Technology is evolving every new day and has its impact on every thing. In this paper we will analyze the acceptance of technology in the Banking Industry of Pakistan. This research investigates complexities (factors) that have resisted or obstructed the adoption of Internet Banking in Pakistan. Traditional innovation diffusion model (IDT) is used to develop the research model indicating the proposed complexities and acceptance of Internet Banking among Pakistani users. The model is tested with a survey sample (n=45). Out of the nine complexities identified, six are found significant. The findings of the research signify that 67 % of the proposed complexities, Familiarity with the technology, Concerns for Download Speed, Unfriendly Website Design, Fear of Government tracking transactions, Security and People Gaining Access/Misusing, hinder the users in accepting and adopting internet banking technology in Pakistan.
|Internet Banking Pakistan; Innovation Diffusion Theory; Complexities
|Internet has changed the way people used to do business. It has transformed the whole
business landscape for both individuals and businesses (AbuShanab 2010 et al.).
Internet users in Pakistan have increased significantly from 2000 to 2009 by 133,900 to
18,500,000 respectively (Internet World Stats, 2010). Though e-commerce is still in
immaturity stage in Pakistan, increase in the internet users opened many opportunities
for business-to-business, business-to-consumer and peer-to-peer e-commerce in
Pakistan providing products and services to a great segment of population.
|Since the diffusion of internet, financial institutions that are taking the benefit of this
medium have adopted the concept of internet banking. Initially internet banking was
used for advertisement and promotional activities for the banks’ products and services
(Tan and Teo, 2000). As this medium started grooming, internet banking has created
value for the banks in terms of reducing cost, enhances customer service, and has
increased long-term profit by allowing customers to carry out transactions online and
perform other activities at any time they want from their homes, offices or from any other
remote location that is feasible for them.
|Technology is evolving every day and in almost in every aspect but not everything that is
coming in the way is being accepted. Before anyone adopt a technology, all the
information about the technology will be collected and combined to develop a belief
about using the technology and that belief will in turn make the individual to accept or
reject the technology (Nor and Pearson, 2007).
|Unfortunately, customer adoption of Internet banking still has not been in acceptable
level among Pakistani banks. There are many complexities in adopting the Internet
Banking in Pakistan. Problems such as easy access to computers, familiarity with
technology, reliability of technology, unfriendly website, server down / unreliable services, fear of government tracking transactions, security risk, people gaining access /
misusing and training / awareness needs have been identified in this paper.
Implementing Internet Banking in Pakistan is difficult with the presence of these
complexities. These should be either removed or minimized from the path of the new
Banking technology so as to work with economies of scale which will in return reap more
benefit to the Banks and give more facility to its users.
|Also the banking sector is focusing on that part of the population who are unbanked and
do not have bank accounts which will in turn give the banks more revenue without the
expense of brick and mortar branch banking.
|In deriving a framework for this study, Diffusion of Innovation (IDT) model (Rogers, 1963,
1983, 1995) is being considered. In this model, Rogers describe that diffusion is the
“process by which an innovation is communicated through certain channels over a
period of time among the members of a social system”. He also defines innovation and
communication as “an idea, practice, or object that is perceived to be new by an
individual or other unit of adoption” and “Communication is a process in which
participants create and share information with one another to reach a mutual
|According to Rogers (1995), there are five key beliefs namely, relative advantage,
compatibility, complexity, trialability and observability. All of these control individuals to
adopt an innovation. IDT model has been used by previous researchers in a number of
ways such as it was used for instrument development by Moore and Benbasat (1991);
was applied by Tan and Teo (2000), Taylor and Todd (1995) as a part of research
models and was put side by side with the traditional Technology Acceptance Model
(TAM) by many researchers such as Lau (2002), Plouffe et al. (2001).
|This research encircle around the complexity factor only. As defined by Rogers (1995),
“complexity is the degree to which an innovation is perceived as relatively difficult to
understand and use.” Nor and Pearson (2007) believe that complexity is to use an
innovation by exercising mental or physical efforts. Previous research (Cooper and
Zmud 1990; Dickerson and Gentry 1983) has revealed that innovation having significant
complexity requires additional efforts and greater implementation in terms of technical
and operational skills to amplify its chance of acceptance. Banking on the internet
requires keying and clicking, a user friendly interface that would give individuals a
perception that internet banking services are less complex to use, thus making them use
such services. (Tan and Teo, 2000).
