The Adoption of Technology Based Service Delivery in Financial Service Electronic Banking in Thailand

The adoption of technology based service delivery in
financial service; Electronic banking in Thailand
By Boontariga Lertsatwatana, BA, MBA
Thesis submitted to the University of Nottingham for the

degree of Doctor of Philosophy, February 2003
Acknowledgements
First I would like to express my gratitude to the Thai government for granting me the PhD
scholarship to do this research.
Special thanks to my family, particularly my mother who has inspired me to appreciate the
importance of education, and also my sister and brother for their love, encouragement and
support.
My sincere gratitude to my supervisor, Professor Christine Ennew for her valuable
supervision, patience, and continuous encouragement. Without her understanding, advice
and help I would not have been able to complete this work. Also, many thanks to my
other supervisors, Dr. Jim Devlin and Dr. Dawn Burton for their guidance. I also wish to
thank Professor Barry Howcroft and Ms. Sally McKechnie for being on my viva
committee and providing valuable comments and suggestions.
My gratitude also goes to my colleagues at the Rajabhat Chandarakasem Institution for
their support and help.
I am very grateful to the Krung Thai Bank, Krung Sri Ayudthaya Bank, Bangkok Bank
and Thai Panit Bank who facilitated the process of data collection.
Finally, I am also very grateful to the reviewers of this thesis, in particular to Gregory
Corfield for all his assistance on correcting grammar, writing style and proof reading the
final version of the thesis.
TABLE OF CONTENTS
ii
Page
Tables
Figures
Abstract
xii
xvi
xvii
Chapter One...............................................................................................................
Introduction......................................................................................................................1
1.1
Background to the study..................................................................................1
1.2
History of research in adoption of electronic banking......................................2
1.3
The definition of IT and Electronic banking.....................................................4
1.4
Research Aims..................................................................................................5
1.4.1
1.5
Research contribution.......................................................................................8
1.5.1
1.6
Development of a conceptual framework................................................6

Defining the research approach................................................................9
Research approach.........................................................................................12
Chapter Two.............................................................................................................13
2.
The impact of Information Technology on service delivery systems in the banking
industry...........................................................................................................................13
2.1
Introduction....................................................................................................13
2.2
The impact of IT in the financial services.......................................................15
2.3
The impact of IT in service delivery systems..................................................18
2.3.1
Conceptual framework...........................................................................19
2.3.2
Electronic banking..................................................................................25
2.4
2.3.2.1
Automated Teller Machines (ATMs)..................................................26
2.3.2.2
EFTPoS (Electronic Funds Transfer at Point of Sale)........................26
2.3.2.3
Telephone banking..............................................................................27
2.3.2.4
Internet banking.................................................................................27
The impact on the quality of IT service delivery............................................28
2.4.1
2.5
Service quality models............................................................................29
2.4.1.1
Gronroos framework.........................................................................29
2.4.1.2
A service quality model......................................................................32
The service quality determinants....................................................................36
2.5.1
Components of perceived service quality...............................................36

iii
2.6
Chapter summary...........................................................................................44
Chapter Three.........................................................................................................46
3.
The adoption of electronic banking ................................................46

3.1
Introduction....................................................................................................46
3.2
Innovation and diffusion.................................................................................47
3.2.1
Innovation..............................................................................................47
3.2.2
Diffusion.................................................................................................48
3.2.2.1
3.2.3
3.3
Background of innovation and diffusion research..................................49
Factors influencing the rate of adoption.........................................................50
3.3.1
Perceived attribute of innovation and adoption......................................55
3.3.1.1
Relative advantage.............................................................................56
3.3.1.2
Compatibility......................................................................................57
3.3.1.3
Complexity.........................................................................................58
3.3.1.4
Trialability..........................................................................................58
3.3.1.5
Observability (or Communicability)...................................................59
3.3.1.6
Other perceived attributes..................................................................59
3.3.1.7
Perceived risk.....................................................................................60
3.3.1.8
Cost....................................................................................................62
3.3.1.9
Control...............................................................................................63
3.3.2
3.4
Diffusion variables..............................................................................49
Service quality as a perceived attribute of innovation............................63
The adopter characteristics of electronic banking..........................................68
3.4.1
Demographic characteristics..................................................................71
3.4.2
Attitudinal and perceptual factors..........................................................75
3.4.3
Social interaction and communication behaviour...................................75
3.4.4
Consumption patterns............................................................................76
3.5
Gaps from the literature.................................................................................77
3.5.1
3.5.1.1
3.5.2
Direction for future research and research questions.............................83

Model development............................................................................87
Adopters characteristics of technology based financial services for
electronic banking..................................................................................................91
3.6
Chapter summary...........................................................................................92
iv
Chapter Four...........................................................................................................94
4.
The Methodology part I: Qualitative method ............................94

4.1
Introduction....................................................................................................94
4.2
Philosophical perspective...............................................................................95
4.2.1
4.3
Positivist and phenomenology paradigms..............................................95
Methodological considerations.......................................................................96
4.3.1
Qualitative and quantitative approaches.................................................96
4.3.2
Choices of research approach.................................................................98
4.4
The objectives of the exploratory research.....................................................99
4.5
Data collection method..................................................................................99
4.6
Designing the focus group interviews..........................................................100
4.6.1
Sample population................................................................................101
4.6.2
Sampling group selection methods.......................................................102
4.6.3
The details of the group participants....................................................104
4.6.4
Sampling approach for the focus group interviews..............................107
4.6.4.1
The recruitment of the sampling group............................................108
4.6.5
The sample size....................................................................................108
4.6.6
The process of conducting the focus group interviews........................109
4.6.7
The structure of the focus group interviews........................................109
4.7
4.6.7.1
Introduction......................................................................................110
4.6.7.2
Content.............................................................................................110
4.6.7.3
Summary and conclusions................................................................110
Chapter summary..........................................................................................111
Chapter Five..........................................................................................................112
5.
Thailand and the Thai banking industry.....................................112

5.1
Introduction..................................................................................................112
5.2
Demographic data........................................................................................112
5.2.1
Population............................................................................................113
5.2.2
Number of employed people by level of education..............................114
5.2.3
Income and expense.............................................................................115
5.2.4
Occupation...........................................................................................115
5.3
Economy......................................................................................................116
5.3.1
Economic crisis....................................................................................117
5.3.2
Infrastructure........................................................................................117
5.4
Society and culture.......................................................................................118
5.5
Thai banking industry...................................................................................118
5.5.1
History and background.......................................................................118
5.5.2
Structure of the Thai banking system...................................................119
5.5.3
The Thai banking situation...................................................................122
5.5.4
The four big Thai banks........................................................................124
5.5.5
Siam Commercial Bank or Thai Panit..................................................126
5.5.5.1
5.5.6
5.5.6.1
5.5.7
5.5.7.1
5.5.8
5.5.8.1
5.5.9
5.6
Products and services.......................................................................126

Thai Farmer Bank.................................................................................127
Products/Services.............................................................................127
Bank Krung Thai..................................................................................128
Products/Services.............................................................................129
Bangkok Bank......................................................................................130
Products/services..............................................................................130
Thai electronic banking market............................................................131
5.5.9.1
Automatic Teller Machine (ATM)....................................................131
5.5.9.2
Sophisticated ATM machine.............................................................136
5.5.9.3
Telephone banking............................................................................136
5.5.9.4
Debit card.........................................................................................137
5.5.9.5
Internet banking...............................................................................137
Chapter summary.........................................................................................138
Chapter Six.............................................................................................................139
6.
Focus Group Interviews......................................................................139

6.1
Introduction..................................................................................................139
6.2
Analysis and results......................................................................................139
6.3
The definition of electronic banking.............................................................140
6.4
The meaning of good service quality of banks.............................................142
6.5
The meaning of good service quality of electronic banking.........................144
6.6
The key important factors for adopting electronic banking services............145
6.6.1
Relative advantage...............................................................................145
6.6.2
Complexity...........................................................................................149
vi
6.6.3
Compatibility........................................................................................150
6.6.4
Observability and communicability.......................................................155
6.6.5
Trialability............................................................................................158
6.6.6
Perceived risk.......................................................................................159
6.6.7
Cost......................................................................................................162
6.6.8
Control.................................................................................................164
6.6.9
Perceived service quality affecting the rate of adoption.......................164
6.7
6.6.9.1
Reliability..........................................................................................165
6.6.9.2
Trust and confidence........................................................................166
6.6.9.3
Brand and image of the bank............................................................169
Adopter characteristics.................................................................................171
6.7.1
Demographic characteristics................................................................171
6.7.2
Attitude and perceptual factors............................................................172
6.7.3
Consumption patterns..........................................................................173
6.7.4
Social interaction and communication behaviour.................................173
6.8
The development of the hypotheses.............................................................174
6.9
Chapter summary.........................................................................................181
Chapter Seven......................................................................................................183
7.
Methodology Part II..............................................................................183

7.1
Introduction..................................................................................................183
7.2
Issues of measurement.................................................................................183
7.3
Method of data collection............................................................................184
7.3.1
Sampling unit........................................................................................185
7.3.2
Representativeness...............................................................................185
7.3.3
Sampling distribution............................................................................186
7.3.4
Questionnaire design............................................................................186
7.3.5
Constructing the questionnaire.............................................................187
7.3.6
The validation of the questionnaires.....................................................196
7.4
Validity and reliability...................................................................................196
7.4.1
Concurrent validity...............................................................................197
7.4.2
Content validity....................................................................................197
7.4.3
Construct validity.................................................................................198
7.5
Reliability......................................................................................................199
vii
7.6
Analysis method...........................................................................................200
7.6.1
Descriptive statistics.............................................................................200
7.6.2
Factor analysis......................................................................................201
7.6.3
Logistic regression...............................................................................203
7.7
Chapter summary.........................................................................................204
Chapter Eight........................................................................................................205
8.
Data Analysis I.........................................................................................205

8.1
Introduction..................................................................................................205
8.2
General descriptive analysis of respondents.................................................205
8.3
Characteristics of the adopter and non-adopter...........................................207
8.3.1
The gender of respondents...................................................................208
8.3.2
The age of the respondents..................................................................209
8.3.3
The marital status of the respondents...................................................210
8.3.4
The education level of the respondents................................................211
8.3.5
The monthly income of the respondent................................................212
8.3.6
The occupation of the respondents......................................................214
8.3.7
Social activities of the respondents......................................................215
8.3.7.1
Frequency of moving house.............................................................217
8.3.7.2
Working hours of the respondents....................................................218
8.3.7.3
Number of hours spent reading........................................................219
8.3.8
8.3.8.1
8.4
Consumption patterns..........................................................................220
Technology products........................................................................221
The perceived attributes of electronic banking.............................................224
8.4.1
The perceived attributes of telephone banking.....................................224
8.4.2
The perceived attributes of the debit card............................................230
8.4.3
The perceived attributes of sophisticated ATM....................................234
8.5
The personal characteristics.........................................................................238
8.5.1
8.5.1.1
The attitudinal and perceptual behaviour of telephone banking...........239

Social interaction and communication behaviour of telephone banking
241
8.5.2
The Attitudinal and perceptual behaviour for debit card......................242
8.5.3
Social interaction and communication behaviour of debit card............244
8.5.4
The Attitudinal and perceptual behaviour of sophisticated ATM..........245

viii
8.5.5
Social interaction and communication behaviour for sophisticated ATM

246
8.6
Validity and reliability...................................................................................247
8.6.1
8.6.1.1
8.7
Validity analysis....................................................................................247
Construct validity.............................................................................247
Factor analysis..............................................................................................249
8.7.1
Factor analysis of the perceived attributes of electronic banking.........249
8.7.1.1
8.7.1.2
Debit card.........................................................................................252
8.7.1.3
Sophisticated ATM...........................................................................254
8.7.1.4
A comparison between factor solutions for three electronic banking
services and other studies.................................................................................257

8.7.2
Factor analysis of personal characteristics and communication patterns.

260
8.7.2.1
8.7.2.2
Debit card.........................................................................................262
8.7.2.3
Sophisticated ATM...........................................................................263
8.7.3
Validity conclusions..............................................................................265
8.8
Reliability......................................................................................................265
8.9
Chapter summary.........................................................................................268
Chapter Nine.........................................................................................................269
9.
Data analysis II........................................................................................269

9.1
Introduction..................................................................................................269
9.2
Logistic regression.......................................................................................270
9.3
Model building.............................................................................................270
9.4
Interpreting and reporting of logistic regression results...............................272
9.4.1
Assessing the goodness-of-fit of the models........................................273
9.4.1.1
Hosmer and Lemeshows Goodness of Fit test................................273
9.4.1.2
R-square (R2L)..................................................................................274
9.4.2
Testing the predictive accuracy............................................................276
9.4.3
Testing the predictive efficiency of the model......................................280
9.4.3.1
Coefficient........................................................................................280
9.4.3.2
Wald statistic....................................................................................280
ix
9.4.3.3
Odds ratio (or Exp ).......................................................................281
9.5
The empirical logistic regression model of telephone banking.....................281
9.6
The empirical logistic regression model of debit card..................................284
9.7
The empirical logistic regression model of sophisticated ATM....................286
9.8
A proposed structure model.........................................................................288
9.8.1
The imposed logistic regression model of telephone banking..............289
9.8.2
The imposed logistic regression model of debit card...........................291
9.8.3
The imposed logistic regression model of sophisticated ATM.............293
9.8.4
Multi-colinearity...................................................................................297
9.9
Testing the hypotheses.................................................................................298
9.10
Summary of findings....................................................................................312
9.11
Chapter summary.........................................................................................313
Chapter Ten............................................................................................................314
10.
Conclusion........................................................................................................314
10.1
Introduction..................................................................................................314
10.2
Summary of the research..............................................................................315
10.3
The consistency and differences of the research findings in Thailand and
western countries.....................................................................................................322
10.4
Contribution to theory..................................................................................324
10.5
Implications of findings................................................................................325
10.6
Limitations and suggestions for future research...........................................327
10.7
Conclusions..................................................................................................329
References....................................................................................................................331
Further reading.............................................................................................................354
Appendix......................................................................................................................359
TABLES
Table 2.1 Determinants of service quality..........................................................................38
Table 3.1 Perceived features of direct banking services.....................................................54
Table 3.2 Characteristics of adopters.................................................................................69
Table 3.3 Profile of the consumer innovator......................................................................71
Table 3.4 Demographic characteristics research................................................................74
Table 3.5 Perceived attributes of technology based financial service.................................88
Table 3.6 Adopter characteristics.......................................................................................91
Table 4.1 Group 1. Non-adopter group (pilot group) recruited by the researcher...........104
Table 4.2 Group 2. Non-adopter group recruited by the bank. (This group is mixed
between non-adopters and partial adopters)............................................................104
Table 4.3 Group 3. Non-adopter group recruited by the researcher................................105
Table 4.4 Group 4. Non-adopter group recruited by the researcher................................105
Table 4.5 Group 5. Adopter group recruited by the researcher........................................106
Table 4.6 Group 6. Adopter group recruited by the bank................................................106
Table 4.7 Group 7. Adopter group recruited by the bank................................................107
Table 4.8 Group 8. Adopter group recruited by the researcher.......................................107
Table 5.1 Comparison of the population of the Thai kingdom and Bangkok by age........113
Table 5.2 Comparison of the population by education attainment level between the whole
Thai kingdom and Bangkok.....................................................................................114
Table 5.3 Comparison of average monthly income and expenditure per household between
the whole Thai kingdom and Bangkok.....................................................................115
Table 5.4 Population, 15 years of age and over by occupation........................................116
Table 5.5 The list of banks in Thailand.............................................................................121
Table 5.6 Foreign banks...................................................................................................121
Table 5.7 The number of branches between 1993-1998...................................................123
Table 5.8 Banks assets.....................................................................................................124
Table 5.9 Number of commercial banks branches as of December 1998........................125
Table 5.10 The ATM card holding and daily withdrawal amounts by banks....................132
Table 5.11 Number of ATM cards and ATM machines in Thailand..................................133
Table 5.12 The value of money withdrawn by ATM. Average by month (million Baht)...134
Table 5.13 Bank promotion programme.........................................................................135
Table 5.14 The average cost of establishing one branch...................................................135
Table 7.1 Section one - Perceived attributes of telephone banking..................................190
xi
Table 7.2 Section two - Perceived attributes of debit card...............................................192

Table 7.3 Section three - Perceived attributes of sophisticated ATM...............................193
Table 8.1 Composition of the people who responded......................................................206
Table 8.2 Questionnaires distribution...............................................................................207
Table 8.3 The gender of the adopter................................................................................208
Table 8.4 The age of the respondents...............................................................................210
Table 8.5 The marital status of the respondents...............................................................211
Table 8.6 The level of education between groups of adopter and non-adopter................212
Table 8.7 Monthly incomes..............................................................................................213
Table 8.8 The occupation of the respondents...................................................................215
Table 8.9 Social activities and the types of electronic banking customer.........................216
Table 8.10 Frequency of moving house and the type of electronic banking customers....217
Table 8.11 Number of working hours and the type of electronic banking customer........219
Table 8.12 Number of people reading and the type of electronic banking customer........220
Table 8.13 Comparison between the adopter and non-adopter for answering machine
usage........................................................................................................................221
Table 8.14 Comparison between the adopter and non-adopter for wireless telephone....222
Table 8.15 Comparison between the adopter and non-adopter for mobile phone............222
Table 8.16 Comparison between the adopter and non-adopter for fax machine..............223
Table 8.17 Comparison between the adopter and non-adopter for computers.................223
Table 8.18 Comparison between the adopter and non-adopter for Internet.....................224
Table 8.19 Perceived attributes of telephone banking......................................................225
Table 8.20 Perceived service quality of telephone banking..............................................229
Table 8.21 Perceived attributes of the debit card.............................................................230
Table 8.22 Perceived service quality of debit card...........................................................233
Table 8.23 Perceived attributes of sophisticated ATM.....................................................234
Table 8.24 The perceived service quality of sophisticated ATM.......................................237
Table 8.25 Attitudes toward change and willingness to take risks...................................239
Table 8.26 Social interaction and communication behaviour...........................................241
Table 8.27 Attitude toward change and willingness to take risk......................................242
Table 8.28 Social interaction and communication behaviour...........................................244
Table 8.29 Attitudes toward change and willingness to take risks...................................245
Table 8.30 Social Interaction and Communication Behaviour.........................................246
Table 8.31 Perceived attributes factor solutions of telephone banking............................250
xii
Table 8.32 Perceived attributes factor solutions of debit card..........................................252

