source of competitive advantage in the banking industry [2].

Therefore, this study seeks to investigate the determinants of customer loyalty of online banking in the Malaysian context. This study adapts technology acceptance model (TAM) to investigate customer loyalty of online banking [3-5]. This study is expected to generate new insights on the factors that influence mobile banking loyalty.

Literature Review

Mobile Banking

In general, mobile banking refers to the use of mobile banking application to perform online financial transactions. Other mobile banking services include online fund transfer, account management, bill payment, PIN changes and balance inquiry [5]. The mobile banking user may use those services when the mobile devices are connected to a server through internet. Mobile devices and communications networks are two preconditions for mobile banking services. That is, users need to install mobile banking application on their mobile devices, such as mobile phones or tablets [6].


Perceived usefulness and perceived ease of use are the key components of technology acceptance model (TAM) [3]. Technology acceptance refers to an observable willingness to use the information technology in accomplishing a task. However, numerous people are not willing to make real use of technology in daily lives. Therefore, there is a phenomenon in investigating the factors of influencing individual’s technology adopttion [6]. In addition, Theory of Reasoned Action (TRA) from Ajzen et al. [7] is the origins of TAM. In TRA, a person's beliefs and attitudes are assumed to influence on the individual’s intention to perform a specific task [8]. Whereas in TAM, user acceptance of technology is assumed to determine by perceived usefulness and perceived ease of use. The model is shown in Figure 1.


Figure 1: TAM (Davis, 1989).


Loyalty is a customer’s intention to repurchase a product or service from the same seller, brand or service provider [9]. Hence, the user’s loyalty of mobile banking may refer to continuous or repeating use of mobile banking service. In other words, customer’s loyalty can be interpreted as the higher value provided by the specify seller, brand or service provider compared to others [10]. Therefore, customer’s loyalty is considered as a key success factor for a seller or brand over a time [11,12]. Loyalty can be measured by psychological component and behavioral component, where psychological component depends on customer’s feeling to rely on a person, products or services of an organization [10], whereas the latter one is based on customer’s frequency of visiting a certain shop or customer’s expenses on the brand or product [13]. Besides, loyalty may also be known as e-loyalty. E-loyalty is defined as the customer’s intention to revisit a website or to repurchase from same online vendor [11].

Research Model and Hypotheses

The research model of this study includes 4 variables, which are subjective norms, perceived ease of use, convenience and loyalty. As shown in Figure 2, the subjective norms are acting as an independent variable which influencing the convenience and perceived ease of use. Convenience and perceived ease of use are mediating between the relationship of subjective norms and user’s loyalty.


Figure 2: Research Model.

Subjective Norms and Convenience

Subjective norms happened when someone’s thought; action or feeling is influenced by other people such as family and friends. It is also refer to social influence or social norm [14]. Subjective norms are defined as the “perceived pressures on a person to perform a given behaviour and the person’s motivation to comply with those pressures” [15]. In this study, the external variable is subjective norm. Therefore, the relationship between subjective norms and convenience is the first hypothesis. Empirical evidences that social influence positively on convenience [16-18]. In Gu et al. [19] study, subjective norms are found have insignificance relationship with convenience.

H1: Subjective norms have a positive impact on user’s perceived convenience of mobile banking.

Subjective Norms and Perceived Ease of Use

From the research model shown in Figure 2, subjective norms are also influencing perceived ease of use (PEOU). In TAM, PEOU is assumed to influence by external variable. As stated in previous section, the external variable is subjective norms. From previous studies, subjective norms are investigated to have a significant and positive relationship with PEOU [17]. From the finding of Montazemi et al. [20], subjective norms proved to significant and positively influencing user’s PEOU in their pre-adoption stage of using online banking. Hypothesis 2 is developed below.

H2: Subjective norms have a positive impact on user’s perceived ease of use on mobile banking.