|The proposed research model as shown in figure 1 is composed of 9 complexities that
have been identified through focus groups and literature review (Dixit and Datta, 2010;
Yousufzai et al., 2003)
|The data is collected by distributing questionnaires at two banks, the Hong Kong
Shanghai Bank Corporation (HSBC) Pakistan and the Allied Bank Limited (ABL) of
Pakistan customers and to the business professionals.
|The questionnaire has total 13 questions as given in Appendix A in which the
respondent has to answer for 11 questions either yes or no except the 2 questions that
are of internet banking usage and age group which used 5 point scale because these
both questions involves to answer the internet banking usage in terms of percentage that
is divided in 5 slots and the age group is divided into five categories.
|Finally data is going to be analyzed by using the Chi-square tests. Chi-square test is
used to determine whether the attributes such as internet banking usage and
complexities are independent or dependent of each other.
|H0: Usage of Internet Banking is not independent of having easy access to computers
whenever and anywhere the service is required.
|Ha: Usage of Internet Banking is independent of having easy access to computers
whenever and anywhere the service is required.
|H0: Age group is not independent in understanding and using the Internet Banking
|Ha: Age group is independent in understanding and using the Internet Banking facilities
|H0: Usage of Internet Banking is not independent of speed of download and / or reliability
|Ha: Usage of Internet Banking is independent of speed of download and / or reliability of
|H0: User’s preference for Internet Banking is not independent of the bank’s website that
is unfriendly to users.
|Ha: User’s preference for Internet Banking is independent of the bank’s website that is
unfriendly to users
|H0: Users preference of using Internet Banking is not independent of the Bank’s server
failure most of the times when the service is urgently required.
|Ha: Users preference of using Internet Banking is independent of the Bank’s server
failure most of the times when the service is urgently required
|H0: Usage of Internet Banking is not independent of users perceiving security risk in
|Ha: Usage of Internet Banking is independent of users perceiving security risk in Internet
|H0: Usage of Internet Banking is not independent of the user’s fear of traceability of
transactions by the government and the loss of personnel information.
|Ha: Usage of Internet Banking is independent of the user’s fear of traceability of
transactions by the government and the loss of personnel information.
|H0: Usage of Internet Banking is not independent of misusing of the users’ account.
|Ha: Usage of Internet Banking is independent of misusing of the users’ account.
|H0: Age group is not independent of the users’ willingness to be trained and
encouragement to use Internet Banking by their respective banks.
|Ha: Age group is independent of the users’ willingness to be trained and encouragement
to use Internet Banking by their respective banks.
|The 6 complexities numbered 2, 3, 4, 6, 7 and 8 as shown in figure 2 proved to be
significant out of 9 identified in the proposed model.
|Total 45 questionnaires are collected from which ten of ABL were discarded due to
biased data as they were filled by ABL officers instead of ABL customers. Sample of
n=35 is taken and the data is analyzed by using statistical applets to test the
hypotheses.. In this research, each hypothesis was analyzed by using Chi Square at a
0.01 significance level to determine the actual relationship among the variables selected.
This level of significance was chosen because the sample size is very short.
|The results shown in Table 1 indicate that out of nine null hypotheses, six were rejected.
The nine complexities were identified in this research out of which six were determined
to be the complexities whereas three of them provide with less evidence to be the
complexities for using Internet Banking. The significant complexities are Familiarity with
the technology, Concerns for Download Speed, Unfriendly Website Design, Fear of
Government tracking transactions, Security and Unauthorized access by people as
shown in figure 2.
|As a whole, we see from the pie chart shown in figure 3 that sixty seven percent of the
complexities, i.e. 6 out of 9 are more than enough to obstruct the people to adopt
|From null-hypothesis 1, 5 and 9 it is obvious that these identified complexities are of no
concern to the users. They will continue their Internet Banking practices with these
complexities. However, from null-hypothesis 1 it is evident that easy access to
computers to use Internet Banking is not an issue in Pakistan. Computers are very
common here and now people can always use their palmtops and mobile phones for
their online transactions. Again from null-hypothesis 5 it is clear that system failure does
not hampers the user to make use of Internet Banking and there are users who wants to
avail this facility even if they have to confront with system failures. It might be the
reason that customers have not experienced frequent system failures. As of nullhypothesis
9 it shows that the user of any age wants to explore things and technology by
themselves rather they are to be trained and educated by their Banks. This shows the
interest in technology of the user. Their must be an element of ego and self respect that
the user does not want to be trained like a chid by their banks.