Table 8.33 Perceived attributes factor solutions of sophisticated ATM............................254
Table 8.34 The comparison of the factor structures between the three types of service. .257
Table 8.35 Personal characteristics of telephone banking................................................261
Table 8.36 Personal characteristic of debit card...............................................................262
Table 8.37 Personal characteristics and communication patterns of sophisticated ATM..264
Table 8.38 Cronbachs Alpha of perceived attributes dimensions.....................................266
Table 8.39 Cronbachs Alpha of personal characteristic dimensions................................267
Table 9.1 Hosmer and Lemeshow test.............................................................................274
Table 9.2 R2L of electronic banking..................................................................................275
Table 9.3 Classification accuracy for the adopter and non-adopter of telephone banking
.................................................................................................................................276
Table 9.4 Classification of accuracy for the adopter and non-adopter of debit card........277
Table 9.5 Classification accuracy for the adopter and non-adopter of sophisticated ATM
.................................................................................................................................278
Table 9.6 The empirical logistic regression model of telephone banking.........................282
Table 9.7 The empirical logistic regression model of debit Card......................................284
Table 9.8 The empirical logistic regression model of sophisticated ATM.........................286
Table 9.9 The imposed logistic regression model of telephone banking...........................290
Table 9.10 The imposed logistic regression of debit card.................................................292
Table 9.11 The imposed logistic regression model of sophisticated ATM........................294
Table 9.12 Comparing imposed structure model of three type of service........................296
Table 9.13 Personal characteristic of electronic banking..................................................297
Table 9.14 Aggregated Independent Samples T-Test........................................................298
Table 9.15 Technology ownerships and usages................................................................310
Table 9.16 The number of financial usages.......................................................................311
Table 10.1 Summary of the hypothesised testing.............................................................321
Table 10.2 Personal characteristics...................................................................................321
Table 10.3 Demographic characteristics...........................................................................322
xiii
FIGURES
Figure 1 The Research Approach.......................................................................................12
Figure 2.1 Illustrations of technology-based service delivery in the banking industry.......21
Figure 2.2 Gronroos framework.......................................................................................30
Figure 2.3 Conceptual model of service quality.................................................................33
xiv
ABSTRACT
This research studies the factors affecting the adoption of electronic banking in developing
countries, particularly in Thailand. The study is based on the established adoption
framework by Rogers (1983). Two areas of interest, namely perceived attributes and
adopter characteristics are considered as the most important factors affecting the adoption
of electronic banking. Five perceived attributes of innovation were proposed i.e. relative
advantage, compatibility, complexity, observability and trialability (Rogers, 1983). In
addition, this list was expanded by this study to include new perceived attributes such as
perceived risk, cost, control and perceived service quality. Adopter characteristics referred
to attitudinal and perceptual factors; demographic characteristics; social interaction and
communication behaviour; and consumption patterns.
There were three phases of the study. The first phase is based on a review of the existing
literature. The second phase discusses the methodological approaches, which were a
mixture of the qualitative and quantitative methods. Focus group interview results are
detailed and the preliminary research answers were discussed. The findings from the focus
group interviews were used to develop the proposed framework and facilitate the
quantitative study by helping to develop the questionnaire. The final phase was to do data
analysis. The hypotheses were tested by using T-test independent, Chi-square tests and the
logistic regression model.
There were two main findings of this research. Firstly, the study shows that perceived
attributes are a better predictor for adoption of electronic banking than adopter
characteristics. Secondly, the findings discovered that not all of the perceived attributes
are important for influencing the adoption of electronic banking services, which depends
on the type of service and its characteristics.
This thesis is a contribution to theory and the managerial application of the banking
industry in developing countries, where there is a shortage of studies in this area. The
research is also a contribution to develop perceived service quality as one of the important
perceived attributes for the adoption of electronic banking.
xv
Chapter 1
Introduction
1.1
Background to the study
This study focuses on the factors influencing the adoption of new technology based
methods of service delivery, namely electronic banking, in the context of Thailand where
Information Technology (IT) has played an important role in changing the structure of
businesses and financial services. The rapidly changing environment and the increasing
competition in financial services marketing has resulted in pressures to develop and utilise
alternatives to the traditional banking branch environment by providing new technologybased service delivery systems. Electronic banking is one of the alternatives that allow
banks to serve more customers without expanding the branch network and increasing
employee costs. Although, banks have put a lot of effort into developing new technology
based service delivery systems to replace traditional bank branches, it is not certain that
the customer will adopt the new technology services. Thus, it is important to explore the
impact of Information Technology from the customers perspective and look at the factors
that will be involved in the customers decision whether or not to adopt new technology
services.
As new channels of service become more diffused there may be a change in the quality of
the service that banks provide to their customers. Traditionally, customers perceive the
level of service quality of their bank branch by evaluating the front-line staff that provides
the services face to face with the customer. However, this is changing since banks are now
becoming more reliant on technology to deliver services to their customers. Bank
customers will increasingly need to build their evaluations less from the bank staff and
more from the technology-based service delivery.
Service quality has been greatly discussed in the literature (Gronroos, 1984; Parasuraman,
Zeithaml and Berry, 1985; Blanchard and Galloway, 1994) and the concept of the
customer participating in service delivery has also been discussed (Bateson, 1985; Silpakit
and Fisk, 1985; Dabholkar, 1996). Moreover, work on service quality and the impact of
technology on service delivery by Joseph et al (1999) has presented some perceived
attributes of electronic banking regarding the perceived service quality, such as how
reliability relates to the adoption of electronic banking (Sathye, 1999; Rugimbana, 1995;
Lockett and Littler, 1997; Szmigin and Bourne, 1999). However, the literature has not
really focused on the effects of service quality for the adoption of technology based service
delivery directly.
1.2 History of research in adoption of electronic banking

In recent years, since the 1990s, there has been increasing numbers of adoption research
papers in new technology based service delivery and electronic banking. However, the
direction of research has been changing context in the types of new technology based
service delivery over time (Black et al, 2001). The early stages of electronic banking
research focused on ATMs service (Zeithaml and Gilly, 1987; Lewis, 1991; Marr and
Prendergast, 1993; Rugimbana and Iversen, 1994). The second stage was when the
introduction of telephone banking appeared as a financial service in the mid 1990s. During
this period adoption research in financial services focused on telephone banking (Barczak
et al., 1997; Lockett and Litter, 1997; Al-Ashban, 2001). The latest interest is the Internet
banking services (Sathye, 1999; Black et al, 2001). However, some research studies have
looked at more than one type of service at the same time such as ATMs and telephone
banking (Hewer and Howcroft, 1999) and home banking (Howcroft et al, 2002).
The benefits of comparing the different types of electronic banking services is to find
whether there is a consistency in the literature review where the results were not definitely
clear for each research study. There appears to be similarities in some of the research
results such as the discovery of the three perceived characteristics, namely relative
advantage, compatibility and complexity (ease of use) which appear in most research
work. However, some research has found new additions from Rogers framework of
2
perceived attributes of innovation such as perceived risk and cost. There is new research
that has found other factors such as the level of service, reliability, trust etc. Therefore,
more studies need to be done to confirm these findings, which will be beneficial to apply to
new technology based service delivery systems that will be introduced in the future. In this
research, three types of electronic banking services are chosen to represent the general
picture of electronic banking namely debit card, sophisticated ATM and telephone banking.
Many studies of adoption of electronic banking have focused on factors influencing the
adoption of new technology based service delivery. Two major factors that are considered
to have an effect on adoption are from the perceptions of customers towards the electronic
banking services and the personal characteristics of the groups who are likely to adopt the
services. Most of the research has studied the perceived attributes (characteristics) of
innovation (the perception of innovation characteristics) by comparing the differences
between groups of adopters and non-adopters. For personal characteristics, most of the
literature focuses on the demographic characteristics. However, a few studies (Zeithaml
and Gilly, 1987; Lockett and Littler, 1997) were also interested in other personal
characteristics such as communication behaviour; social interaction consumption patterns
and attitudinal and perceptual factors. Therefore more studies need to be done in this area.
It was widely accepted from previous studies (Rogers, 1962,1983,1995; Lockett and
Littler, 1997) that attitudes towards an innovation are more successful as predictors of the
purchase outcome than consumer personal characteristics. However, very few studies have
been conducted that attempt to compare all other three types of electronic banking
services, particularly including the debit card service, which is very successful in the UK
but not doing very well in the USA or in Thailand.
The Thai banking industry was chosen for the purpose of the study for a number of
reasons. Firstly, Bangkok is chosen as the major city in Southeast Asia that can be used to
represent the overall picture of developing countries. We can do this because Bangkok has
similar demographic and socio-economic characteristics to other major Southeast Asian
cities. Secondly, Thailand is considered to be one of the new industrial countries and one
of the major players in the economic and political life of the Southeast Asian region.
Thirdly, the reason that we did not collect data from the other provinces of Thailand is
3
because Bangkok can better represent the overall picture of the big cities in Thailand.
Bangkok is the financial and business centre and capital of Thailand. Outside Bangkok the
banks do not provide a full variety of electronic banking services and also outside major
cities, the infrastructure is not so well developed. Additionally, the other purpose is to
explore the conceptual framework developed in Europe, American and Australia and see if
it can be applied in Asia, which has large differences in customer characteristics. Thus, the
purpose of this study is to study the adoption of technology based service delivery,
electronic banking, from the perspective of the customer in the context of the adopter
versus non-adopters in Thailand.
1.3
The definition of IT and Electronic banking
There are many definitions of Information Technology. However, for the definition of
Information Technology in this research we will use the meaning, which is defined by
Fletcher
(1995)
stated
that
IT
means
computing,
microelectronics
and
telecommunications, which are combined to provide a wide variety of products and

services. The term electronic banking is generally used to describe the preparation of
information or services by a bank to its customers via a computer, telecommunications
equipment such as telephone, fax machine, television or other electronic equipment
(Daniel, 1999). This thesis considers retail electronic banking in Thailand, which refers to
sophisticated ATM, telephone banking and debit card. ATMs refer to traditional ATM
cards, which can be used only to withdraw money.
Sophisticated ATM refers to a Automatic Vending Machine and is sometimes called cash
express or a deposit cash machine, which can provide other financial services such as
paying utilities bills, checking balances, depositing money, cash express and inform the
user with the latest news e.g. university entrance examination results, lottery results etc.
Telephone banking refers to all financial services that banks provide via telephone such as
transferring money, check balance, paying utilities bills etc.
Debit card refers to one type of card for use in ATMs in Thailand, which customers can
use to buy goods and products, including withdrawing money and balance checks. Using a
debit card will directly update the customers account immediately after the purchase.
In this research we have excluded Internet banking because when the research started, the
number of Internet user was very small and Internet banking had just started, and was in
its early stages as a banking service.
1.4
Research Aims
The literature has shown that there are still gaps in the existing research. These can be
concluded as being in three major areas. Firstly, there have been a number of research
studies in western countries e.g. UK, USA and Australia that are about the adoption of a
variety services in electronic banking. However, there is lack of similar research in
developing countries in Southeast Asia. Therefore, this raises doubts about the application
of electronic banking in different countries particularly in Thailand. Secondly, there is not
enough explanation of the factors influencing the adoption of electronic banking
particularly in exploring the relationships between the perceived service quality of new
technology services and their adoption. Thirdly, there are gaps explaining the demographic
characteristic of the adopter and non-adopter groups. Previous studies found that the
adopter is likely to be younger, have a higher education and status. However, for
demographic characteristics such as gender, there is very little explicit evidence
differentiating between the adopter and non-adopter groups. Europe and America have, to
some extent, removed the barriers between males and females in society and business, but
conversely, in developing countries, such as Thailand, there is still an inequality between
male and female.
Most of the research has focused on demographic characteristics when compared with
small numbers of research studies in other personal characteristics (see table 3-1) such as
consumer patterns; and social interaction and communication behaviour; attitudinal and
perceptual factors.
The study also considers these factors may have influences on the
adoption of innovation.
This research attempts to develop a conceptual framework through a contribution to an

underlying theoretical framework, which is based on the literature reviews.
1.4.1 Development of a conceptual framework
There are two areas of theoretical framework that the research is focused on i.e. the
adoption of electronic banking and the personal characteristics of the adopter and nonadopter groups.
The first aim of this research, in respect of a conceptual framework development, is to
extend the knowledge of what are the key important influencing factors of adoption of
electronic banking. There are two areas of the theoretical framework that this research
focuses on i.e. the perceived attributes influencing the adoption of electronic banking and
the personal characteristics of the adopter and non-adopter groups. In addition, this
research intends to investigate the relative ability of perceived attributes of innovation and
personal characteristics to predict adoption.
This research is interested in finding what are the perceived attributes of banking
innovation. The study will examine whether the established theory of adoption based on
the five perceived attributes of Rogers framework (1983) can be used to identify the
adopters of electronic banking.
Rogers framework has been widely accepted in adoption research (e.g. Ostlund, 1974;
LaBay and Kinnear, 1981; Rugimbana, 1995; Lockett and Littler, 1997; Szmigin and
Bourne, 1999; Black et al, 2001). Therefore, in this study it is also included as the core
study of perceived attributes of electronic banking.
The perceived attributes of innovation referred to five perceived attributes of innovation
by Rogers (1983). These are relative advantage (economic gain, increasing benefits),
compatibility (socio-culture values and beliefs, with previously introduced ideas and
customers needs), Complexity (ease of service use), observability (ease of product
communication to potential customers) and trialability. However, two more variables from
recent studies (Rugimbana, 1995; Lockett and littler, 1997) are also added into the study,
namely perceived risk (error of transaction, security risk) and cost (purchase and usage
costs). This study also adds new perceived service quality variables, namely reliability
(including accuracy of the service), trust and confidence (the service can be proven or
guaranteed by the service provider).
Personal characteristics are adapted from Robertson (1971), Rogers (1983) and Lockett
and Littler (1997). These referred to demographic characteristics (age, gender, income,
occupation and education), attitudinal factors (willingness to take risks and attitudes
towards change), consumption patterns (higher usage in financial and technology
products) and social interaction and consumer behaviour (social participation, read print
media, influences from friends and family).
The second aim is to examine whether or not perceived service quality of technology
based service delivery for electronic banking affects the adoption of products/service.
There is still not a clear definition of service quality in relation to electronic banking from
the previous literature. The variety of studies that exist suggests different industries and
even different demographic characteristics may cause customers to have different
perceptual attributes of products/service, which may affect the adoption of technology.
The third aim is to examine whether or not personal characteristics of customers can be
used to classify the adopter and non-adopter groups. The framework is based on the work
of Robertson (1971), Rogers (1983) and Lockett and Littler (1997). These referred to
demographic characteristics, attitudinal factors, consumption patterns, social interaction
and consumer behaviour.
The final aim is to study whether or not perceived attributes of innovation are a better
predicting factor than using personal characteristics. Previous studies (e.g. Ostlund, 1974;
Lockett and Littler, 1997) suggested that perceived attributes are a much more efficient
predictor of adoption.
1.5
Research contribution
This research has created an original adoption study of electronic banking in the context of
Thailand. At the start of the research (1998) there were only a small number of adoption
research studies about developing countries. Therefore, the new framework may be
applicable generally to similar financial services, either in similar cultures, or other
countries in South Asia. Moreover, the perceived service quality of innovation is also an
original contribution to the adoption research in a general context and in the electronic
banking services. There is no previous research that has considered the perceived service
quality as one of the perceived attributes of innovation in addition to the existing Rogers
framework. However, factors such as reliability, accuracy (Rugimbana, 1995; Dabholkar,
1996), control (Dabholkar, 1996), trust in the channel (Hewer and Howcroft, 1999
Szmigin and Bourne, 1999;) and levels of service (Lockett and Littler, 1997), have
appeared in many studies regarding customers concerns about the adoption of electronic
banking.
The second contribution is to give banks a better understanding of the factors which are
needed for attention when considering the introducing of new technology services for
electronic banking. The findings about the adopter characteristics will also help understand
more about their customers behaviour and customising the services to suit the customers
needs. The findings may also help banks to focus on specific market groups who are likely
to be the first pioneers to adopt any new services.
1.5.1 Defining the research approach
This thesis is organised into 10 chapters. They can be summarised into three stages.
Stage 1 - This stage involves literature reviews as follows:
Chapter two reviews the literature in order to explore the impact of Information
Technology in business and financial services. This chapter will explain how IT has an
important role in changing the service delivery process in banking and its impact on
service quality. The conceptual framework is developed to explain how customers are
8
involved with the technology based service delivery and what are the important factors
affecting customer participation.
Chapter three reviews the literature, paying attention to factors influencing the adoption of
electronic banking. This included drawing out the conceptual frameworks, which tries to
explain the important attributes of the rate of adoption. In this chapter the preliminary
framework is developed, and the gaps in the previous literature are identified and used for
building the focus group interviews questions.
Chapter five reviews the literature that has been investigated to determine the current
situation in the Thai banking services.
Stage 2: This involves determining the rationale for the choice of methodology and a
detailed explanation of the research methodology, which is given in chapter four and
chapter seven. The choices of the research approach are presented, namely the qualitative
and quantitative methods. Chapter four, the research methodology part one, includes
describing the philosophical perspectives, methodological considerations and the research
methodology. However, this chapter will also focus on the qualitative methods, and focus
group interviews, as well as the identification of the research questions.
Chapter seven details the methodology undertaken to conduct the empirical study. This is
involved with the sample frame, sample size and data collection design. The details of the
quantitative methodology are presented. The first section explores the issues of
measurement, followed by the methods of data collection, which included the
questionnaire design. Issues of reliability and validity are also discussed.
The final section is divided into three chapters, describing the analysis methods.
Chapter six presents the results of the focus group interviews. The findings will be used to
refine the framework, which has been introduced in chapter four. The results from the
focus groups are also used to help develop the questionnaire.
Chapter eight presents a general descriptive analysis of the data collected. It intends to
provide a general analysis. The first section provides a general descriptive analysis of the
respondents characteristics classified by adopters and non-adopters. This involves the
demographic data, consumption patterns, social interactions and communication
behaviours. The second section presents the results of the perceived attributes, comparing
the means between the adopter and non-adopter groups related to three types of electronic
banking. The third section presents the results comparing the means of the attitudinal
factors, social interaction and communication behaviour between the two groups. The
fourth section examines the validity of the research results. The fifth section provides the
factor analysis results and a comparative of its findings. The final section discusses the
reliability of the findings.
Chapter nine, reports the findings of further results from the factor analysis by using
logistic regression. The aim is to test how well each factor predicted the adoption. The
hypothesis testing is conducted to explain the findings of the research questions.
Stage 3: Chapter ten presents the refined conceptual framework with support from
quantitative data, including the conclusion of the overall findings and discussion. The
contribution and implication of the research will be discussed.
10
1.6
Research approach
Figure 1 The Research Approach

Literature on the impact of IT on service delivery systems and
service quality in financial services
Literature on customer adoption and developing a preliminary

conceptual framework from the literature
Research methodology I
Literature on Thailand and the Thai banking industry
Conducting qualitative methods by using focus group interviews

and development of the conceptual framework
Research methodology II
Conducting quantitative methods by using a questionnaire survey
Data analysis I and II