Convenience and Loyalty

In Oxford dictionary, convenience is defined as “the state of being able to proceed with something without difficulty or the quality of being useful, easy, or suitable for someone.” Convenience can also be known as perceived usefulness in TAM theory. According to Davis et al. [3] perceived usefulness refer to the user’s belief in using a technology or system to increase his or her performance. Moreover, perceived usefulness can also be referred as time saving, effectiveness at work and the significance of the system for individuals work [21]. As basic technology and service have already been tested and standardized, convenience has become an important factor for user’s acceptance of certain technology when similar products and services exist [22]. To enhance customer loyalty, high level of convenience of online shopping has become more significant for driving force a brand [23]. Numerous researches found the convenience and loyalty has a positive and significant relationship [14,24-27]. Therefore, the hypothesis of convenience and loyalty is developed.

H3: Convenience has a positive impact on user’s loyalty in mobile banking.

Perceived Ease of Use and Loyalty

Perceived ease of use is one of the important variables in TAM. The definition of perceived ease of use (PEOU) by Davis et al. [3] is “the degree to which a person believes that using a particular system would be free of effort”. In other words, PEOU refer to the easiness for user to understand and use the system. PEOU is affecting the customer’s intention to use mobile banking due to the requirement to have a certain level of knowledge and skill for the users [28]. Besides, it is related to the effort of involve in utilizing a technology [29]. In previous research, perceived ease of use was found positively influence user’s intention to adopt smartphone apps .In other words, user’s loyalty will be higher as they perceived the technology is easy to use [30]. From previous researches, PEOU has positive and significant relationship with the user’s loyalty [24,31-34]. Therefore, the last hypothesis is shown below.

H4: Perceived ease of use has a positive impact on user’s loyalty in mobile banking.


Survey Instrument

In this study, a questionnaire was developed to collect empirical data. The questionnaire consisted 3 parts. In the first part of the questionnaire, questions regarding demographic characteristic were asked such as gender, age, education level and income. For the second part, respondents were asked to indicate their level of agreement to the statement which related to the research constructs. On the other hand, the third part of the questionnaire is questions about the period of respondents using mobile banking and the frequency they use mobile banking in a month. In second part questionnaire, all statements are measuring by seven-point Likert scale ranging from ‘strongly disagree’ to ‘strongly agree’.


The study use convenience sampling strategy to select the sample. Paper questionnaire was distributed in a total of 300 copies. In a month period, 183 copies were returned back. The response rate was achieved at 56%. The questionnaire also distributed in another form which is an online questionnaire. The online questionnaire was randomly sent to 150 mobile banking users and 78 questionnaires were answered. The response rate is successfully achieving 52%. The total responses are 261.

Data Analysis Technique

After the survey was completed, all the raw data were edited, recorded and coded in Microsoft excel and data input into SmartPLS for processing. Before process the data with SmartPLS, the data was checked for outliers and missing values. There are 251 cases as valid sample and retained for measurement analysis. Partial least squares (PLS) path modeling technique was used using the SmartPLS 2.0 M3 software. PLS was chosen to use in this study because it is not requiring the distributional assumption of normality, needed less demand on measurement scales and not limit with small as well as large samples [35].


Respondents’ Profile

In the survey, majority of the respondents are female (69%). Most of the respondents are between 18 to 25 years-old. Their educational level, mostly at the college and university level. As most of them are university students, therefore 59% of them have no monthly income, whereas for those who have a job mostly has RM2, 001 to RM3, 000 monthly incomes. Besides, the majority of the respondents have over 2 years’ experiences for using mobile banking. Lastly, there are 80% of them using mobile banking between 1 to 5 times in a month.

Evaluation of the Measurement Model

To assess the adequacy of the measurement model, PLS factorial validity tests were conducted and shown in Table 1. Convergent and discriminant validity were considered for validating the measures and PLS factorial validity test provided evidence for the convergent validity. The outer loadings were all exceeded 0.7 and significant. The Chronbach’s alpha value and composite reliability value were both greater than 0.7. Besides, the AVE were also all greater than 0.50. In Table 2, the discriminant validity of the measurement model was built. Each of the variable’s square roots of AVE was greater than the correlation between the variable and other variable. Moreover, the indicators’ cross loading was also accessed and found there is no indicator loads higher on opposing construct (Table 3). Therefore, the measurement model results offered strong evidence for the validity and reliability of the construct measures in this study.