|From null hypothesis 2 it is clear that users of different age group have difficulties in
understanding the technology of Internet Banking. This is due to technology changing
rapidly day by day and one has to get updated frequently. Younger people with age
bracket 20-30 tend to indent themselves according to the ongoing technology as
compared to other age groups people. Null- hypothesis 3 shows that if the user uses a
slow connection instead of finding out the problem in-house, blame would be on the
bank’s services hitting on the Bank’s reputation. An important issue that is perceived
from null hypothesis 4 is of the website’s design. That is, whether it is friendly for the
users or not. It also depends that how much technical the user is. Banks would not have
any inconvenience in changing and modifying their websites again and again if they
have tested it initially with small number of users, thus holding up their customers tightly
afterwards. From null-hypothesis 6 it is evident that users are very optimistic about the
security issues, such as people in Pakistan do not even trust their government and they think that by using electronic transfers or electronic money they would be easily traced
and would be taxed unnecessarily. Again from null hypothesis 7 and 8 it is apparent that
misusing of the bank account is a very important issue for the Internet Banking. As we
have seen the misuse of credit and debit cards every now and then, which is what
worries the Internet Banking users.
|From null hypothesis 1 it is concluded that banking customers do not have to worry in
accessing the banks’ website as they have no problem in getting access to computers
whenever the need arises. From null hypothesis 5 and 9 it is concluded that customers
do not confront with the unreliable web services and do not need any training or
awareness campaigns to start with or continue using internet banking activities. This
part of the result supports that the infrastructure of the banking and the telecom sector
has mutually developed to the extent that people do not find frequent malfunctions in the
online services provided by their banks and they do not require any guidance and
knowledge based programs.
|The remaining significant complexities in null hypothesis 2, 3, 4, 6, 7 and 8 respectively
shows that there are still many hindrances and obstructions for the customer to adopt
internet banking. Though customers do not require training sessions to operate but still
they are not fully familiar with the technology used by their banks and that confirms to be
a complexity in view of users because they are dealing with financial transactions and
needs to know how it works. Users needs to be very sure of the safety and privacy of
their transactions and desires that no one gains access to their personal information.
Also, unfriendly website resists the user in using internet banking technology. More over,
users do not want to maintain audit trails while moving with their financial transactions as
they have a conception that log files of their financial transactions can be accessed by
the government personnel and would be misused for taxation and other related
|Based on the research findings, it is recommended that bankers should first maximize
the usage of Internet banking amongst current customers because the cost associated
with providing services over the Internet is much lower than traditional practice. These
complexities should be removed so as to make the people accept the new technology
and to make the best use of the facilities provided by the internet banking.
|From figure 2 it is apparent that null-hypothesis 2, 3, 4, 6, 7 and 8 are actually the
complexities in the way of adopting the technology of Internet Banking. Following are
some of the recommendations based on the identified complexities starting with the
most significant one.
|• Banking transactions website should not be that much heavy to download or
retrieve data as the Banks never know that what type of connections are being
used by their customers.
|• Banks should tell their customers to use fast internet connections to get good
satisfactory results of their Internet Banking.
|• Banks have to educate their customers how to avoid giving any personal
information online unless asked by the banker himself to avoid misusing of
|• Before uploading the websites, Bank’s should do the pilot tests of their website
so as to get the feedback of it assuming that every customer is not technical in
operating these transaction websites.
|• Banks need to take their customers in confident assuring that their transaction
log would not be accessed by the government body.
|• Users should be made familiar with the facilities by their Banks so that they can
easily utilize these useful resources.
|• It is the duty of the Bank personals to give confidence to their customers and
inform them about the layers of security they have implemented for the Internet
|• Banks can train their customers in a way by which they do not get the feeling of
being directed. Instead they should be given simulators when they ask for the
Internet Banking activity, asking them to enjoy the simulated Internet Banking
experience and their feedback.
|This research lacks the large sample size. As internet banking is not that much prevalent
in Pakistan, it was very difficult to get more candidates for the survey. It is hopeful that in
the coming years more users would experience the internet banking in Pakistan that
would give researchers larger sample size and in turn would give more reliable analysis.
In future new problems and complexities would be expected to emerge as technology is
evolving every now and then, giving users more luxuries and facilities on one hand and
promising new problems and difficulties on the other.
Tables at a glance
Figures at a glance
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