Reporting of overall findings and conclusions.
11
Chapter 1
2. The impact of Information Technology on service
delivery systems in the banking industry
2.1
Introduction
There has been wide recognition that IT has had a major and dramatic impact on business,
which is noticeable by the considerable volume of research in this area (Porter, 1980,
1985; Parson, 1983; Grover et al, 1993; IT and marketing Martel, 1988; Fletcher, 1995,
Colgate, 1998; IT in service management, Rands, 1992; IT for improving service quality,
Kingman-Brundage, 1991; Mukhopadhyay et al 1997). Some researchers have concluded
that IT has had an impact on products and customer service (Harvey et al, 1993; Storey,
and Easingwood, 1993; Domegan, 1996) and some have studied IT and the service
delivery process (Harvey and Filiatrault, 1991; Harvey et al, 1993).
IT has taken a crucial role in organisations over the past decade, particularly for those
businesses that are facing a highly competitive environment. As a consequence, business is
rapidly changing with the use of Information Technology. Miles (1990) explains the impact
of IT as follows:
The widespread diffusion of new computer and communication technologies,
reflects the dramatic reductions in cost and size, and the increases in power,
applicability and reliability, that have been associate with new IT
IT can improve the organisations efficiency as well as reducing the size of its business
costs. For example, technology helps to reduce the burden of manual work and database
systems help to provide useful information that companies can use to add value and
differentiate their services (Zeithaml and Bitner, 1996).
This is supported by Quinn and Gagnon (1986) who suggested that
12
IT enables the business to utilise existing systems and networks to create

new products and services. By employing efficient communications
technologies a wider customer base can be reached. Also these
technologies can reduce costs as they can be used for a wider range of
applications than before. Technology also allows new products to be
introduced more quickly, and can allow companies to respond quickly to a
competitors moves.
The diffusion of IT is widely spread across businesses including the service sector.
However, there are differences between services and products. Schoell and Guiltinan
(1992) explained the nature of a service being when a customer purchases a service,
he/she is not purchasing anything physical, rather he/she is purchasing a process.
Therefore, focusing on customer responsiveness will be a crucial reason for investment in
IT and information systems within the service sectors. IT is ideally suited to the service
industry because of its impact on improving the process of service delivery and because it
can be used to satisfy the customers needs. For instance, IT can be use to improve
customer service by identifying the information requirements to deliver quality service.
(Berkley and Gupta, 1995). However, there are many ways in which IT can have an
impact on service, which Zeithaml and Bitner (1996) explained that Technology is used
in the service sector to lower costs, increase productivity, improve the way service is
delivered technology also revolutionises the types of new services created by
companies. For these reasons one of the most visible impacts of IT is the way that
companies deliver services to customers by Heskett (1987) implied that businesses that
implement IT support systems are able to improve their service delivery mechanisms.
These systems will also introduce new services. Supporting this idea, Harvey et al (1993)
stated that, in a competitive environment a process must deliver service with a competitive
combination of cost, quality, timeliness and flexibility in order to survive. Thus the design
of the service delivery system is more important when designing a service because the
delivery system can define the service quality (Rands, 1992). The concept of how IT
impacts on the quality of service delivery has been explained by Daniels (1994), who
suggested that IT can be used efficiently to facilitate mass customisation because IT can
provide a good quality of service and improve the speed at the same time. For example,
13
using an automatic answering service can help a company to answer their customers
inquiries 24 hours a day. However, there have been only a few studies investigating the
impact of IT on the service quality of technology based service delivery. These studies
show that there is also a gap from exiting literature in this area.
In summary, IT has an important role to accelerate the changes in business overall
including the service sector. One of the areas that have been largely affected is the service
delivery system, particularly in the financial services industry, which relies heavily on
technology based service delivery. Moreover, IT has also had an impact on facilitating a
good service quality to the customer. Therefore, this chapter will investigate the impact of
IT on financial services, with a focus on service delivery. The study of how IT is enhancing
new service delivery channels and providing new channels of technology based services
delivery for electronic banking are illustrated. These new channels are changing the way
financial institutions, particularly banks, provide services for customers. Therefore, the
final section discusses IT and how it can improve service quality. Service quality models
are also examined. This section leads us to understand how IT has impacted and improved
the customers service. Finally, the key determinants of service quality are addressed in
detail.
2.2
The impact of IT in the financial services
The application of IT in the financial services is growing fast. There are major forces that
are effecting dramatic changes in financial services, which will be described as follows.
Firstly, the deregulation in the financial markets not only in developed countries but also in
the developing countries (Anandarajan et al, 2000; Polatoglu and Ekin, 2001). Secondly
the growth of globalisation, which has increased the competitive pressures not only from
local markets but also from international trade organisations. This has put pressure on
most companies performance to provide increased productivity and efficiencies in their
financial management. Finally, these two forces have also put pressures on the financial
markets, particularly in the banking business for a rapid acceleration in technology
development. As long ago as 1990, Beitel (1990) concluded the role of technology in the
14
financial services is a crucial tool for creating and delivering new businesses, generating
new profits and defining a new competitive edge.
Technological change is increasing customers expectations, demands and requirements.
The impact of increasing competitive pressures and developments in the financial services
market has forced the financial institutions to re-engineer their organisations (Drew, 1995).
Traditionally, technology has been used just to reduce costs, however, rapidly changing
technology is now playing a crucial role in increasing productivity efficiencies that enhance
a banks ability to gain a competitive advantage. IT implementations in a financial services
institution create changes in the services operation. However, such changes must occur
both in the front-line and back-office. Financial institutions regard IT as a method of restructuring and re-engineering their organisations for the purposes of reducing costs and
creating competitive advantage (Sathye, 1999). Therefore, business growth now relies
more on new technology than human efforts (Rajan, 1984). Rajan (1984) concluded that
increasing technology reduced the recruitment of new bank-employees. The combination
of a decrease in the number of administrative jobs and an increase in the demand for a
more customer orientated and personalised services creates a situation where the financial
institution, particularly the banking businesses, rely on new technology based service
delivery to provide a service with a minimum cost for mass customisation.
The development of Information Technology is a major consideration for financial
services firms as they attempt to compete in new retail financial services markets. New
varieties of services and benefits will become available, as well as new methods of
distribution of services, which may further help to add value to the retail financial services
offerings. Kingman-Brundage (1991) suggested that Information Technology is also used
as a tool for improving the service quality performance. Systems analysts play a crucial
role in designing the information systems that are required by customers, front-line staff
and the support team. However, in practice there is likely to be a problem between the
front-line staff and the support team because it is unlikely that systems analysts can
provide a complete solution to the service quality problems and provide enough support to
the front-line staff. This may be caused by the operating capability not complying with the
customers expectations. Technology can play a crucial role by making this process
successful.
15
Researchers have concluded that IT has had an impact on improving service quality.
However, it is difficult to measure because of its characteristics. Services are intangible
and it is difficult to measure services quality effectively, when compared with measuring
the quality of a manufactured product. In addition to this, service quality in the services
sector has to happen in real time, and involves real customers. However, we can
measure some activities such as the ability of IT to reduce the waiting queues in banks
or whether IT is able to increase the companys productivity overall, by providing
employees with better customer service records. We will not measure just speed or time,
but we will also measure the quality of service needed to satisfy the customers
expectations. As a result of this, financial institutions are continually developing new
technologies within their organisations. Also it is assumed that more advanced
technology creates the ultimate key for improving customer service (Mathe and Dagi,
1996).
In short, in financial services, technology affects business in a number of difference ways.
The most visible way IT has impacted on service delivery is by the introduction of new
technology based service delivery. These new technology services are aimed at
customising customers needs and improving service quality. Therefore, the impact of IT in
service delivery systems will be discussed in section 2.3; the impact on the quality of IT
service delivery will be illustrated on section 2.4; followed by the service quality
determinants in section 2.5.
2.3
The impact of IT in service delivery systems
The advances in technology have affected service delivery in many ways. Porter (1985)
concluded the impact of IT:
Technology can be an integral part of every value activity in a company, and
technological change can increase competitiveness, due to its ability to impact on
virtually every activity.
Dramatic changes to the financial services technologies for both front and back rooms
include communication by networks that closely link together. Therefore any changes to
16
any part of the service component will affect the delivery system. Supporting this idea,
Howcroft, (1992) explained The effects of electronic technology, deregulation, increased
competition and heightened customer awareness have had a significant impact on the
delivery of financial products and services. The changes in the backroom office have
affected the encounter process between the service provider and the customer as we have
discussed in previous sections. In this section we will examine the impact of IT on the
service delivery system. The characteristics of a service are different from goods and
products because the service product is the service process itself. Therefore, service
product design is heavily dependent on the delivery systems development. When these
delivery systems are designed it is important that customers perceptions of the services be
understood (Rands, 1992). To satisfy the customers perceptions of good services we must
evaluate how the service has been delivered to the customer (Gronroos, 1984).
Technology can facilitate the process of service delivery direct to the customer or to
develop the new delivery systems, or support systems, as one part of the process for
increasing the speed of transactions or communication between each department of the
service system. IT can also be used to develop the new service delivery systems. There are
many components in services delivery systems that have an important role affecting the
performance of the overall service. The service component must not only rely on the
service provider and technology support, but must consider the customers who encounter
the process as the most important components (Rands, 1992). For services, the impact of
new technology may not be limited to the back office but could require a change in the
role the customers play in the service delivery process (Fitzsimmons and Fitzsimmons,
1994). The introduction of IT has also changed the way companies communicate with
their customers and the nature of this contact.
To understand what are the components of service delivery, in the next section, the
conceptual framework of service delivery in the banking industry will be illustrated. This
also included details of new technology based service delivery in financial services.
2.3.1 Conceptual framework
17
During the past years researchers have tried to develop a framework to explain the
classifications of service (Lovelock, 1983; Shostack, 1984; and Sasser et al, 1978). The
characteristics of services have a significant effect on whether the consumer will
participate in the service option and in what way, and to what extent (Langeard, et al
1981; Dabholkar, 1994), and also helps us to understand the nature of the service being
offered. One of the most complete classifications of services to date is the one proposed
by Lovelock (1983). Lovelocks classification is based on the following statements:
The nature of the services activity.
The types of relationship with the customer.
The degree of customisation.
The extent to which a judgment is made by personal opinion.
The nature of demand and supply.
The method of service delivery.
Each of these classifications suggests different degrees to which customers want to

participate in the service. However, during the time since this research has been done, the
use of technology by service firms in providing services to customers has accelerated
rapidly and progressed significantly in the service industry.
There are other researchers who have discussed technology in service delivery, however
most of this work is adapted from Lovelocks framework. Dabholkar (1992 quoted in
Dabholkar, 1994) is one of the researchers who have developed categories to explain how
services firms are using technology in many service industries, particularly in banking. She
developed the framework of how technology impacts on the service delivery in the
banking industry, which is shown in figure 2.1.
Dabholkar (1994) suggested that the rapidly changing use of technology in the service
industry has caused difficulties in applying existing frameworks to any new service,
particularly with technology based service delivery. A new classification will give a better
idea regarding how technology based service delivery could be classified and will explain
the different impacts of IT in of each category, the components of each service delivery
18
and how customers are involved with each type of technology based service delivery. This
will highlight the benefits of how the service should be developed and used to satisfy the
customers needs. There are three major questions to be answered, namely who delivers
the service, where is the service delivered and how is it delivered. Dabholkar (1992
quoted in Dabholkar, 1994) discussed three ways that services are delivered as follows:
Firstly, backroom staff, who do not have direct contact with the customers, use
technology behind the scenes to support and increase the overall efficiency of operations.
For example, backroom staff will operate a database system that allows bank customers or
staff to retrieve data or do banking transactions via an on-line system.
Secondly, front-line staff, who have face-to-face or telephone contact with customers, use
technology to provide a faster, fuller service to customers. An example is call centre staff
that provide banking services via telephone. Finally, customers use technology to perform
the services for themselves. For example, bank customers using banking service via ATMs
machines.
Dabholkar (1996) proposed the general technology based service delivery framework,
which covered in general all types of technology based service delivery, and some types of
services that are not provided in the banking industry. However, this study will focus on
the banking industry as illustrated in figure 2.1. The framework is based on the nature of
interactions between the bank and customer i.e. person to person, person to technology
and the location of service delivery i.e. at the customer home, or at the service site. This
gives four broad delivery categories, cell-1 to cell-4, which are described in detail in the
following section.
Figure 2.1 Illustrations of technology-based service delivery in the banking industry
19
Source: Dabholkar, 1994

Dabholkar (1994) also viewed that, in general, what the customer expected from
technology based service delivery are the same general requirements of the service
industry i.e. fast and efficient delivery; reliable, accurate; responsive, knowledgeable
providers, flexibility in using the services and a good environment. However, she then
concluded with five major factors for evaluating the service quality of technology based
service delivery, namely service providers, technology, physical environment, customers
and waiting time. Based on Dabholkars framework, each type of category (figure 2.1) has
been explained as follows:
Cell one - presents the traditional way bank customers deal with their bank branch.
Technology has a major role in this service encounter. However, the bank back office is
also working to provide the systems so the bank customers will not know the mechanisms
of the technology. The service delivery quality relies heavily on the front-line staff. The
service provider factor has an important role in the case of direct contact situations
between the front-line staff (teller) and the bank customer. The customer also observes the
responsiveness, attitude and the willingness to provide good customer services from the
staff. Customers tend to appreciate friendly, helpful and polite service (Dabholkar, 1994;
Moutinho and Meidan, 1989). However, technology has to be just one part of the service.
Customers will also evaluate the bank staff and the way they use the technology. Problems
may occur caused by the technology such as systems failure causing delays. How quickly
20
service providers can solve these problem is critical to the customers experiences of the
service. The physical environment is also important for on-site services encounters.
Waiting time is a customer concern and an issue in evaluating the efficiencies of banking
services. However, Dabholkar(1994) pointed out that there is a time gap before the
customer losses control and feels frustrated with the situation. For example, customers
who go to use the services at their branch and have to wait for long periods of time
queuing for the service may be patient if they see the bank staff working very hard and all
the counters are available for service. However, if the banks staff do not appear to be
concentrating on providing good service and only a few of the counters were operating
the customer might feel like complaining and be unhappy about the service.
Cell two - customers use technology to perform services by themselves. Service providers
use back-office technology behind the scenes as a service delivery tool to provide services
replacing the front-line staff. However, there are many factors that concern customers
regarding technology, mainly what are the benefits of the service such as convenience
(Rugimbana and Iversen, 1994, Barczak et al.1997), speed (Dabholkar, 1994), timesaving (Bazczak et al, 1997), ease of use (Sathye, 1999, Bazczak et al, 1997, Rugimbana,
1995; Anandarajan et al, 2000), and security issues (Barczak et al, 1997). Dabholkar
(1994) also added that reliability and user-friendliness of services are also very important
factors to be considered when customers evaluate technological services. These are the
factors that a customer would expect from new technology services compared with their
use of services at the bank branch.
Problems may occur during the period the customer uses the technology based service
delivery. However, customers will not normally blame themselves but they will blame the
technology delivery system. For example, bank customers who have problems with the
ATM machine because the ATM kept their card, did not blame themselves for operating
the machine incorrectly, they blamed the machine for being unreliable and difficult to
operate etc. However, not only ATM machines can be categorised in this cell. Other
electronic banking services such as telephone banking (with voice responding systems),
debit card and Internet banking can be classified in this channel. Internet banking requires
significant amounts of technology to run the service. Back-office innovations do not
directly affect the customer, but the technology may increase complications by changing
21
internal processes, which will impact on customer services. For example, the changes in
the money transmission, clearing system and ATM link give benefits to the customer for
adopting new technology services based service delivery.
Cell three - bank staff provide services via the technology-based service delivery. In this
category, telephone banking is a good example that illustrates the factors affecting the
process of the service that has been delivered to the bank customers. Bank customers use
the telephone as a tool for receiving the services from the call centre. The service is
provided through this channel rather than for obtaining information. However, telephone
banking can provide many varieties of service, and has rapidly increased over the last five
years. There are factors that may be influencing this channel such as the customer, the
technology of the bank, waiting times and bank staff (call centre). Front-line staff who
encounter the customer directly by using the telephone do not have the same encounter
situation as they would with the bank customer at the branch. However, customers expect
the same responsiveness, politeness and helpful attitude, even though the customer cannot
see the process that is providing the service but they can listen to the voice and feel the
enthusiasm of the staff. The waiting time is also a crucial factor i.e. How long the
customer has to wait before getting through to the call centre or how long the customer
has been kept waiting on the phone before getting their required information or the
processing of their transaction.
Cell-four - Customers call the banks automated customer services to get information.
The services provider is also working behind the scenes to support the service. Customers
play a crucial part of the encounter with the service process. Like cell-3, waiting time is a
major concern when customers use the service as well as the functional aspects of the
service. Some customers complain that the company uses too many long messages and
sometimes advertised new services forcing customers to wait for long periods of time or
listen to too many messages before getting the information that they want. The queuing of
connections between telephone services has been seen as one part of the service process
that customers use to evaluate the services delivery system. The physical environment has
no significant role in this channel.
22
In summary, the trend of using these technology-based service delivery options has been
rising sharply in recent years. The category (cell-2) where customers use technology to
perform services for themselves is becoming increasingly the primary channel that banks
use to provide services for customers such as sophisticated ATM that can provide a
variety of services. Electronic Fund Transfer at Point of Sale (EFTPoS) is an important
service known as debit card. However, Internet banking has been seen as the future of the
banking industry. This also includes the category (cell-3) where service providers use the
telephone as a tool for providing banking services as the technology based service
delivery. Although cell-1 is presently representing the majority of the cases where the
banks deal with customers, as we have already discussed, the market competitive forces of
reducing costs and increasing productivity and including the customers attitudes to
change towards technology products indicates that cell-1 will be a declining option in the
future. Cell-4 technology plays a crucial role in delivering the services as well as with
customers who encounter the services by themselves.
The success of technology based service delivery depends on customers acceptance
because banking customers participate directly in the service process. Customers may also
need to learn new skills such as using a computer for the use of Internet banking to
receive some benefits such as the availability of services 24 hours per day. The
contribution of the customers as active participants in the service process must be
considered when making changes in the service delivery system.
Consumer characteristics are considered as one of the main factors that affects whether
customers adopt new technology based service delivery (Ostlund, 1974; LaBay and
Kinnear, 1981; Rogers, 1962, 1983, 1995; Dickerson and Gentry 1983, Silapakit and Fisk,
1985; Lockett and Littler, 1997). The ownership of a technological product e.g. home
computer, Internet services and the use of financial services is also considered in some
research (Lockett and Littler, 1997 Dabholkar, 1994; Howcroft et al, 2002). However, to
fully understand all the factors influencing the adoption of electronic banking services, the
conceptual framework of innovation and diffusion needs to be addressed, which will be
discussed in chapter four. The following section discusses the new channels of service
delivery.
23
2.3.2 Electronic banking
New varieties of IT services, which are the results of the diffusion of innovation, have been
introduced to customers, such as the Automatic Teller Machine (ATMs), Electronic Fund
Transfer at Point of Sale (EFTPoS), telephone banking and Internet banking.
2.3.2.1
Automated Teller Machines (ATMs)
ATMs were initially introduced to reduce the workload of the front-line office. ATMs are
not only installed in bank branches, they can be installed anywhere in community areas
such as supermarkets, universities, transport stations etc. These are making ATMs more
available as an alternative delivery system to the branch, which requires much higher
expense to maintain than ATMs. In addition, customers also get the benefit of their
worldwide network of links to other banks ATMs. Therefore, this delivery method
provides services unlimited by the restrictions of the bank branch. Moreover, there is
evidence of increasing numbers of customers using ATMs. In addition to the original
introduced ATM services, there have been improved and modified services. Sophisticated
ATMs have been developed to deliver a wider range of financial services than the original
ATMs could offer. The sophisticated ATM can offer services such as cash withdrawal,
deposits, transfers between accounts; cash advances from bank credit card accounts, bill
payments and balance inquiries. Some banks also use ATMs as a multi-media tool to
advertise their new and existing products and services to their customers.
2.3.2.2
EFTPoS (Electronic Funds Transfer at Point of Sale)
EFTPoS is a network technology that is a money transfer transmission system. Bank

customers know EFTPoS as a debit card service, which has benefits that are similar to
using a cheque book. However, debit cards are more like using cash because they are
more flexible and provide a larger range of services than cheques. The IT systems have
24
improved the network links so that they can now directly update the customers balance at
their bank. Therefore EFTPoS is much faster than using a cheque and also reduces the
paperwork and the risks from fraud. EFTPoS is used by customers in the same way that a
cheque book is used, however they also have the advantage of being less cumbersome,
less paper intensive and easier to track down in the event of fraud. Moreover, the range of
services that can be offered at the point of sale is much wider that that offered by a
cheque. The debit card has been more popular in the UK than in the USA if compared with
credit card use. Likewise, in Thailand, Bangkok bank has introduced debit cards for a
while, but they were not widely accepted because of the limited places that the customer
could use the card as well as customers not appreciating the benefits of the immediate
update of their bank balance when compared with the free credit advance that they got
when using their credit card.
2.3.2.3
Telephone banking
Telephone banking is a new important channel for banks to deliver their services. It can
supply a range of services such as transferring money, withdrawing money, checking
account balances, and applying for mortgages etc. Traditionally, banks have provided their
services by front-line staff via the branches. Information Technology has developed
database systems providing facilities and support for the new network linked systems
supplying the customers information. Call centres enable customers to use their telephone
to contact the bank staff who can then use the network linked customer database to offer
their financial services.
2.3.2.4
Internet banking
Bank customers have known home banking as Internet banking. It has become the latest
channel of technology based service delivery. Jayawardhena and Foley (2000) summarised
the advantages of introducing the services as follows: cost savings, increased numbers of
customers, and enabling mass customisation. In addition, Internet banking provides a low
cost alternative to opening new branches and allows the bank to reduce its costs. The
25
numbers of households that have a computer and Internet connection has risen rapidly in
recent years therefore the banks have seen an opportunity for the success of Internet
banking.
The next section describes the service quality of technology based services delivery. Bank
customers have high expectations when they use technology based service delivery for
electronic banking. Therefore, it would be beneficial to understand the service quality
conceptual framework.
2.4 The impact on the quality of IT service delivery