Table 1: Factor loadings for individual items.

Construct/item Loading Cronbach’s alpha (α) Composite reliability AVE
Convenience:   0.89 0.93 0.82
C1 0.86      
C2 0.95      
C3 0.92      
Loyalty:   0.94 0.96 0.90
L1 0.96      
L2 0.94      
L3 0.94      
Perceived ease of use:   0.90 0.94 0.84
  PEU1 0.91      
PEU2 0.92      
PEU3 0.91 0.91 0.94 0.84
Subjective norms:        
SN1 0.91      
SN2 0.92      
SN3 0.93      

Table 2: Descriptive data, inter-construct correlations and the square root of AVE.

  Convenience Loyalty Perceived ease of use Subjective norms
Convenience 0.91      
Loyalty 0.43 0.95    
Perceived ease of use 0.52 0.42 0.92  
Subjective norms 0.40 0.49 0.29 0.92

Table 3: Cross Loadings.

  Convenience Loyalty Perceived ease of use Subjective norms
C1 0.86 0.40 0.50 0.35
C2 0.95 0.43 0.48 0.38
C3 0.92 0.34 0.43 0.37
L1 0.42 0.96 0.43 0.47
L2 0.41 0.94 0.39 0.42
L3 0.40 0.94 0.37 0.50
PEU1 0.51 0.40 0.91 0.24
PEU2 0.47 0.34 0.92 0.29
PEU3 0.46 0.41 0.91 0.26
SN1 0.34 0.41 0.30 0.91
SN2 0.38 0.48 0.26 0.92
SN3 0.39 0.45 0.23 0.93

The structural model was assessed, after developing the measurement model. The results are shown in Figure 3. The predictive relevance and predictive power were also assessed and the results were shown in Table 4. In Table 4, the model’s predictive relevance was proof by the Q-Squared. As all 3 dependent variables which is convenience, loyalty and perceived ease of use have a value that significantly higher than zero. In the Table 5, it has shown the result of hypotheses testing that contenting Path coefficient and t-Value. The results display showed all 4 hypotheses were supported. All four variables have a positive causal effect to another one at 1% significance level.


Figure 3: Structural model test results. **Significant at p<0.01.

Table 4: Predictive relevance and predictive power.

Endogenous Variable R-Squared Q-Squared
Convenience 0.16 0.13
Loyalty 0.24 0.21
Perceived Ease of Use 0.08 0.07

Table 5: Results of hypothesis testing.

  Path coefficient t-Value Supported?
Convenience>Loyalty 0.29** 4.68 Yes
Perceived Ease of Use>Loyalty 0.27** 4.15 Yes
Subjective Norms>Convenience 0.40** 6.81 Yes
Subjective Norms>Perceived Ease of Use 0.29** 4.49 Yes


This study seeks to investigate the determinants of customer loyalty of online banking in the Malaysian context. This study discovered that perceived convenience and perceived ease of use are important factors for Malaysia’s mobile banking users to stay loyal in using the services provided. Subjective norms, which are measured by the influences of family, friends and important people, also play an important role to affect user’s perceived convenience and perceived ease of use.

This study offers theoretical and practical implications. Theoretically, this study offered support for the inclusion of subjective norms factors enhances the understanding of the antecedents of perceived convenience and perceived ease of use. Practically, this study identified the important determinants that influence user’s loyalty in using online banking services in the Malaysian context. This suggests that the user’s loyalty is determined by convenience and ease of use of the mobile banking service. Managers in the banking industry should focus on improving the mobile banking service based on customer perspectives. On the other hand, policy makers may instill a policy to use social influence to encourage more bank users to use mobile banking service.

This study has several limitations. This study uses cross-sectional design and only investigates the sample on Malaysian banking users. Future studies can be devoted to performing similar studies in another context to provide a better understanding of customer loyalty. Furthermore, a longitudinal study can be considered to investigate the temporal effect of customer loyalty of online banking service.


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