Service quality has been widely accepted as an important factor in the financial services
(Blanchard and Galloway, 1994; Levesque and McDougall, 1996). However, the
increasing levels of competition in the financial services industry has increased the role of
service quality as being perceived as a key differentiating factor for sustaining a
competitive advantage (Boaden and Dale, 1993). The nature of the service encounter in
electronic banking relies on the service delivery process. This means that the service
delivery process is one part of the service measurements that customers use to evaluate
the service quality as well as the outcome of the service that can influence the perception
of quality (Gronroos, 1984; Parasuraman et al, 1985).
To improve service quality in the service delivery process IT can be used to assist in
delivering a fast, accurate and reliable service. IT is also used to support new service
developments and provide information for management decision-making and advice
(Lloyd-Walker and Cheung, 1999). The new Information Technology systems are
marketing database systems and network links to service operations. These can create an
enormous potential to increase the quality of the customer service in the delivery service
system. However, to gain the benefits of this potential, new technologies must be
recognised and the service encounter must be redesigned (Zuboff, 1988).
26
In the next section a service quality framework for the service industry will be discussed.
The framework will also show how the application of technology can enhance service
quality.
2.4.1 Service quality models
The conceptualisation of service quality has been described in many ways, which
Parasuraman, Zeithaml and Berry (1988) identified as perceived quality versus objective
quality, quality as attitude, quality versus satisfaction and expectations compared to
perception. They categorised the group who taught perceived service quality as the
degree and direction of discrepancy between consumers perceptions and expectations.
They concluded that this group is found from the work of Gronroos (1984), Lehtinen and
Lehtinen (1982) and Parasuraman et al (1985).
Parasuraman et al (1985) is widely acknowledged as the main study of the service quality
model. Therefore, in this study we will also discuss the two frameworks by Gronroos
(1984) and the SERVQUAL by Parasuraman et al (1985). Although both frameworks are
based on the same concept, there were differences between the components of each
model. This will be discussed in the following section.
2.4.1.1 Gronroos framework
Gronroos (1984) concluded that perceived service quality is the comparison between the
expectations of the customer before the encounter of the service and the perceptions after
receiving the service. The evaluation of the quality of the service is from both the
functional quality and technical quality are presented in figure 2.2
27
Figure 2.2 Gronroos framework
Source: Gronroos, 1984

Gronroos (1984) explained that there are two aspects of measuring service quality, namely
technical quality and functional quality.
Technical quality refers what service the
customers receives from the service provider. For example, technical quality may be
concerned with the accuracy which transactions are processed, the speed with which
cheques are cleared etc. He suggested that the technical quality outcome of the process is
important to the customer and is part of their evaluation of the service. Functional quality
refers to how the customer obtains the service. The functional quality refers to the
process used to deliver the service including the interaction between the service provider
and the customer. In essence, technical quality is what the customer gets and functional
quality is the way in which the service is delivered. He suggested that there are two links
between these two processes. Customers cannot evaluate the quality of a service by
28
simply examining the end result (technical quality) but they must also evaluate the process
during the period the service is being performed for them. This concept leads us to
consider that IT has an impact on the quality of the service delivery process which
customers use to evaluate the overall perceived service quality. For example, when bank
customers go to use ATM machines the functional quality is involved with the accessibility
of the machine and the technical quality involved with the ATMs machines processing
transaction reliability and accuracy.
Gronroos (1984) concluded that the process of how customers received the service
functional quality is sometimes more important than what the customer received from the
service. For example if customers use ATM machine to withdraw their money, they may
have received their money but still may not be satisfied with the service because it took
too long queuing to use the machine.
This model explains the perceived quality of the service that will be the result of the
customers evaluation of the perceived service relative to the expected service. Therefore,
the quality of the service is dependent on two variables: expected service and perceived
service. The expected service of a customer is influenced by traditional marketing activities
i.e. advertising, field selling, PR, pricing and external influences by traditions, ideology and
word-of-mouth. Service providers use marketing activities to make promises to the
customer by creating a corporate image. Gronroos (1984) presented that the corporate
image could be built up by the technical quality and the functional quality of its service.
Therefore, the use of Information Technology such as a good database system can help
improve the technical quality of the bank, whilst functional quality is evaluated by the
process of receiving the service in a fast, reliable and better manner than if the customer
went to use the services at their branch. This will meet the customers expectations of
using electronic banking and encourage them to be willing to adopt the new technology
based service delivery that the banks have been introducing.
In summary, Gronroos framework has helped us to understand that the process of the
customer encounter with the service is very important and is sometimes more important
than the results of the service itself. IT has an important role to improve the service
delivery process, particularly for electronic banking that relies on technology as a tool to
29
deliver the service. This means the customer evaluates the quality of the service delivery
process as part of the perceived service quality. However, the model by Gronroos (1984)
has faced criticism because it does not include the customers past experiences as factors
that influenced their expectations of quality. Parasuraman et al (1985) suggested that the
customers past experiences are important in determining customers expectations. Also,
Gronroos model does not include considerations of demographic characteristics, even
though customers characteristics may be responsible for the significant differences in
expectations of quality (Bebko, 2000). Therefore, the study of the SERVQUAL model by
Parasuraman et al (1985) is necessary. Their model has included personal needs, which
can be linked to the demographic characteristics, and past experiences, which have
affected the customers expectations. The model also provides the overall picture starting
from the service provider collecting the data about what the customer needs until delivery
of the service to the customer. This will be discussed in the next section.
2.4.1.2 A service quality model
This model has been developed by Parasuraman et al (1985), which they used to explain
that the consumers quality perception is influenced by a series of four distinct gaps as
shown in figure 2.3. Gronroos (1984) suggested that functional quality, the process of
service delivery to the customer, is more important than the outcome itself. Therefore, this
may be the reason that the work by Parasuraman et al (1985) is focused on the process of
service delivery in the development of a service quality model (Mangold and Babakus,
1991; Smith, 1995; Abdelazia, 2001). Based on previous frameworks, the results of the
study by Parasuraman et al (1985) found that overall service quality perceived by
customers determined by the gap between customers product/service expectations and
their perceptions of the actual delivered service. The gap discrepancies are determined by
the size of several other gaps, which may be part of the service organisation. Therefore,
the gap model is a way to examine the delivery process and SERVQUAL measures the
dimensions of the service that consumers used to evaluate the service quality.
Zeithaml et al (1990) presented that the key ideas for delivering high-quality service is to
balance customers expectations and perceptions and close the gaps between the two. To
30
close the SERVQUAL gaps, a company would gain advantage from an understanding of
the problems within the company or gaps that might be responsible for the external
customer perception of problems. Zeithaml and Bitner (1996) explained how IT could
narrow the gap, which we explained with the existing service quality model framework
that Parasuraman et al proposed in 1985 as follows:
Figure 2.3 Conceptual model of service quality
Source: Parasuraman et al, 1985

Gap-1 - The difference between the customers expectations of service and the
companys understanding of those expectations. Zeithaml and Bitner (1996) concluded
that the problems causing Gap-1 types are inadequate for marketing research orientation
and insufficient marketing relationships. As a result customers perceived the service as
being of poor quality. The strategies for closing this gap are by collecting accurate
information about customers expectations, improving the communication within the
31
company and developing customer relationships. Technology can be used to develop

information within a company, by using various database and information sharing
technologies, to improve the performance of the service.
Gap-2 - The difference between a company understanding the customers expectations
and the service quality specifications. Zeithaml and Bitner (1996) focused on how
companies translate their understanding of customers expectations into service quality
specifications. They referred to customer-driven service designs and standards. To close
the Gap-2, three problems should be identified which are firstly, a lack of customerdriven service standards and secondly, inadequate service leadership. Finally, poor service
designs. The strategy for closing this gap is to build up the service designs and perform
standards that response to customers expectations. Technology can improve service
design by reducing the process of service delivery and customising customer needs.
Gap-3 - The discrepancy between the service quality specifications and the actual service
delivered by the company. The service quality standards are involved with people,
systems and technology (Zeithaml and Bitner, 1996). For these reasons to reduce the
Gap-3 a company must provide good standards to its employees and their delivery
systems and it should also satisfy customers expectations. However, Zeithaml and Bitner
(1996) suggested that technology could support service standards and designs to meet
the expectation of customers by using computer technology. IT can be used to improve
the service operating system or design service processes to make them faster and more
efficient.
Gap-4 - The difference between service delivery and the service providers external
communications. This is the discrepancy between the actual and promised services.
Typically, promises are made by a service providers company through media such as
advertising and other communications channels that form the customers expectations
(Parasuraman et al, 1985). In addition Zeithaml and Bitner(1996) explained that external
communication can affect customers expectations and customers perceptions of the
delivered service. Therefore customers also evaluate the delivery process as part of
assessing the service quality.
32
For these reasons to close the Gap-4, service providers have to balance their promises
with the actual service, which relies on both accurate and appropriate communication to
customers. Companies can use IT to provide a good quality of service by keeping their
promises to their customers. For example, by providing easily accessible 24 hours
customer services via call centres or online systems.
Gap-5 - This gap is the result of Gaps-1 through 4. Technology is one of the key tools
for closing the Gaps in many ways, which can balance the expectations of the service
and the perceived service of the customer. IT can help to make the service fast, efficient,
reliable and accurate. The results of closing these Gaps are to improve the quality of
service.
In summary, both frameworks have presented the importance of the service delivery
process which affects the customers evaluation of the service quality overall. IT can be
used to improve the quality of service in every process of the model and can help to close
the gaps. Therefore, a good quality of service delivery has a significant impact on the
customers overall perceptions of service quality. The models also support the assumption
that customers may evaluate the quality of the service delivery system as one part of the
factors that may affect the decision to adopt the new technology-based service delivery.
This will be discussed during chapter three. However, the next section discusses the
determinants of service quality. These may be applied to finding the determinants of
service quality in technology based service delivery for electronic banking.
2.5 The service quality determinants

The framework by Gronroos(1984) and Parasuraman et al (1985,1988) has been
referenced in many studies when discussing the determinants of service quality in the
service industry (Carman,1990; Blanchard and Galloway, 1994; Newman and Cowling,
1996; Avkiran, 1994; Dabholkar, 1994; Ghobadian et al, 1994; Joseph et al, 1999; Jun
and Cai, 2001 etc.).
33
The component parts of service quality are important because customers will use them to
determine the overall service quality. Therefore in this study we will also examine both of
these frameworks as follows:
2.5.1 Components of perceived service quality

Gronroos (1984) explained the components of good service quality, which concluded that
there are six criteria of good perceived service quality:
Professionalism and skills.
These refer to the ability, skill and knowledge of the service provider, staff and systems to
solve any problems that might occur when the customer encounters the service in a
professional manner.
Attitude and behaviour.
These refer to the attitude and behaviour of the service provider and their staff when they
are dealing with the problems of the customer. Customers expect responsiveness and
politeness from front-line staff.
Accessibility and flexibility.
This refers to the accessibility and flexibility of the service, such as the location, service of
the staff, service provider, system and operating hours.
Reliability and trustworthiness.
Refers to the dependability and accuracy of the service. The customers know that
whatever takes place they can rely on the service provider and its employees and systems
to keep promises and perform for the best interests of the customers.
Recovery.
Refers to the ability of the service provider to correct any problems the customer has
during a service encounter and how quickly action is taken by the service provider to
recover and resolve the problems.
34
Reputation and credibility (image).
Refers to the reputation, trust and the image of the service provider.
Parasuraman et al (1985) presented 10 determinants of service quality (see table 2.1)
which consumers used in evaluating service quality as derived from their focus group
interviews research. Based on a classification of the qualities or attributes possessed by
goods and services (Nelson, 1974; Darby and Karni, 1973), Parasuraman et al (1985)
proposed that these 10 dimensions of service quality could be classed as either search,
experience or credence qualities which they describe in details as follow; Firstly, search
qualities referred to as attributes which the consumer can determine prior to purchasing
a product, which referred to tangibles and credibility determinants. Secondly, experience
properties are attributes which can only be discerned after purchase or during
consumption. These properties refer to access, courtesy, reliability, responsiveness,
understanding/knowing of service dimensions. These service determinants are normally
found during the time the customer is purchasing or consuming the service. Finally,
credence properties referred to characteristics which the consumer may find impossible
to evaluate even after purchase and consumption. These refer to competence and
security of service dimensions.
Table 2.1 Determinants of service quality
Reliability involves consistency of performance and dependability

It means that the firm performs the service right the first time.
It also means that the firm honours its promises. Specifically, it involves:
Accuracy in billing;
Keeping records correctly
Performing the service at the designated time
Responsiveness concerns the willingness or readiness of employees to provide service. It involves

timeliness of service:
35
Knowledge and skill of the contact personnel;
Knowledge and skill of operational support personnel;
Research capability of the organization, e.g. securities brokerage firm.
Access involves approachability and ease of contact. It means:

-
The service is easily accessible by telephone
Waiting time to receive service is not extensive
Convenient house of operation
Convenient location of service facility
Courtesy involves politeness, respect, consideration, and friendliness of contact personnel (including
receptionists, telephone etc.).
It includes:
Consideration for the consumers property
Clean and neat appearance of public contact personnel.
Communication means keeping customers informed in language they can understand and listening
to
them. It may mean that the company has to adjust its language for different consumers, increasing
the
level of sophistication with a well-educated customer and speaking simply and plainly with a novice.
It involves:
Explaining the service itself;
Explaining how much the service will cost;
Explaining the trade-offs between service and cost;
Assuring the consumer that a problem will be handled
Credibility involves trustworthiness, believability, honesty. It involves having the customers best
interests at heart.
Contributing to credibility are:
Company name;
Company reputation;
Personal characteristics of the contact personnel;
The degree of hard sell involved in interactions with the customer.
Security is the freedom for danger, risk, or doubt. It involves:

-
Physical safety. (Will I get mugged at the automatic teller machine?);
Financial security (Does the company know where my stock certificate is);
Confidentiality (Are my dealings with the company private?).
Understanding/knowing the customer involves making the effort to understand the customers needs.
It involves:
-
Learning the customers specific requirements;
Providing individualized attention;
Recognizing the regular customer.
36
Tangibles include the physical evidence of the service:

-
Physical facilities;
Appearance of personnel;
Tools or equipment used to provide the service;
Physical representations of the service, such as a plastic credit card or a bank statement;
Other customers in the service facility.
Source: Parasuraman et al, 1985

Parasuraman et al (1988) has summarised the five dimensions of the determinants of
service quality (SQ) into five categories. The SERVQUAL scale was developed from five
dimensions, which the customers use to evaluate the service quality in four categories of
service sectors i.e. retail banking, credit cards, securities brokerage; and product repair
and maintenance.
These are:
Tangibles, refer to the physical facilities, the condition of the equipment and buildings;
the environment; the appearance of personnel.
Reliability refers to the ability to provide the service as accurately as possible and as
promised to the customers.
Responsiveness refers to the willingness to help customers and provide the service and
respond to the customers requirements promptly and deal effectively with complaints.
Assurance refers to credibility, security, competence and courtesy. Customers should

be kept informed and updated with information about the service (communication). It
also refers to the ability of the service staffs knowledge and skill to perform the
service effectively (competence). It requires the trust and confidence of the service
provider that can be represented in terms of its reputation (creditability), the politeness
of front line staff, ensuring physical safety and financial and confidential security
(security).
Empathy refers to access, communication and understanding. Service providers should

understand and response to customers needs and requirements. This is also involved
37
with the ease with which customers can access the service or contact the service
provider.
Berry and Parasuraman, (1991) suggested five dimensions. The first, reliability, is
concerned with whether the outcome of the service delivery was delivered as promised,
whilst the other four dimensions concern the process of service delivery, or how the
service was delivered. Parasuraman et al (1988) also suggested that SERVQUAL to be
an effective and stable tool for measuring service quality across service industries (also in
Zeithaml et al, 1990). However, some researchers have suggested that SERVQUAL has
limitations that affect its application in many areas such as the purpose of the measurement
instrument, models for service quality measurement and the dimensionality
of service quality etc. (Robinson, 1999). For example, Carman (1990) expressed some
doubts about the general use of SERVQUAL dimensions. He recommended that seven or
eight dimensions of the original ten dimensions are better at evaluating SQ than using five
dimensions (e.g. courtesy and accesses should be retained) and also suggested that some
items (e.g. responsiveness and access) also need to be expanded. He also found a problem
with the measurement of expectations. Carman (1990) also criticised the work of
Parasuraman et al (1988). He noted that there are practical problems with obtaining
information about customers expectations. He has questioned the process of evaluating
their expectations and their perceptions of service when the respondent is asked to fill in a
questionnaire for both at the same time. Therefore, the respondents opinions would have
been affected by their experience of using the service.
In addition, Buttle (1986) suggested that expectations may increase or decrease over a
period of time, therefore the expectation score of service in the past may not be the same
as an expectation score in the present. Therefore, Buttle(1996) claimed that SERVQUAL
had limitations to measure the changing of customer expectations.
Robinson(1999) also had some doubt whether the future use of SERVQUAL as a means
for measuring service quality is suitable although he accepted that it has probably been
the best, and most popular approach available during the 1990s. He commented that
there is some significant weaknesses. One of his questions was whether the five
dimension model is still appropriate for its original context.
Some criticism has

38
appeared regarding the claim by Parasuraman et al (1988), that the SERVQUAL scale and
dimensions were generalised for all types of service sector.
Teas (1993a) found that the expectations concept is not clear for its measurement in the
SERVQUAL scale. He also concluded that the errors in the result from the first part of
questionnaires which ask about the expectation of the service in the SERVQUAL
instrument is caused by the misunderstanding of respondents interpretation of the
questions, not the response from their attitudes, (Tea, 1993b). Smith (1995) suggested
changes to the instrument because he found problems applying the SERVQUAL scale in
the health care environment. Cronin and Taylor (1992) criticised SERVQUAL because
service quality dimensions are different for all industry sectors, therefore each sector may
require different service quality scales. They also suggested that service quality is a
prerequisite of consumer satisfaction. Therefore, for managerial interest, customer
satisfaction had more influence on the customers intentions than service quality. They
proposed the performance-based scale (SERVPERF) which they claimed was more
efficient in comparison with the SERVQUAL scale. Angur et al (1999) compared these
two scales in their retail banking study. The result show that not entirely five dimensions,
proposed by Parasuraman et al (1985,1988), were found to be important but only two
dimensions (i.e. reliability and responsiveness) did. In addition they suggested that the
SERVQUAL scale is much better to provide the information about service gaps than
SERVPERF scale does. Therefore, in spite of these criticisms, SERVQUAL dimensions
are referred to as the established framework in the majority of service quality studies. (e.g.
Rugimbana, 1995; Black et al, 2001; Blanchard and Galloway, 1994; Newman and
Cowling, 1996). Comparing the proposed model by Gronroos (1984) and Parasuraman et
al (1985) showed there are some similarities between the two studies. For example,
reliability, trust, knowledge and accessibility have been discussed in both studies.
Reliability and accessibility were also found to be in the service quality determinants of
technology-based service delivery research papers, indicating that they are important
factors to consider when evaluating the service quality of electronic banking, which can be
described as follows:
39
Joseph et al (1999) suggested that the convenience/accuracy, accessibility, feedback/

compliant management, efficiency, queue management and customisation are the six major
factors that customers used when measuring the service quality of electronic banking in
Australian banking. They also suggested that the factors impacted on the adoption of
electronic banking in Australia. The details of this study will be further discussed in regard
to adoption in chapter three. However, Jun and Cai (2001) argued that service quality
dimensions by Parasuraman et al (1985) are not appropriate for measuring service across
products and services (e.g. Cronin and Taylor, 1992; Bowers et al. 1994; Rowley, 1998
was quoted in Jun and Cai, 2001; Zhu et al, 2002). For this reason, they aimed to identify
the service quality determinants of Internet banking in the USA. Jun and Cai (2001)
collected the sample by accessing web site bulletin board systems where customers posted
their experiences of using banking services. A total of 704 individual comments were
recorded for the 49 Internet banking services in the USA. The results found 17 dimensions
of service quality, which were divided into three categories i.e.
Banking service product quality (1 dimension), customer service quality (10 dimensions)
and online systems quality (6 dimensions). The majority 8 dimensions (reliability,
responsiveness,
competence,
courtesy,
credibility,
access,
communication
and
understanding the customer) of customer service quality are the same as the dimensions
found by Parasuraman et al (1985). Only two new dimensions were found in their study
(collaboration and continuous improvement). However, for online systems quality was
composed of contents, accuracy, ease of use, timelines, aesthetics (attractiveness of the
web site) and security.
There is recent research by Zhu et al (2002) who has studied the impact of IT-based
services on service quality in the consumer-banking services in the USA. The population
of the study was based on the active customers of a large national bank who had used ITbased service delivery options such as ATMs, 24-hour telephone service, on-line banking,
and Internet banking etc. The data was collected by postage-paid return envelopes. The
response rate was 11% from 185 usable responses. The response rate was low because the
questionnaire was very long. Zhu et al (2002) proposed a service quality model in their
study that linked customers perceived IT based service attributes to traditional service
dimensions as measured by SERVQUAL in the context of customer perceived service
quality and customer satisfaction. The results show that for the overall service quality
40
dimension based on SERVQUAL only reliability, responsiveness and assurance were found
to be important. He also suggested that customers were more likely to perceived a
higher value on these quality dimensions if they perceived a high quality of IT-based
services, such as ease of use, time saving, convenience, provision of accurate account
information, ability to satisfy most of their needs, and having no risk of the invasion of
their privacy. They also found that the perceived IT-based services as described had a
direct impact on the overall service quality dimension. The more customers that were
satisfied by the IT-based services, the better they felt about this proposed service
dimension which, also affected positively the perceived service quality and customer
satisfaction.
Based on these literature reviews, the dimensions of service quality in electronic banking
have similarities with the existing framework by Gronroos (1984) and Parasuraman et al
(1985). However, there are also newly introduced service determinants for evaluating the
service quality for IT based service delivery found to be important in addition to previous
frameworks. Therefore, it is too early to generalise the conclusions of the service quality
dimensions of technology-based service delivery for electronic banking. Moreover, some
studies (Dabholkar, 1996) have examined the service quality dimension as the perceived
attributes of innovations and have found an effect on the intention to use technology-based
self-service. This will be discussed in detail in the next chapter.
In summary, the literature has shown that IT has impacts on improving the service quality
of the service delivery processes which customers use as one of the major parts of
evaluating the perceived service quality overall. We assume that the perceived service
quality of technology-based service quality may have an impact on the adoption of
electronic banking. However, we do not know if this is true because there have been very
few studies in this area. Therefore, further investigation is needed to address this shortfall.
2.6 Chapter summary

The major conclusion of this chapter is that Information Technology can be shown to have
a considerable and significant effect on financial services particularly in banking. The
41
impact of IT on financial services has been discussed. This chapter has investigated the
impact of IT on service delivery in financial services and how IT can improve the quality of
service delivery. A conceptual framework was introduced. The classifications of
technology based service delivery was discussed showing how different kinds of electronic
banking are affected differently by Information Technology. The service quality of
technology based service delivery has also been examined. The conceptual framework of
service quality has been addressed. This is useful for examining the factors that customers
use to evaluate the quality of the service. Finally the determinants of the service quality
model have been investigated. Many studies have investigated the service quality
dimensions, however, only a few have focused on new technology based service delivery.
This shows that there are still gaps missing from previous studies about the determinants
of service quality of technology based service delivery.
The literature illustrated that customers evaluated the service delivery process as an
important part of the overall perceived service quality. This leads us to question whether
or not the perceived service quality of electronic banking can have an impact on the
adoption of the service. Further investigation will be discussed in the next chapter about
the adoption factors influencing the adoption of electronic banking.
42
Chapter 1
3.
3.1
The adoption of electronic banking

Introduction
The impact of IT has been illustrated in previous chapters. This has shown the effects on
financial services when introducing new technology services. However, any new delivery
systems and benefits will only materialise when bank customers decide to use the services.
Therefore, it is important to study what factors will affect the adoption of new technology
based service delivery, such as electronic banking.
There are two major areas of interests in this research namely the perceived attributes of
innovations and the personal characteristics (adopter versus non-adopter groups) as the
major factors influencing adoption. There are additional perceived attributes, which were
found in recent studies of electronic banking areas that need further investigation such as
perceived risk, cost and perceived service quality and how they may affect the adoption.
However, we will also consider that the characteristics of adopters and non-adopters such
as gender, age or income may also differ from the findings in previous studies and this
information can be used to identify the groups of adopters or non-adopters. Although
there are many studies in this area, the personal characteristics have not shown any
patterns that can be applied for all types of products. Thus, this research will consider
further studies in these areas in relation to technology based financial services for
electronic banking.
There are five main sections in this chapter structured as follows: Firstly, to describe the
meaning and background of innovation and diffusion research. Secondly, to investigate the
perceived attributes of innovation that affect the bank customers willingness to adopt new
technology services. The conceptual framework was developed by Rogers (1983) and has
been widely accepted to be the original model in diffusion of innovation research. Rogers
(1983) identified five perceived attributes of an innovation that affect the likelihood of
adoption, namely relative advantage, complexity, compatibility, trialability, and
43
observability (or communicability). Other studies have added new attributes such as
perceived risk, and cost influencing the adoption of electronic banking such as telephone
banking, to this list, but it is still considered that there may be other important attributes
that have yet to be identified. Rogers (1995) suggested that influences on the adoption
decision are contextual and vary across products and services. Features of the context may
help to explain adoption further by providing new influences. Thirdly, the personal
characteristics will be discussed based on Robertson (quoted in Loudon and Della Bitta,
1993) and Lockett and Littler (1997) namely demographic characteristics, attitudinal and
perceptual factors, social interaction and consumer behaviour, and consumption patterns.
Fourthly, this section will review the existing literature on adoption and identify possible
gaps in understanding. These gaps will be used to define the research questions for the
study of adoption in the context of electronic banking in Thailand. Finally, the model has
been developed from the existing framework and also a series of propositions are
presented which aim to clarify the gaps which are raised in this chapter regarding the
perceived attributes of electronic banking and the characteristics of the adopter and nonadopter.
3.2
Innovation and diffusion
New products and services have been introduced to the market consistently during recent
times. Some are new and some are modified from existing technologies. This is accepted
as technological innovation. Once new technology is accepted and used by potential
individuals or groups the spread of that innovation is called the diffusion process.
3.2.1 Innovation
Rogers (1983) defined the meaning of innovation as an idea, practice, or object that is
perceived as new by an individual or other unit of adoption. He also explained that
innovation does not only apply to new discoveries but can include any newness of ideas,
knowledge or decisions to adopt by an individual. According to this definition, the
innovation has been interpreted in three ways. First are the new discoveries of
products/services. Second are ideas, knowledge or things that are proceeding differently
44
from existing ideas. The third way is ideas, knowledge or things that are adopted in one
market segment but are new to other market areas. Robertson (1967) suggested that the
definition of innovation involves changes in consumption patterns. These can be described
in detail as follows:
Firstly, a continuous innovation involves changes and improvements to an existing product
rather than inventing a completely new product. This type of innovation slightly affects the
consumption pattern.
Secondly, a dynamically continuous innovation also involves changes and improvements
of an existing product rather than developing a new one. However, a dynamically
continuous innovation has more impact on changing consumption patterns than a
continuous innovation.
Finally, a discontinuous innovation involves the alteration of new consumption patterns by
introducing a completely new product which was previously unknown.
3.2.2 Diffusion
The diffusion process helps to explain how new ideas and cultural practices spread
through a society, as well as how new products are diffused. The main distinction in the
diffusion of innovations is the emphasis on communications within the social structure
rather than individual information processing which is emphasised in adoption studies
(Engel et al, 1985, 1986). The most important contribution to the study of diffusion of
innovations was a book of the same name, written by Everett Rogers in 1962 and updated
in later years (1983, 1995). Rogers said that diffusion is defined as the process by which an
innovation (new idea) is communicated through certain channels over time among the
members of a social system. Under this definition, a product might be around for a long
time but still be perceived as new and be regarded as an innovation in a given market.
45
3.2.2.1
Diffusion variables
Based on a range of diffusion studies, Rogers (1983) suggested that the four main
elements in the diffusion of innovations were as follows:
1. The innovation
2. Communication (through certain channels)
3. Time (at which certain individuals decide to adopt the product relative to others)
4. A social system (interrelated people, groups, or other systems)
The results of this process shows that some people have made a decision to continue
using a new product after it has been tried. These people are adopters. Other people are
classed as non-adopters of new products because they have decided, for many reasons,
not to adopt a new product. Some of these types of people will not be exposed to
information about the product or will wait until other people have tried the product before
doing so themselves. Some consumers will quickly decide if a new product is not what
they want, perhaps because of brand loyalty and satisfaction with current products. Other
consumers may want a product but may not buy it for a variety of other reasons.
3.2.3 Background of innovation and diffusion research
Early theoretical frameworks, for diffusion of innovation, were developed from work in
rural sociology and expanded to include other areas such as education, public health and
medical sociology, communication and marketing. The study of diffusion of innovation in
marketing has increased dramatically since the 1960s. Rogers (1995), who surveyed
diffusion research, pointed out that by 1994 marketing diffusion research had accelerated
greatly. The marketing publications on diffusion in 1994 were 15% of the total diffusion
research published. Most of the marketing research has been done in the areas of
predicting the adoption for new products. The adoption research has been done in many
topics such as the perceived attributes of innovations, the characteristics of innovativeness
and its effect on the rate of adoption, and the identification of adopter categories in many
products/services etc. However, these can be summarised into two schools of thought as
follows; the first argues that the main focus on the adoption of innovations are based upon
46
product characteristics and the second maintains that innovation adoption is more
consumer-based, suggesting that it depends on personal characteristics, which can be
classified for an innovator to laggards continuum (Holak, 1988). There are varieties of
products/services in areas of interest such as new consumer-packaged goods, health foods
(Foxall and Bhate, 1993), home computers (Dickerson and Gentry, 1983), retailing
(Zeithaml and Gilly, 1987), consumer durables (Holak, 1988, Martinez et al, 1998) and
financial services.
Adoption research in financial services was started during the 1970s by Adcock and
Hirshman (1977) who studied the demographic characteristic of bank credit card users.
However, in the late 1980s to mid 1990s there were increasing numbers of studies in
adoption research (Zeithaml and Gilly, 1987; Lewis, 1991; Marr and Prendergast, 1993;
Rugimbana and Iversen, 1994) that focused on ATMs, EFTPoS. The late 1990s saw the
introduction of new technology-based service delivery which changed the attention to
telephone banking (Lockett and Littler, 1997; Barczak et al, 1997). This also happened in
the latest new technology services such as Internet banking (Sathye, 1999; Black et al,
2001).
3.3
Factors influencing the rate of adoption
There are two major factors that are widely focused on predicting the adoption of
innovations in diffusion research i.e. perceived attributes of innovation and adopter
characteristics. There have been many research studies looking at these two factors, but
they have been done separately. However, there are only small number of studies that have
focused on comparing the attributes of innovation, as perceived by adopters and adopter
characteristics. This is discussed as follows:
Ostlund (1974) was the first person that studied and compared the two factors, perceived
innovation attributes and the personal characteristics of innovators, as predictors of the
purchasing behaviour by using Rogers framework. He completed two studies using the
perceived attributes of innovation from Rogers framework i.e. relative advantage,
compatibility, complexity, observability, trialability and added perceived risk (Bauer, 1960
quoted in Ostlund 1974). The first study was involved with six consumer products, which
47
had not yet been launched onto the market at that time. The data was collected in two
steps. Before and after the product was launched into the market telephone interviews
were carried out and data collected in both of the two steps. The results showed that
perceived attributes of innovations were found to be much more successful as predictors
of the purchase outcome than respondents personal characteristics. Ostlund (1974) also
suggested that the impact of different attributes of innovation on adoption varied. The
results show that compatibility and relative advantage are the main perceived attributes
that concerned customers, whilst trialability was least important as a predictor as long as
the products are not expensive.
The second study was involved with a brand of oven roasting bags. The same group
collected the data from housewives in the test area before the new products had been
launched into the market and was followed-up by questionnaires afterwards. Ostlund
(1974) found the same results as the first study that perceived innovation attributes can be
used as a more efficient predictor than personal characteristics. He also found that relative
advantages and perceived risk ratings received the highest important rate. His studies
showed the different effects of perceived attributes for prediction of the adoption rate.
Moreover, perceived risk, which he adds onto Rogers perceived attributes, is found to
highly affect the rate of adoption. In summary, Ostlund (1974) suggested this research
needed to be reproduced for other types of potential adopters and products/services. This
has lead to further research (LaBay and Kinnear, 1981; Holak, 1988). These studies have
been done to test how these two variables are useful for predicting the adoption rate. The
results confirmed that the type of product/service and potential adopter are affected
differently by the perceived attributes of innovation (LaBay and Kinnear 1981; Holak,
1988). Therefore, we found that Ostlunds findings are very useful for investigating the
customers perceptions for predicting the rate of adoption. In addition, the Osltund study
(1974) illustrated the use of perceived attributes of innovation in the classification of
adopter and non-adopter. However, Ostlunds studies (1974) are more concentrated with
consumer products. Holak (1988), who was interested in examining product
characteristics by using 19 types of products, confirmed the findings of Ostlunds work
(1974) by showing that for different types of products/services the perceived attributes
have different important influences on the rate of adoption. Therefore, it will be useful to
consider a study that has been done in the financial services.
48
Rugimbana (1995) studied the perceptual and demographic characteristics of Australias

retail banking customers in terms of predictive efficacy by comparing between users and
non-users of the automated teller machine (ATM). The perceived characteristic or
attributes were mainly based on five perceived attributes of innovation by Rogers
(1962,1983,1995). However, additional attributes such as perceived risk as suggested by
Ostlund (1974) and financial and social cost as suggested by Zeithaml (1981) were also
added to the model. Five factors emerged from factors analysis, which explained 66% of
the results, namely convenience, ease of use, compatibility, reliability and accuracy.
However, in the final analysis reliability and accuracy did not appear in the logistic
regression model. Only three perceived attributes (convenience, ease of use and
compatibility) were found to be the most important factors for predicting automated teller
machine usage (Rugimbana, 1995). He also suggested that three other attributes, namely
social costs, trialability and observability have not impacted on the adoption of ATMs and
pointed out that ATMs are not associated with low risk and low involvement trials or to
the observation of their advantages. Attempts to measure these attributes may be difficult.
Lockett and Littler (1997) investigated the adoption of direct banking by telephone. The
perceived innovation characteristics and personal characteristics were questioned to
predict the adoption behaviour and were also compared with the effectiveness of perceived
innovation characteristics and personal characteristics in classifying adopters and nonadopters. The personal characteristics model will be discussed in section 4.3.3. In this
section we will discuss the perceived attributes of the direct banking service models and
the results of comparing the models for the prediction of adoption behaviour. Lockett and
Littler (1997) proposed a model which was composed of five factors, namely relative
advantage, costs, customer learning requirements, perceived risk and social relevance.
However, they developed a new model (see table 3.5), which is based on the framework
by Rogers (1962), Gatignon and Robertson (1989), including Bauers (1960).
Compatibility and complexity has been grouped together as customers learning
requirements. Lockett and Littler (1997) also added some new factors such as cost,
perceived risk and social relevance. Some factors such as compatibility and complexity are
referred from Rogers framework, which has already been discussed in previous sections.
Therefore, we will discuss only the new factors that Lockett and Littler (1997) presented
49
differently from the previously discussed literature. Firstly, relative advantage which is
normally referred to as economic gain. However, in their study, the improved service level
was added in as a sub-factor of relative advantage. This factor emerged from the focus
group interviews. Lockett and Littler (1997) referred to the levels of service by comparing
direct banking services with services that customers received at their bank branch.
Secondly, cost refers to purchase costs and usage costs which most bank customers have
to accept from using direct banking services (telephone charges). Thirdly, perceived risk
referred to the risk of errors and security risks, which they used to compare direct banking
services with services at bank branches. Both cost and perceived risk were negatively
related to the adoption of direct banking services. Finally, social relevance referred to
social value. Lockett and Littler (1997) refer to the social value that will cause a member
of the society to adopt the service.
Table 3.1 Perceived features of direct banking services
Factor
Relative advantage
Sub-factor
Economic gains
Costs
Improved service level (compared to branch banking)

Usage costs
Customer learning requirements
Purchase costs
Compatibility
Complexity
Perceived risk
Trialability
Risk of error
Social relevance
Security risk (people listening in)

Social value
Source: Lockett and Littler, 1997

The results have shown that from all fourteen variables only seven were significantly
different between adopters and non-adopters, namely for relative advantages (availability
50
of service), complexity, perceived risk (the risk of error and security risk), the usage costs
and the trialability of the service. The results indicated that the most important perceived
attributes of direct banking service is availability (24 hours). They explained that this is
because office hours of branch banks are not compatible with adopter groups lifestyles.
Finally, Lockett and Littler (1997) compared the effectiveness of perceived innovation
characteristics and personal characteristics in classifying adopters and non-adopters. The
results obtained showed that the perceived innovation attributes are better than the
personal characteristics for predicting the adoption behaviour. These results support those
that had been found by Ostlund (1974). He found that collecting the personal
characteristics of individuals is less effective than obtaining the perceived innovation
attributes. However, the personal characteristics are still useful to predict the
characteristics of the adopter groups.
There are some limitations from Lockett and Littlers work (1997) particularly because
they integrate compatibility, trialability and complexity into customers learning
requirements although the nature of these three perceived attributes are different. The first
two perceived attributes have a positive effect whilst complexity has a negative effect on
adoption. In addition, there are differences between compatibility and complexity.
Compatibility refers to past experiences, beliefs and value for the potential adopter.
However, some customers who experienced the innovation as difficult to use may not be
dependent on just compatibility. It may be that the characteristics of the service itself is too
complicated, therefore instead of focusing on the customer the service provider should
concentrate on how to make the product or service more simple and easier to use.
Moreover, social relevance, which has sub-factors as social value, should be classified as
part of personal characteristics rather than classified in the perceived attributes of
innovation because adopters and non-adopters of innovation perceive the influences from
society in different ways. For example, teenagers observe the changes of society and
friends influences in terms of new fashions more than adult groups. Therefore,
observability (communication) should be part of innovation characteristics, which was
originally presented by Rogers. However, other factors such as perceived risk, and costs
which Lockett and Littler (1997) added as influencing factors affecting the adoption of
telephone banking, have shown a large impact on customers adopting technology services
in the banking industry. These two factors were also acknowledged in many diffusion of
51
innovation studies, in addition to the five perceived attributes by Rogers (1983), to have
an important impact on adoption of innovation (Sathye, 1999). These factors will be
discussed in the next section.
3.3.1 Perceived attribute of innovation and adoption
This research is focused on perceived attributes of innovation and its adoption. This is an
area that has not had a great deal of research when compared with other areas in diffusion
studies (Rogers, 1995). He also stated that this is one of the most important factors
affecting adoption. This is supported by his summaries from previous studies that
suggested between 49% to 87% of the variance in the rate of adoption could be explained
by perceived attributes of innovation. Therefore, given its importance it is justifiable to
undertake further research.
Rogers (1995), has shown that there are five attributes, which are the key important
factors that explain the rate of adoption, namely relative advantage, compatibility,
complexity, trialability and observability. These five perceived attributes are also widely
referred to in other adoption research studies regarding financial services (Rugimbana,
1995; Lockett and Littler, 1997; Szmigin and Bourne, 1999; Black et al, 2001; Polatoglu
and Ekin, 2001). Therefore, each of these perceived attributes of innovation will be
considered in turn.
3.3.1.1
Relative advantage
The customer will adopt the innovation more easily if the product or service creates value
by reducing cost, increasing benefits, convenience, and status (Rogers, 1983). In addition,
Fletcher (1995) pointed out that an innovation, where the adopter gets the benefit
immediately or directly, would be more effective than a long-term benefit or indirect
benefit. For example, in banking, ATMs diffused through the social system quickly because
they offered high perceived, advantage to consumers who wanted 24-hour availability.
Debit cards, in contrast, have been slow to diffuse. Although electronic transfer at point of
52
sale (EFTPoS) systems such as debit cards may offer advantages to banks and retailers,
consumers perceive little benefit over cheques or credit cards (Engel et al 1995).
The other sub-factor of the relative advantage attribute that Evans et al (1996) also
considered is speed. Speed refers to how fast the benefits of the product are experienced
by the consumer. Generally, the faster the benefit of the product or service is experienced,
the more likely it is to be adopted by the customer.
Rogers (1983) reviewed many diffusion research papers and found that relative advantage
is the most important if compared with other perceived attributes. There have been a
number of research studies in the financial service industry that have found that perception
of relative advantage attributes affect adoption. Rugimbama and Iversen (1994) found that
ATM users perceived the convenience of using ATMs greater than non-users. This result
supports the work of Lockett and Littler (1997) who found the availability of electronic
banking services such as telephone banking is the most important factor affected the
adoption of direct banking.
In summary, Rogers concluded that the greater the perceived relative advantage of an
innovation, the more rapid its rate of adoption will be.
3.3.1.2
Compatibility
This refers to the extent to which the innovation fits the customers values and culture.
Rogers (1983) stated, The adoption of innovation depends on the compatibility or
incompatibility with socio-cultural values and beliefs; with previously introduced ideas,
or with clients needs for the innovation. As Dickerson and Gentry (1983) concluded in
their research, the previous experience in a variety of technical products usually meant the
person had a technology adopters profile. Evans et al (1996) explained that compatibility
refers to the degree to which a product is consistent with consumers current values,
understanding and behaviour. This has been supported by the findings of financial services
research such as Rugimbana and Iversen (1994) who found that ATM users perceived
higher levels of compatibility with their lifestyles than non-ATM users. In recent studies,
53
Black et al (2001) has found compatibility affecting the willingness to adopt Internet
banking services.
3.3.1.3
Complexity
This refers to how difficult an innovation is to understand and use (Rogers, 1983). Engel
et al (1995) viewed that the more complex the new product is, the more difficult it will be
to gain acceptance. Complexity refers to how the consumer judges the innovation in terms
of its ease or difficulty of use (Dabholkar, 1996; Rugimbana, 1995; Sathye, 1999; Szmigin
and Bourne, 1999). The perception of complexity is negatively related to the adoption of
innovation and is highly related to the perceived risk attributes (Rogers, 1983).
A considerable number of research studies in financial services have found that complexity
affects the adoption of electronic banking which supports the research of Leblanc (1990)
who compared non-users and users of Automated banking in Canada. The results show
that users are more likely to perceive the service as simple while non-users found the
machines as too complicated (complex) to use. The study by Sathye (1999), about the
adoption of Internet banking in Australian cities used 500 respondents, which were divided
into 50% personal and 50% business respondents. The results show that 40% of the
personal respondents and 48% of business respondents who were aware of Internet
banking had decided not adopt it because respondents found it too difficult to use.
3.3.1.4
Trialability
This refers to the degree to which an innovation or product can be experimented with or
tried-out by the consumer on a limited basis (Rogers, 1983). If an innovation is perceived
by potential customers as capable of being pre-tested this will stimulate customers to trial
new products and services. Moreover, this idea has been found to be a significant factor
affecting the adoption of financial services because customers perceived less risk when
54
they were given the opportunity to try the product before making the decision whether to
adopt the service (Lockett and Littler, 1997). These included the demonstration of
applications, which are widely used to introduce the new services to customers who want
to try out the Internet banking services (Hewer and Howcroft, 1999; Black et al, 2001).
However, some research has suggested that in financial services it is difficult to try the
services before agreeing to use them. Therefore, they have not found evidence to support
the suggestion that trialability can be used to classify the groups of adopters and nonadopters (Rugimbana, 1995; Szmigin and Bourne, 1999).
3.3.1.5
Observability (or Communicability)
This refers to the degree to which the results of an innovation are visible to other members
in a social system. The perception of observability attributes is positively related to the
adoption (Rogers, 1983). The easier the results of an innovation can be observed and
communicated to others, the more rapidly it will be adopted. Hewer and Howcroft (1999)
have suggested that the perceived attributes of observability regarding the new technology
delivery channel of financial services, can also be evaluated by examining the degree of
access to the necessary equipment i.e. telephone, Internet, cable or digital T.V. Sathye
(1999) has found the major factors that influenced the consumers adoption of Internet
banking in Australia. The results show that the second biggest concern is the lack of
awareness of the benefits of Internet banking for the non-adopter groups. Like trialability,
observability has been proposed to test the discrimination between adopters and nonadopters of electronic banking from the work of Lockett and Littler (1997), Rugimbana
(1995) and Sathye (1999). However, the results have not shown any different perceptions
between the groups of adopters and non-adopters.
3.3.1.6
Other perceived attributes
There are many studies that have found that in addition to five perceived attributes, other
attributes can also affect the rate of adoption such as perceived risk (Ostlund, 1974;
LaBay and Kinnear, 1981; Evans et al 1996; Murdock and Franz, 1985) and cost
55
(Gatignon and Robertson, 1989; Lockett and Littler, 1997; Sathye, 1999). We will also
examine these in the following section.
3.3.1.7
Perceived risk
Risk is most commonly seen as reflecting variations in the distribution of possible

outcomes (Mitchell and Boustani, 1994). However, Bauer (quoted in Ostlund, 1974;
Stone and Gronhaug, 1993; Ho and Ng, 1994; Mitchell and Boustani, 1993) is the first
person that found perceived risk to be a significant factor regarding consumer behaviour.
He explained that
Consumer behaviour involves risk in the sense that any action of a consumer will
produce consequences which he cannot anticipate with anything approximating
certainty, and some of which are likely to be unpleasant.
Customers may not purchase something that may result in dissatisfaction. The
interpretation of this has been referred to as consumer perceived risk. Mitchell and
Boustani (1994) suggested that if consumers buy a product/service that is a low-risk
purchase, consumers purchasing behaviour would not have been greatly affected by the
risk. If the risk of the new product is low, it is more likely to be adopted. However, if
products have a high level of perceived risk, for example financial service products,
consumers will be more concerned about high-perceived risks than when they buy
convenience products. Therefore, the risk in financial services is considered as one of the
perceived attributes of innovation (Oslund, 1974) influencing the rate of adoption.
Ho and Ng (1994), based on Jacoby and Kaplan (quoted in Stone and Gronhaug, 1993;
Mitchell and Boustani, 1994), classified risks into five dimensions i.e. financial,
performance, psychological/social, physical and time-loss risks. Based on Ho and Ng
(1994) and Loudon et al 1988 (quoted by Lowe and Corkindale, 1998) definitions, we
define the meaning of each dimension of risk from bankcard users as follows.
56
Physical risks refer to two types of risk. One is from the risk of loss and damage to the
card and the other is from the risk of physical attack, which may cause harm or injury to
ones health.
Performance risk is where the customers cannot use the product/service to complete a
transaction because the product/brand may not work properly or as expected. For
example, a customer uses an ATM to withdraw money but the machine refuses to give the
requested money and debited money out from the account.
Psychological risk refers to how the consumer perceives himself after making purchases.
Social risk refers to the consumers perception of how others will react to his or her
purchase. The brand/product may negatively affect the way others think of them. This may
lower the self-image of the consumer or the perceived image of the consumer from others
viewpoints.
Financial risk is the risk that using a product/service may lead to financial loss, for
example where the consumer cannot get a refund when needed or is not able to reverse
the transaction or to stop payment after discovering a mistake. This is including the cost
that the customer has to pay if the brand/product completely fails or costs more than it
should to use it as required (Lowe and Corkindale, 1998).
Time-loss is the risk that happens when a customer buys a product/service, which is not
working properly, causing the customer to waste their time and effort getting it adjusted,
repaired or replaced (Loudon et al 1988). For example, in financial services if the
customer chooses to use a payment method that will take up more time to complete a
transaction than paying by other methods. However, Ho and Ng (1994) explained that it
does not include the time spent after the use of the service.
Ho and Ng (1994) have studied the customers risk perceptions of electronic payment
systems. The objective of their study was to compare each risk dimension among
alternative payment methods i.e. cash, EFTPoS and credit card, on the impact of the size
of purchase towards the perceived risk and the perceived risk between EFTPoS users and
non-users. A total of 200 questionnaires were distributed in front of banks and shopping
57
malls that received a 92% response rate from the group of consumer who were below 30
years old and used EFTPoS (i.e. ATM card) or credit card. The results show that EFTPoS
has the lowest physical risk if compared with using cash that has the highest physical risk.
Moreover, the findings show that EFTPoS has a low physical and psychological risk but a
high risk in the remaining risk dimensions while cash had the lowest performance risk. Ho
and Ng (1994) also found that EFTPoS and credit card payment performance risks for
small purchases were higher than for large cash purchases because small transactions are
less acceptable to retailers. For a comparison of perceived risk between EFTPoS users
and non-users they found that EFTPoS users had a lower level of perceived risk for
EFTPoS payment than non-users. This leads to the assumption that perceived risk is
involved with the other perceived attributes of innovation, where Mitchell and Boustani
(1993) implied that there was a connection between risk perception and the adoption
process. They suggested that Rogerss five perceived attributes of innovations impacted
on customer perceived risk, which also affected the rate of adoption. For example,
consumers perceived less risk with product/services that are compatible with previous
experiences (Ronkainen was quoted in Mitchell and Boustani, 1993). Conversely, if the
adopter has a high level of perceived complexity of using the service, the customer group
is also likely to perceive a higher risk. This means that perceived risk fits well with
Rogers model. Some studies have directly examined the effects of perceived risk on the
rate of adoption.
3.3.1.8
Cost
Costs are referred to as purchase costs, switching costs and usage costs (Gatignon and
Robertson, 1989; Lockett and Littler, 1997) for adopting new services. Lockett and Littler
(1997) found that adopters are willing to pay for the usage costs of telephone banking
more than non-adopters. Sathye (1999) found that 55% of 500 personal and business
respondents considered that an unreasonable price was preventing them from adopting
Internet banking.
58
3.3.1.9
Control
Perceived control is referred to as the amount of control that a customer feels he/she has
over the process or outcome (Dabholkar, 1996). Previous studies have identified control
as one of the important influences on the customers decision to use self-service (Bateson
and Hui, 1987; Langeard et al, 1981; Dabholkar, 1996). Dabholkar (1996) found that
control is one the two important factors that customers use to evaluate the quality of
technology-based self-service.
This is also supported by the study of Hewer and
Howcroft (1999) who noted that customers perceived feeling of being in control when
they use services at their branch and PC banking.
3.3.2 Service quality as a perceived attribute of innovation
Service quality is a critical issue in financial services. Competition between financial

institutions is increasing rapidly, and financial services/products are becoming
standardised. Customers are not easily able to differentiate between competing banking
services. Therefore banks are using service quality as the key factor in producing a
differentiating strategy for attaining competitive advantage (Blanchard and Galloway,
1994; Angur et al, 1999).
Easingwood and Storey (1991) suggested that overall standards of quality are one of the
factors that are highly correlated with success of any new technology service. Technology
based financial services have been increasing their role in recent years. There are only a
few studies (Dabholkar, 1996, Joseph et al, 1999) that have been done to investigate the
service quality of technology based financial service. Conversely, there has been a
considerable amount of research done to examine the service quality in bank branches
(Parasuraman et al, 1988; Blanchard and Galloway, 1994; McDougall and Levesque,
1994b; Stafford, 1996). However in the past decades only a few of these studies have been
done in terms of the service quality of new technology financial services when compared
with the large amount of research that has been done to measure the service quality at the
branch.
59
The study by Joseph et al (1999) investigated the impact that IT had on the service quality
of technology based service delivery and customer satisfaction in the Australian banking
industry. The research methodology was done in two stages. Firstly, focus group
interviews were done with two groups, with 20 participants in each group, followed by
distributing questionnaires. The 300 usable questionnaires returned from electronic
banking customers were analysed. Six factors were identified to explore the customers
perceived service quality of electronic banking. These were convenience/accuracy,
feedback/complaints management, efficiency, queue management, accessibility and
customisation.
The importance/performance technique was used to evaluate the six
factors. The results showed that only two of the six categories (convenience/accuracy and
efficiency) were shown by customers to be factors that they considered to be very
important and contributed significantly to satisfaction and performance. Accessibility was
one category that customers felt was an important attribute but banks had not performed
well in this area. Joseph et al (1999) analysed their results by using the ImportancePerformance measurement, which used a summary of means (six factors) of performance
rating minus an importance rating. The results showed that all six factors, except queue
management, had negative gap scores which means the respondents did not believe that
electronic banking services performed at the level that the consumers desired. Therefore
they suggested that Australian banks need to improve their customers perceived service
quality of electronic banking by being more concerned about the accuracy of all
transactions, improving their electronic services and being more accessible etc.
The study also showed that customers expected a high service quality from electronic
banking, particularly in convenience and accuracy and the efficiency of the technology
service.
The findings lead us to consider that this performance failure may be affecting the intention
to use and adopt electronic banking because the consumers have reservations about the
quality of service they will receive. Therefore, the customer may not use or adopt if they
perceive that the service will not perform at their expected satisfaction level. This concept
is supported by Bateson (1985), who suggested that when customers choose to use a
technology based service delivery, they are influenced by its quality attributes.
60
However, it is still not clear what is the link between service quality and customer
adoption of new technology services. In this aspect, there have been two or three studies
that have referred to service quality and the rate of adoption, which we will now discuss.
LaBay and Kinnear (1981) examined the consumer decision process in the adoption of
solar energy systems. The data was collected by a mail survey of 631 individuals in one
region of the USA. The sample was classified into three categories, namely adopters and
non-adopters with knowledge of the system and non-adopters with no knowledge of the
system. The response rate for each category was 69% (102 usable returns from adopters),
76% (300 usable returns from non-adopters with system knowledge) and 48% (229 usable
returns from non-adopters with no system knowledge). The results show that product
related and economic factors are the highest concerns for adopters. For product related
factors, they found that quality and reliability of the system and installer are very important
ratings. However, LaBay and Kinnear (1981) considered these factors as part of the
product related attributes rather than as one of the perceived attributes of innovation.
Lockett and Littler (1997) have found that one sub-factor of relative advantage is
improved service levels (when direct banking service is compared to branch banking). The
results show that this variable was significant at the 1% level. This means the users of
direct banking services perceived that the direct banking services were at an improved
service level. However, Lockett and Littler (1997) and LaBay and Kinnear (1981) did not
look separately at this sub factor as a service quality attribute. They built this up as a sub
factor in relative advantages. This may be because they saw service quality as a dimension
of relative advantage. Therefore, realise that service quality and relative advantage have a
similarity but there are some big differences between them, which we will discuss in the
next section.
The study by Dabholkar (1996) presented an alternative model of service quality
(Attribute-Based Model and Overall Affect Model) to determine the important attributes in
evaluating service quality for technology-based service delivery (touch screens in fast food
businesses) and examined the impact of service quality on intentions to use technologybased service delivery. Dabholkar (1996) presented a framework to explain the factors
underlying the customers decision to participate in the service delivery. This is based on
61
the customers intention to use technology-based self-service. The model has been
developed from past studies and from qualitative research. Interviews were conducted
with potential customers of technology-based self-service options to determine the
attributes they considered important with respect to such options. The interview results
show that five attributes; speed of delivery, ease of use (effort and complexity), reliability
(includes accuracy), enjoyment and control were important to customers in evaluating and
deciding to use technology. Dabholkar (1996) tested the results by using scenario
approaches and quantitative methods. The sample was taken from a group of
undergraduate students. Data collection had been taken in the classroom. The sample was
divided into three groups under situational conditions; low waiting time treatment, high
waiting time treatment and a control group (whose scenarios had no mention of waiting
time). They found that service quality had a strong, positive influence on the intended
selection of ordering options and they also found that the attitude towards using
technological products had a positive effect and the interaction of employees had a
negative effect on the evaluation of service quality. Only two attributes, enjoyment and
control, strongly influenced customer evaluation of the service, as well as intentions to use
the technology-based self-service. Dabholkar (1996) explained her findings that speed of
delivery and reliability had no effect on service quality in the study because of the intercorrelations among independent variables. Speed of delivery was highly correlated with
control for all three situational conditions. However Dabholkar (1996) discussed some
interesting points from her study indicating that there are some gaps in the scope of the
research. Firstly, the scenario approach may not be a good indicator of the actual
behaviour. Secondly, the sample group of students did not vary in demographic terms (i.e.
age, level of education) and attitude toward using technology products. Therefore the
results may not be applicable to other groups of customers. Dabholkar (1996) pointed out
that age and cultural differences might also be reflected in different levels of the needs for
interaction with service employees. Thirdly, considering the characteristics of service, she
said that the attributes based model explained most of the variance in service quality in this
study. The attributes included in this framework may impact evaluations of service quality
differently. Finally, some attributes that may be important with other technology services,
such as perceived risk and cost or physical environment did not emerge from this study.
62
In summary, Dabholkars study showed that the service quality did affect the intention to
use technology based financial services and justified the attention given to service quality
issues in the literature. It verified the intuitive connection that if people expect to get a
service delivery option with a high level of quality, they will use it. Dabholkars framework
did not refer to the adoption behaviour. She focused on the evaluation stage, which is at
the early stage before customers adopt new technology services. However, some factors
are similar to Rogers framework (1983). For example speed of delivery is one part of
relative Advantage (RA), ease of use is referred to as complexity. A recent study was by
Szmigin and Bourne (1999), who were also interested in the adoption of financial
technology services such as electronic cash, using the five perceived attributes (Rogers,
1983) to investigate the adoption behaviour. The sample used twenty-five second and third
year degree and MBA students at a British University. The study used a semi-structured
interview format. Five perceived attributes were considered, namely relative advantage,
complexity, compatibility, communicability and observability (trialability was excluded)
with the addition of perceived risk (Ostlund, 1974; Lockett and Littler, 1997). These were
used to explain the adoption behaviour of Mondex card users (a form of electronic cash).
The results showed some interesting information about perceived risk and trust. They
explained that students who use Mondex cards have to trust the vendor to transfer the
correct amount from their cards. Trust is one of the key factors in the service quality
dimension (Gronroos, 1984). Therefore, trust may be one of the perceived service quality
attributes that bank customers use to evaluate electronic banking services and could have
an impact on the adoption of innovations.
There is further evidence supported from Hewer and Howcroft (1999). They reviewed an
existing study of consumers uses, motivations and perceptions of home-based telephone
and Internet banking and found that the perceived level of trust is important and they
suggested that the adoption and usage of new delivery channels will be determined by the
amount of trust consumers have in the new technology. In addition they also viewed that
branding and web page design are aimed at encouraging and improving quality. These
affect the rate of adoption and diffusion of new channels in financial service.
These studies suggest that perceived service quality might be one of the factors that
customers are concerned about when they make a decision to adopt technology based
63
financial services. However, no empirical study has been done to test these assumptions
directly.
3.4 The adopter characteristics of electronic banking

There is a considerable amounts of research which has studied the characteristics of
adopters and non-adopters, such as Rogers (1962, 1983), Robertson (1971), Adcock and
Hirshman (1977), Zeithaml and Gilly (1987), Dickerson and Gentry (1983), Prendergast
(1993), Abdul-Muhmin (1998) and Lockett and Littler (1997). The findings related to
adopter characteristics, which appear in table 3.2.
64
Table 3.2 Characteristics of adopters
Authors
Product/service
Rogers and
Rural sociology, socio
Shoemaker (1983) economic characteristics;
Personality variables;
Robertson (1971) Grocery and appliance
products
Adcock and
Hirshman (1977)
Credit card
Dickerson and
Gentry (1983)
Zeithaml and
Gilly (1987)
Home computer
Lockett and
Litter (1997)
Direct banking service
Martinez, Polo
and Flavian
(1998)
Consumer durable
products
Retailing technology
(Grocery scanners,
EFTPoS, ATM)
Characteristics of adopter
Communication behaviour
Demographic factors;
Communication behaviour
Social interaction factors;
Attitudinal perceptual and personality
factor;
Value factors;
and consumption patterns
Demographic characteristics,
Leisure activities,
Lifestyles perceptions,
Store image characteristics
Demographic characteristics, consumer,
creativity and previous experiences
Consumer characteristics i.e. Demographic
characteristics, locus of control, social
interaction, communication behaviour
(print media)
Socio-economic; Social interaction and
communication behaviour; Attitudes and
personality; and product category
Demographic and socioeconomic
characteristics
Source: compiled by the author.

Most of the previous research has been done in western countries. Therefore, we do not
know how important the personal characteristics influencing the adoption of electronic
banking will be if applied in the Asian context. In addition, for personal characteristics,
most of the adoption studies have focused on demographic characteristics when compared
to only a small number of research studies, particularly in the banking industry, which have
studied other personal characteristics e.g. attitudinal and perceptual factors, social
65
interaction and communication behaviour; and consumption patterns and how these
factors have impacted on the adoption of electronic banking.
However, different studies have identified different characteristics that distinguish adopters
and non-adopters. Also some studies have shown problems with work on adopter
characteristics that have indicated that they were not always good for predictions, so there
was a need for further research to understand how efficiently to use adopter
characteristics for predicting adoption. To date, adopter characteristics have only had a
limited ability to predict the adoption of innovations when compared with the perceived
attributes of innovation. However, combining these two factors has improved the power
of prediction (Rugimbama, 1995).
Based on a content analysis of the literature on diffusion in rural sociology, Rogers (1983)
concluded that variables related to innovativeness were grouped into three characteristics;
Socio-economic characteristics (years of education, literacy, social status, commercial,
economic, orientation and attitude toward services/products); Personality variables, which
involves empathy, which is the ability to deal with abstractions, rationality, intelligence,
fatalism, levels of achievement, motivation, levels of aspirations; and communication
behaviour. This was related to the level of social participation, the seeking of information
behaviour and the level of exposure to interpersonal communication channels. However,
Robertsons (1971) consumer innovator profile framework was more involved with
marketing diffusion research, whereas Rogers framework focused on the field of rural
sociology. Robertsons (1971) findings were based on twenty one studies in marketing
diffusion research i.e. consumer innovativeness across product categories, consumer
innovativeness for appliances and consumer innovativeness for grocery products which
Loudon and Della Bitta (1993) summarised in the table 3.3 below. This explains the
profile of the innovative consumer. They used five characteristics to explain the behaviour
of innovators and non-innovators. Most of the results shown in this table are supportive of
Rogerss work.
66
Table 3.3 Profile of the consumer innovator

Demographic factors
Higher income levels.
Younger.
Better educated.
Higher occupational status.
Social interaction factors
Greater participation in friendship and
organisational groups.
Socially mobile.
Favourably disposed to innovation.
Attitudinal and perceptual factors

More venturesome and perceives less risk
in buying new products.
Perceived himself as an innovator.
Have favourable attitudes toward new
products.
Consumption patterns
Higher usage rate for the innovative
product category.
Marked willingness to buy new products.
Communication behaviour.
Reads more print media.
Source: Thomas Robertson was quoted in Loudon and Della Bitta, 1993
The various characteristics of innovation will be considered in more detail in the following
sections.
3.4.1 Demographic characteristics
Kotler (1994) explained demographic characteristics as referring to age, sex, family life
cycles, family size, income, religion, race, social class, occupation and education. Every
customer will have a different type of demographic characteristic, which could be used to
identify which consumer segment is applicable to him or her. For example the early
adopters of innovations tend to have a good education, higher income, and higher status
occupations than non-adopters (Dickerson and Gentry, 1983). They concluded from
previous studies that:
A good education could be related to a better understanding of the functions performed by
computers and to the consumers perception of it as less complex. A higher status occupation is
likely to mean that the individual has had more work-related experience with computers,
information systems, and databases. As a higher income could mean that the financial risk
associated with the purchase is smaller, since the cost is a smaller portion of the households
disposable income
In summary Dickerson and Gentry (1983) summarised that not every demographic
variable would be included in an innovators profile. The variables included will depend on
67
the type of products/services. Their research in the area of home computers suggested that
adopters were more likely to be homeowners, have a good education, and have higher
incomes.
Adcock and Hirshmans work (1977) studied the demographic and qualitative profiles of
bank credit card users. The data was collected from a sample of 1,200 residents of a
metropolitan area by using telephone interviews and received a 79% response rate. They
found that bank credit card users tended to have higher incomes, higher education and
were married. Card users were found to be in the group of the middle to upper-middle
income range. The majority of people who held a card were in the age group of 25 to 34,
followed by 35 to 54. Adcock and Hirshman (1977) explained that age is correlated with
credit approval factors such as the length of employment, length of residence, and income.
However, this is different from Dickerson and Gentry (1983) who found that younger
people are more likely to adopt home computers than elderly people. Both groups of
researchers have shown the same resulting characteristics of the adopter as having a
higher education and income. Age relationships were different according to the different
product/services under investigation. This result confirms that the adopter characteristics
depend on the type of products and services.
Rogers (1983) found, in reviewing the literature of diffusion research, which was mainly in
sociology and rural sociology, that early adopters have a better education than later
adopters. Supporting this view, Prendergast (1993) studied consumers current and future
use of self-service technology i.e. ATM, telephone banking and EFTPoS. The data was
collected from 302 telephone interviews of people who were eighteen years old or more in
selected households. His results for ATM suggested that ATM usage is significant with
age, income, gender and occupation. He concluded that higher usage of ATMs are
associated with mostly males and those living in metropolitan centres, and those in whitecollar occupations had the highest ATM usage. For Electronic Fund Transfer at Point of
Sales (EFTPoS), Prendergast (1993) suggested that age is only one of many demographic
characteristics that were a significant difference among EFTPoS users but he also found
that users are more likely to be from the younger age groups. However for telephone
banking, he suggested that there were no significant differences in the demographic
68
variables among users. Rogers (1983) also found from his summarised studies of diffusion
research that age differences did not affect earlier and later adopter groups.
Abdul-Muhmin (1998) studied demographic differences in usage and attitudes towards
electronic payment systems in Saudi Arabia. The data was collected from companies in six
cities by drop-off/pick-up methods of questionnaires. A total of 204 questionnaires were
picked up giving a response rate of 82.2%. He found that three demographic variables i.e.
gender, nationality and income were significant differences between EFTPoS users and
non-users whilst age and education had no significant difference. The results show that
Saudi national males, with high levels of income, had a more positive attitude than nonSaudi females with lower levels of income. This research leads us to consider that the
different context in demographic data, culture and social values may not apply in other
countries that have a different socio-economic context.
Rugimbana (1995) has studied the demographic characteristics of ATM users and nonusers. The results show that only the levels of education were found to be significantly
contributing to the model. This is supported by Lockett and Littler (1997) who found that
innovators are from the group of higher income and education levels. The lifestyle of this
group is usually involved with long working hours during the week so they have no time
to use the services at their branch. In addition they suggested that they should also
consider that the group of people who moved home frequently are likely to be the group
of adopters because these groups of people would normally have to transfer their bank
accounts, but if they chose to use direct service banking, they would not need to.
There are many factors in demographic data that affect the rate of adoption. Most of the
previous research that explored the demographic data considered age, income, occupation
and education. This is summarised in table 3.4
69
Table 3.4 Demographic characteristics research
Demographic
characteristics
Age
Areas of study
Publications
Home computer
Bank credit card
Retailing Technology
Consumer durables product
EFTPoS
ATMs
EFTPoS system
Income, education Rural Sociology
and status of
Grocery and appliance-product
occupation
Credit card user
Home computer
Retailing Technology
ATMs
Credit card
Dickerson and Gentry (1983)

Adcock and Hirshman (1977)
Zeithaml and Gilly (1987)
Holak (1988)
Prendergast and Marr (1994)
Rugimbana (1995)
Abdul-Muhmin (1998)
Rogers (1983)
Robertson (1971)
Dickerson and Gentry (1983)
Zeithaml and Gilly (1987)
Rugimbana (1995)
Chan (1997)
Level education
Consumer durable products
Holak (1988)
Gender
Self service banking

Prendergast (1993)
Credit card user
EFTPoS
Abdul-Muhmin (1998)
Source: compiled by the author.
As can be seen from table 3.4, a lot of research has examined the demographic
characteristics. The findings are often different for different kinds of services and products.
This supported the findings of Holak (1988) who studied the impact of perceived product
attributes, environmental variables, and consumer traits on the purchase intentions of
nineteen technological products in four categories i.e. photographic innovations,
entertainment innovations, kitchen appliance innovations and electronic innovations. The
research took place in the USA for a sample of 130 people with one third taken from
MBA students. The summarised results show that the effects of demographic
characteristics toward the adoption of innovation are different, and depend on the
characteristics of the service and products. Therefore, there is a need for further research
in electronic banking services, particularly in countries with different demographic
characteristics.
70
3.4.2 Attitudinal and perceptual factors
Attitude and perception refers to the positive attitudes towards change and the willingness
to take risks, which previous studies (Rogers, 1983) found in early adopter groups.
Robertson (1971) refers to adopters having a positive attitude towards change, and
towards new technology services, self-perception of innovativeness and the willingness to
take risks (Venturesomeness). These characteristics have been shown to be positively
related to adoption. However, Dickerson and Gentry (1983) also found that individual
creativity is one of the key variables that explained the characteristics of the home
computer adopter. Their results found that adopter groups are people with computer
awareness attitudes, culinary enthusiasts, and self-designated opinionated leaders, satisfied
with finances, homeowners and a credit card user. The research also concluded that the
satisfaction with finances and credit card user variables were also good predictors of
adoption of the home computer (Dickerson and Gentry, 1983). Supporting this idea,
Abdul-Muhmin (1998) suggested from his research that there are differences in attitudes
between EFTPoS users and non-EFTPos users. The results show that EFTPoS users have
a more positive attitude than non-users. Lockett and Littler (1997) found that adopters
have a more favourable attitude toward change, whilst the willingness to take risks
(Venturesome) between adopter and non-adopters were not found to be significantly
different.
3.4.3 Social interaction and communication behaviour
These two subjects involve many factors. Rogers (1983) stated that earlier adopters are
more likely to be active social participators than later adopters. Adopters seek information
about innovations more actively than later adopters. He also indicated that earlier adopters
are more interested in mass media channels than later adopters. Adcock and Hirshman
(1977) found that bankcard users are also more likely to participate in leisure activities
than non-users of bank cards. However life styles such as being an active person,
fashionable person, up to date on most things and a willingness to try new ideas, did not
71
indicate significant differences between non-adopters and adopters. Lockett and Littler
(1997) suggested that the adopter is more likely to rely on personal recommendations, and
the opinions of leaders, than non-adopters.
3.4.4 Consumption patterns
This refers to the usage of innovative products, the willingness to use new services and
the previous experiences of technology products. Robertson (1971) suggested that the
characteristics of the adopter are having high usage of innovative products, and a
willingness to use new services. Dickerson and Gentry (1983) stated that adopters
normally have some experience of using other technology products/services such as
computers and telephone answering services etc. Their results (Dickerson and Gentry,
1983) showed that technically experienced people are more likely to use (adopt) new
technologies such as a telephone answering service, automated teller machine, credit
cards, automatic deposit, automatic bill payments etc. than non-technically aware people
(non-adopters). Lockett and Litter (1997) also considered that consumers that have more
technology service experiences with compatible new technologies are likely to be
adopters. These factors refer to financial product usage, ATM usage, telecommunications
products and purchasing over the telephone. For the appropriate product category, the
results show that adopters are more involved in related product categories such as direct
banking services i.e. Information and telecommunications products (ITC), purchasing
products and services over the telephone and using ATMs more frequently than nonadopters. Lockett and Littler (1997) found that models fit well for classifying adopters
and non-adopters of direct banking services (telephone banking).
3.5
Gaps from the literature
The literature reviews pointed out some areas that are missing from previous research,
indicating a need for further investigation as follows:
A lack of developing countries research
72
The explicit research of service quality and adoption
The important relevant adopter characteristics influencing adoption
This can be shown as follows:

Gap1. A lack of developing countries research.
Many adoption research studies have been conducted in western countries such as the UK,
USA and Australia compared with only a few studies that have been completed in
developing countries (as of the time this study started in 1998). Although, recently there
are increasing numbers of research studies in developing countries e.g. Turkey (Polatoglu
and Ekin, 2001, Saudi Arabia (Al-Ashban and Burney, 2001). However, these are still
lagging behind the number of research studies that have been done in the west. In addition,
these countries also have different customer characteristics when compared with countries
in Southeast Asia such as Thailand. There is evidence, which researchers have noted, that
the factors that affect adoption may be different and many depend upon the characteristics
of the service/product (Dickerson and Gentry, 1983; Holak, 1988; Dabholkar, 1996),
socio-economic, demographic and culture characteristics (Lowe and Corkindale, 1998;
Daghfous et al, 1999). Researchers have studied the comparison between people from
different countries with different demographic, socio economic and cultural values. They
found that consumer behaviour regarding the adoption of new technology was different.
We will discuss this in detail as follows:
Lowe and Corkindale (1998) studied different cultural values and their effects on the
response to marketing programmes. The study compared the different cultural values of
Australians and Chinese from the Peoples Republic of China (PRC). The data was
collected by questionnaires, which were divided into two groups. The samples from both
nations were from a group of undergraduate and postgraduate students in an Australian
university. The total of usable questionnaire from the Australian students was 160
respondents or a response rate of 50.5%. The total usable questionnaires from the Chinese
students were 126 or a response rate 41.3%. The results show that the set of values that
influence the attitudes and perceptions towards a marketing activity in one country, may be
73
a totally different set from those in another country. For instance Chinese customers will
be more likely to be influenced by the brand name, when purchasing a new product, than
Australian customers. Chinese customers are more likely to purchase an older and simpler
product than a new and complex product, when compared with the Australians.
Daghfous et al (1999) studied the culture value and its influence on adoption of
innovations. Three samples (Quebeckers, French and North Africans) were collected by
questionnaires from business students. These three groups consisted of students who
registered in Canadian universities, from Quebec, France and North Africa. There were 83
Quebeckers, 68 French and 85 North African students. The results of their study show that
individual values have a significant impact on consumers behaviour, and their adoption of
new products. In brief Daghfous et al (1999) suggested that
The adoption process of new product/service varies from one individual
to another according to characteristics such as demographics (age, place
of residence etc.), socio-economics (salary, social class etc.), psychographics (personality, open-mindedness) and culture (value system,
ethnicity, etc.)
In addition, some research has been done to examine the attitudinal and behavioural
characteristics of American and Canadian credit card holders. The results show distinct
patterns in the attitudes of each group toward holding and using credit cards (Kaynak
1985 quoted in Delener and Katzenstein, 1994). Rogers (1983) who built up the theory of
innovation of diffusion, also considers that social systems affected the rate of adoption.
The above studies have led the researcher to question the suitability of using just the
original frameworks for application in other countries. Thus, we will reconsider the
relevance of current theoretical frameworks for research in developing countries. Most of
these theoretical frameworks have been developed and tested in Europe and America,
although some have been done in Asia. However, most of these researchers were from
America and European or were natives educated in Europe or America. Therefore the
theoretical framework was applied under very different socio-cultural conditions and these
different conditions should be taken into consideration for diffusion research in the
74
developing countries, particularly in Asia. The reason that we are doing research in Asia is
because very little research has been done in Asia if compared with the numerous amounts
of research in diffusion of innovation that has been done in Europe and America. Asian
markets have a great-untapped potential for economic expansion, so more diffusion
research in this region is particularly needed.
The other reason that we are concerned about the suitability of the original framework is
its application to the different types of services and products. Rogers theoretical
framework has been developed in rural sociology that has a different nature of innovation
and different context than business areas. Thus some diffusion research in marketing
(Ostlund, 1974; Lockett and Littler, 1997; Aggawal et al, 1998) has found that in addition
to the five factors identified by Rogers (1983), there are other perceived attributes which
may be important such as perceived risk (Ostlund, 1974) and cost (Gatingnon and
Roberston, 1989; Lockett and Littler, 1997). It should also be recognised that
characteristics of services/products context may affect the perceived attributes of
innovation. For example, touch screens that are used to order food in restaurants may be
perceived to have less risk than using touch screens to do financial transactions in banking
businesses (Dabholkar, 1996). For these reasons, adopters of fast food touch screen are
not as concerned about risks when compared with bank customers using ATM. Moreover,
for some products/services, not all five perceived attributes (Rogers, 1983) have an effect
on the adoption of innovations. For instance, trialability is excluded from the study of
Szmigin and Bourne (1999). This is supported by the findings of Rugimbana (1995) who
had not found any significant differences between adopters and non-adopters for
trialability of the adoption of ATM services. In addition, some sub-factors of relative
advantage have been found in recent studies that have an impact of the adoption. For
example, control is found as one of the factors that adopters use to make decisions
whether to adopt new technology services. Bateson (1985) and Bowen (1986) quoted in
Joseph et al (1999) suggested that people choose self service options not for monetary
savings, but to feel in control. Moreover, Black et al (2001) found that control is one of
the major benefits that customers feel they get by controlling their account using Internet
banking.
Gap2: The need for explicit research on service quality
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Literature suggested that service quality studies have been largely focused on the banking
industry with only few researchers studying the role of service quality of electronic
banking. Moreover, perceived service quality of innovations have never been viewed as
perceived attributes of innovation in addition to Rogers five perceived attributes.
In diffusion of innovation, there are a small number of research studies that have directly
studied the service quality of technology based service delivery. However, none of these
suggested perceived service quality as a perceived attribute of innovation. This knowledge
has been missing from previous literature. Therefore, there is a gap regarding service
quality, which may be an important attribute that influences customers decisions whether
to adopt new technology services, as well as having a crucial role for bank customers who
use services at the bank branch.
Levels of service have been measured as a sub factor of the relative advantage attribute in
some studies (Lockett and Littler, 1997; Lancaster and Taylor, 1988; Black et al, 2001).
Relative advantage (RA) and service quality (SQ) have a close relationship. If we look at
the definition of both of these factors they are similar in terms of their focus on the
superiority of the service. Rogers (1983) defined RA as the degree to which an innovation
is perceived as being better than the ideas of previously introduced products. This can be
measured in economic terms as well as increasing social prestige, convenience and
satisfaction. In addition, RA is generally associated with a specific attribute that customers
will compare with existing products/services. For example, when bank customers evaluate
new electronic banking services, such as sophisticated ATM, the relative advantage is the
convenience of using service, whereas, service quality is referred to as the outcome of
using the ATM such as providing an accurate and reliable outcome.
Slightly differently, Parasuraman et al (1988) stated that Perceived service quality is a
global judgement, or attitude, relating to the superiority of the service, whereas
satisfaction is related to a specific transaction. In addition the perceived service quality
means the firm has to match the expected service of customers with their perceptions of
actual service performance so that consumer satisfaction is achieved (Gronroos, 1984).
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Therefore, perceived service quality (SQ) is generally involved with the overall evaluation
of the product/service attributes.
From the definition of RA, it may be concluded that customers are comparing the present
perceived benefits of a service with previously introduced products/service, whilst service
quality relies on the customers expectation of the service compared with the perceived
service after the customer uses the service. Therefore, there are subtle differences in what
customers will perceive for these two factors. SQ is the customers perception of their
experiences of actually using the service compared with their expectations, whereas RA is
a more general perception of a new service compared with their existing or past
experiences whether or not the customers are actually using the service.
In addition, perceived service quality in this aspect of influencing service quality of
innovation as found from previous studies such as Rugimbana and Iversen (1994) is
referred to as reliability and accuracy of service. These factors should not be part of
relative advantage as described in most literature definitions. Therefore, instead of
grouping these sub-factors of perceived service quality into one part of relative advantage
we should separate service quality (SQ) from relative advantage (RA). One of the subfactors in SQ is trust as we have already discussed in previous sections. These new issues
have emerged from the diffusion of innovation research in financial services (Szmigin and
Bourne, 1999; Hewer and Howcroft, 1999). Trust is one of the six perceived service
quality dimensions (Gronroos, 1984). In this research we consider that trust in financial
services are more likely to be one part of the perceived service quality rather than only for
some types of the benefits from adopting products/services. Therefore, if we did not
develop perceived service quality as a separated perceived attributes, trust will have to be
put as one of the sub-factors of relative advantage, which is not compatible with the
definition of relative advantage. In addition, perceived quality of service in technology
based financial services are involved with many other factors e.g. reliability (Dabholkar,
1996; Joseph et al, 1999; Gronroos, 1988). Because of these reasons, relative advantage is
not sufficient enough on its own to represent service quality. Thus we will not consider the
perceived service quality as one of the relative advantages. The perceived service quality is
significantly important to be separated as a distinct dimension. This leads us to examine
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that the perceived service quality may be one of the most important perceived attributes of
electronic banking.
Gap3: The important relevance of adopter characteristics influencing adoption.
Many researchers have been investigating what are the adopter characteristics of
innovation. The results show that adopter groups are likely to be from the group of
younger people, high level of status and income. However, for the term of gender, there is
no knowledge explicit for this that can be used to classify the group of adopters and nonadopters. In addition, most of the research studies were focused on the demographic
characteristics whilst there are others characteristics such as attitude and perceptual
factors, consumption behaviours, social interaction and consumer behaviour of which only
a small amount of research has focused on. Regarding Gap-One, a lack of research in
developing countries means that the knowledge from western countries that perceived
attributes of innovation are far better predictors of adoption than personal characteristics
may not be applicable in developing countries such as Thailand. Some studies have found
that the different socio-economic and demographic characteristics will cause different
adoption behaviour (Lowe and Corkindale, 1998; Daghfous et al, 1999; Kaynak quoted in
Delener and Katzenstein, 1994).
3.5.1 Direction for future research and research questions
From the above gaps of the existing studies, research questions have been raised to
address the existing gap as follows:
1. Are perceived attributes of electronic banking, that affect the adoption decision,
different in a developing country in a Thailand context, when compared with a
developed country context?
2. Can perceived service quality regarding reliability (including accuracy) and trust
(including confidence) be identified as one of the important perceived attributes of
innovations that may affect the rate of adoption?
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3. What are the variables that identify the characteristics of adopters of technology
based financial services i.e. electronic banking, and do they differ from the
developing countries context?
4. Are perceived attributes of electronic banking better at predicting usage than
personal characteristics?
Question 1: Are perceived attributes of electronic banking, that affect the adoption
decision, different in a developing country in Thailand context when compared with a
The perceived attributes of an innovation are one of the most important explanations of
the rate of adoption of an innovation (Rogers, 1983). We have found that the framework
presented by Rogers (1983) is very useful and is widely accepted in many studies as a base
model. However, other attributes such as perceived risk have been added from other work
(Ostulund, 1974; LaBay and Kinnear, 1981; Lockett and Littler, 1997 etc.). The added
attributes have sometimes been found to be more important than the five original Rogers
perceived attributes. For example Ostlund (1974) found that perceived risk has a high
effect on the rate of adoption. Therefore in our research context, we will also consider the
possibility that the perceived attributes, found by Rogers (1983), may not be completely
suited to financial service research because the diffusion of innovations in marketing has
different product/service characteristics from the original innovation framework which was
developed from rural sociology.
In addition, Rogers (1995) stated that the five attributes of innovations might not, in all
cases, be the five most important perceived characteristics for a particular set of
respondents. Moreover, Rogers suggested that the best solution is to extract the main
attributes of innovations from the respondents as a prior step to measuring these
attributes. Regarding the adoption of different products/services.
The literature shows that there are some new additional perceived attributes that were
found to be significantly important to the adoption of technology based financial services
79
such as perceived risk and cost that are included in recent studies. The results show that
not all of the five perceived attributes by Rogers appeared to be influencing factors for
adoption of electronic banking. Attributes such as trialability were found to be important
to telephone banking (Lockett and Littler, 1997). However, for Mondex cards (Szigma
and Bourne, 1999) and Internet banking (Sathye, 1999), the factors have not been found
to be important to the adoption of the services.
Question 2: Can perceived service quality regarding reliability (including accuracy) and
trust (including confidence) be identified as one of the important perceived attributes of
This question considers whether service quality is one of the important perceived
attributes of technology based financial services, which may affect the adoption of
innovations. Dabholkar (1996) presented a model to examine the service quality and the
intention to use technology based financial services. One of the important factors that
Dabholkar (1996) found from focus group interviews in her study was reliability.
Reliability is one of the important factors that have been found in service quality
frameworks by Gronroos (1984) and Parasuraman et al (1985,1988). This factor also
referred to the adoption research in financial services in recent studies (Rugimbana and
Iversen, 1994; Walker et al, 2002).
Service quality issues have been widely studied in considerable amounts of research
(Gronroos, 1984; Parasuraman et al, 1985 also in 1988 and 1990, Bateson, 1992). Some
of these studies have been discussed in chapter two. However, there are only a few studies
(Dabholkar, 1996; Joseph et al, 1999) that have been directed specifically at service quality
of technology base service delivery. Moreover, none have seen perceived service quality as
one of the perceived attributes of innovation. Therefore, in this study, the impact of
perceived service quality on the adoption of electronic banking will be assessed. Perceived
service quality is defined as reliability (including accuracy) and trust (including
confidence). Reliability has been identified in many frameworks in service quality
(Gronroos, 1988; Parasuraman et al, 1985 also in 1988; Dabholkar, 1996) as an important
determinant of service quality. This factor is highly related to the types of service where
customers perceived a high risk. Although the perceived attributes of some electronic
80
banking systems have been studied before, there are some factors that we will consider
whether to add that are different from others, particularly as we have developed perceived
quality as one of the perceived attributes of electronic banking. This is an original piece of
work in the diffusion of innovation research, which is the focus of this study.
Question 3: What are the variables that identify the characteristics of adopters of
technology based financial services i.e. electronic banking, and do they differ from the
The adopter characteristics have received considerable attention over the years, which are
shown in table 3.1. Understanding the adopter characteristics is useful for marketing
managers to design marketing strategies to approach the target market with information
such as what kind of media can be used (Robertson, 1971). Moreover, this information
can be used to determine how and why adopters and non-adopters make their decisions.
From the company perspective this information can be applied to other innovations
(Lockett and Littler, 1997; Szmigin and Bourne, 1999). However, the results have not
been confirmed or reproduced completely by all the studies that have been done. While
some researchers have found large demographic differences others have not, particularly
for demographic characteristics such as gender. We have already discussed this in previous
sections. A possible explanation might be that there are many differences in demographic
characteristics, socio-economic, and cultural values, particularly in product/service
characteristics.
Technology based financial services such as electronic banking have had an increasingly
dramatic role in substituting services in branch banks (table 3.3). Electronic banking is a
new channel for banks to deliver their services. Traditionally, banks provided their services
via branches. Many studies for various products/services have shown different
adopter
characteristics (table 3.2) so we may assume that the different types of product and
services will also show different adopter characteristics in this study. Therefore, in this
research, we will examine the adopter characteristics in electronic banking. There has been
some research that has been completed in financial services such as direct banking
(Lockett and Littler, 1997) and credit card users (Adcock and Hirshman, 1977). However,
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there is a need for further research because the existing knowledge is still lacking strong
evidence for applications in most characteristics (Holak, 1988).
Question 4: Are perceived attributes of electronic banking better at predicting usage than
There have been some studies that have found the perceived attributes of innovations are
better predictors than personal characteristics (e.g. Robertson, 1971; Rugimbana, 1995;
Lockett and Litter, 1997). However, this study is further extending the personal
characteristics in the area that little focus has been given to in the past, such as gender, in
addition to demographic characteristics. Moreover, research has been conducted in
developing countries, where there are differences in customer characteristics, and where
there have not been many studies in these areas. The research not only focuses on
comparing these factors but also concentrates on the importance of personal
characteristics toward adoption.
In this research, we will study and compare the non-adopter and adopter characteristics
because, normally, both these groups go through the early steps of the adoption process.
In addition, non-adopters are useful to banks for improving their services/products and
also to use for evolving design and marketing strategies.
To address these questions and propositions we will develop a model by identifying the
elements of perceived attributes of electronic banking and adopter characteristics as
described in the following sections.
3.5.1.1
Model development
The literature, research questions and propositions, which have been discussed above, and
in the previous chapters, will now be used in the context of this research. The proposed
model does not fundamentally change but it adds new influences such as perceived service
quality, which we consider is applicable in developing countries. Therefore, the model
illustrates perceived attributes from the existing framework (Rogers, 1983; Gatignon and
82
Robertson, 1985) and adds brand/bank image and reliability that affects the rate of
adoption (table 3.6), whilst the model of the adopter characteristics of electronic banking
(table 3.7) is mainly based on Robertsons framework (1971).
83
The perceived attributes of innovation.

The models will provide the new framework to be tested within focus group interviews
and a questionnaire. The diagram of perceived attributes of electronic banking is
represented in Table 3.5
Table 3.5 Perceived attributes of technology based financial service
Factor
Relative advantages
Compatibility
Trialability
Complexity
Observability or communicability
Perceived risk
Cost
Control
Perceived service quality
Sub-factors
Economic gain e.g. save time
Increasing benefits e.g. availability of service, give
feeling of control
Socio-culture values and beliefs with previously
introduced ideas
Customer needs
Ease of trialability
Ease of use
Ease of product communication to potential
customer
Financial, physical, performance and time loss risks
Purchase cost and usage cost
Feeling of control over financial business
Reliability composed of accuracy
Trust composed of confidence.
The framework is based on Rogers (1983) five perceived attributes. Four attributes
(relative advantage, compatibility, trialability and observability) are positively related to the
adoption of innovation but complexity is negatively related to the adoption of innovation.
However, many researchers have studied the diffusion of innovations and have found other
perceived attributes in addition to the five perceived attributes by Rogers (1983) have
emerged from their studies. Ostlund (1974) has found that another important attribute,
perceived risk, should be considered as one of the important attributes. Gaginon and
Robertson (1989) found cost as one of the perceived attributes in the results of their
research. Lockett and Littlers (1997) study also supported the previous studies that the
five perceived attributes by Rogers (1983), perceived risk (Ostlund, 1974; Ho and Ng,
84
1994; Mitchell and Boustani, 1994) and Cost (Gatignon and Robertson, 1989; Lockett
and Littler, 1997) all affected the rate of adoption of direct banking services.
The details of perceived attributes have been illustrated as follows:
Relative advantage refers to the degree to which an innovation is superior to competitive
products in terms of relevant dimensions (Rogers, 1983). In this thesis we refer to three
sub factors. Firstly, economic gain, which focuses on saving time and money to do
transactions and secondly, increasing benefits which refers to convenience, faster service,
the availability of electronic banking and the feeling of control. This refers to the amount
of control that a customer feels he/she has over the process or outcome of the service
encounter. Control refers to the amount of control that a customer feels he/she has over
the process or outcome of the service encounter (Bateson and Hui, 1987; Langeard et al,
1981; Dabholkar, 1996).
Compatibility refers to socio-cultural values and beliefs with previously introduced ideas
and customer needs (Rogers, 1983). Our study, based on previous studies, shows that
adopters will adopt new technology based on related past experiences and attitudes.
Therefore we will examine the experience of using other technology services such as touch
screens, computers and other technology appliances.
Complexity refers to technology based financial services and how easy it is to understand
and use them.
Trialability refers to how easy it is for a customer to trial new electronic banking services.
Observability (Communicability) refers to the ease of product communication to potential
customers.
In addition to Rogers framework, the study also adds costs, risks and perceived service
quality as perceived attributes of electronic banking.
85
Perceived risk dimensions are referred to as financial, psychological/social, performance,

physical and time-loss risks.
Costs are referred to as purchase costs, switching costs and usage costs (Gatignon and
Robertson, 1989; Lockett and Litter, 1997) for using new technology services. However,
in this thesis we are concerned only with the purchase costs and usage costs from
electronic banking. The switching costs are not considered in this thesis because this cost
is not obvious like the other two costs.
A perceived service quality is defined as trust/confidence (adapted from Evans et al, 1996;
Engel et al, 1995; Gronroos, 1984), reliability (Dabholkar, 1996) including accuracy
(Rugimbana, 1995; Joseph et al, 1999).
Reliability refers to dependability and the accuracy of the transactions that banks do for
their customers and also whether electronic banking is able to conduct transactions
without generating errors and other forms of risk.
Trust refers to reputation and credibility (Gronroos, 1984). Like reliability, trust has high
relationships with risk. When bank customers perceived a high risk of using electronic
banking service, there are likely to concerns about the level of trust and reliability of
service. Hewer and Howcroft (1999) explained that customers use trust as one of the
factors when they choose to use new technology service channels. Therefore we will also
choose this factor as one of the important attributes that customers may consider before
choosing to adopt technology services from a bank.
3.5.2 Adopters characteristics of technology based financial services for electronic

banking
There are four different characteristics that illustrate the adopter profile in electronic
banking. These are shown in table 3.6.
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Demographic characteristics - This refers to age, gender, income, occupation and

education. The previous studies (table 3.4) show that early adopters are younger, and have
a higher level of income and education, and higher status of occupation if compared with
the later adopters. Adcock and Hirshman (1977) concluded that the range of ages, for the
majority age group of credit card users, is 25 to 34 and followed by 35 to 54. Groups will
be classified by demographic data such as age, location, sex and occupation. Therefore,
within each group we will have the same range of ages, equal proportions of males and
females, different types of occupations and home locations in different areas in Bangkok.
Table 3.6 Adopter characteristics
Factor
Demographic characteristic
Sub-factor
Age, gender, income, occupation and
education
Attitudinal and perceptual factors
Willingness to take a risk and attitudes

toward change
Higher usage in financial and technology

product
Social interaction and communication

behaviour
Social participation
Read print media
Influences from friend and family
Attitudinal and perceptual factors - This refers to the willingness to take risks and attitudes
towards change. According to the characteristics of financial services, electronic banking
has a high risk as it is associated with money. Therefore, customers will perceive more risk
than with other products e.g. ordering food by using touch screens. We also consider the
attitudes towards change of the adopter and non-adopter. The previous research
(Robertson, 1971) found that it is more positively related to an innovator.
Consumption patterns - Higher usage of financial products i.e. ATM usage, purchasing
over telephone (Lockett and Litter, 1997) and other technology products such as
computers, telephone answering services (Dickerson and Gentry, 1983).
87
Social interaction and communication behaviour - This refers to social participation and
communication behaviour of respondents. We expect that the early adopters are more
likely to be involved with social participation and read more printed media (Rogers, 1983).
We will also consider friends and family influences in giving information and advice about
service (Robertson, 1971).
3.6
Chapter summary
This chapter has reviewed literature in two major areas of diffusion research, the perceived
attribute of innovations and the adopter characteristics.
The perceived attributes of innovation, which have been examined in previous sections, is
largely based on Rogers framework. However, there are other perceived attributes of
innovation, which have been examined in this chapter, that affect the rate of adoption i.e.
perceived risk, cost and perceived service quality.
The adopter characteristics can be identified by demographic characteristics; attitudinal
and perceptual factors; consumption patterns and social interaction, and communication
behaviour.
The gaps from the literature review showed the direction for further research, which we
have summarised in the following four questions:
Are perceived attributes of electronic banking, that affect the adoption decision,
different in a developing country in Thailand context when compared with a
Can perceived service quality regarding reliability (including accuracy) and trust
(including confidence) be identified as one of the important perceived attributes of
88
What are the variables that identify the characteristics of adopters of technology
based financial services i.e. electronic banking, and do they differ from the
Are perceived attributes of electronic banking better at predicting usage than

This chapter has made a first step towards developing the model of perceived attributes of
electronic banking (table 3.5) adding some new factors of diffusion research traditions and
the models of adopter characteristic (table 3.6). However, the model must be tested by
empirical study, which this thesis has chosen to do by two steps. First by using qualitative
analysis and then followed by using quantitative methods, which we will discuss in more
detail in the methodology chapter.
89
Chapter 1
4. The Methodology part I: Qualitative method
4.1
Introduction
This chapter explains the research methodology. The preceding process involved the
review of literature in the areas of interest, IT in financial services and the impact on
service delivery systems and service quality (Chapter 2), and customer adoption and model
development (Chapter 3). This literature review has developed the research questions and
has found gaps from the existing literature, which will need to be investigated further. This
chapter discusses the research methodology (a combination of qualitative and quantitative
methods) used by this research. However, in this chapter we will discuss only the
qualitative methodologies whilst the details of the quantitative methods will be addressed
in chapter seven. Accordingly, this chapter is dedicated to presenting the details through
four major sections. Section 4.2 describes the philosophical perspective and the tworesearch paradigm approach. Section 4.3 describes the methodological considerations of
the two research approaches i.e. qualitative and quantitative are presented followed by the
implications of each research approach. Section 4.4 discusses the objectives of the
exploratory research. Section 4.5 discusses the data collection, including the sample
population and the sampling group selection methods, which involves outlining the
sampling groups. The final section 4.6 describes the sampling approach for the focus
group interviews, including the method of group interview recruitment and discusses the
procedures used for conducting focus group interviews.
4.2
Philosophical perspective
90
The philosophical perspective refers to the logic behind the methodology about how the
research should be conducted. Researchers in social science typically approach research
from one of two paradigms, namely positivist and phenomenology paradigms.
4.2.1 Positivist and phenomenology paradigms
Positivists view observation as an approach to obtaining objective knowledge of the

external and real world, and also being independent from the observer (Hughes, 1990;
Easterby-Smith et al, 1995). The philosophical approach, theory, or systems can be
measured whereas concepts cannot be easily quantified. Therefore, the research method of
the positivist is generally experimental with testing of the theory (hypotheses) through
empirical studies such as the use of mathematical models and quantitative analysis,
normally involving large sample sizes. However, this method of research has limitations
when applied to certain research areas, especially in social sciences. This is because
observations of human behaviour are very difficult to analyse using only scientific
techniques. Describing social phenomena using scientific truth is not always applicable and
cannot explain these situations in meaningful terms. The phenomenology paradigm views
the world as a socially built environment with no one, knowable, determinable truth or
law. Easterby-Smith et al (1995) concluded that the phenomenological or phenomenology
philosophy is based on the belief that the world is socially constructed and subjective.
Therefore, there could be many alternative explanations for observed social phenomena,
each of which is specific to a situation or context. The researcher is not assumed to be
independent as they are a part of the phenomena. Hence, researchers values and interests
can affect the outcome of any research. Theories should develop through induction from
the data, preferably using small samples, in detail over the period of time. Therefore, the
researcher frequently uses qualitative and often case study based approaches to avoid
these problems.
Because of the many varied, different beliefs about how the world operates between the
positivist and phenomenology paradigms, researchers use different ways to conduct their
research, namely using quantitative and qualitative methods. Some researchers are
favourable to just one of these paradigms. However, one methodology cannot be proved
91
to be better than the other. Different types of research questions are suited better to each
approach. Some researchers have been searching for an alternative methodology. Hughes
(1990) concluded that The positivist method was to be found in the supposedly empirical
methods of science itself and it required mixing with the phenomenology method of
hermeneutics and historical materialism. However, the idea of combining the two
methodologies will be discussed further in the next section.
4.3 Methodological considerations

There are two major methods associated with the phenomenology and positivist paradigm
in conducting research, namely qualitative and quantitative methods. Therefore the next
section will discuss the advantages and disadvantages of both methods, followed by the
choice of method we employed in this research.
4.3.1 Qualitative and quantitative approaches
The quantitative approach relies on testing variables, and a pre-structured approach to the
research, whilst qualitative research is concerned with the explanation of phenomenon,
process, and contextual detail (Bryman, 1988). The quantitative researcher is trying to
define variables and variable categories. These variables are linked together to form
hypotheses often before the data are collected and are then tested by empirical data. The
qualitative researcher begins by defining very general concepts, which develop as the
research progresses and relate to the framework (Brannen, 1992). A second difference is
the way data is collected. In qualitative methods, the researchers must use themselves as
the instrument, attending to their own cultural assumptions as well as to the data, such as
participating in observations by using interviews. In the quantitative method, the
instrument is pre-determined and refers to structured forms, which are less flexible and
imaginative for input. For instance, using the questionnaire, which is clearly defined. The
questions put to respondents are likely to result in empirical work more than observation
work, which are easily understandable from the findings. Qualitative techniques such as indepth interviewing always produce the quality of context, which Oppenheim (1992)
viewed Allows respondents to say what they think and to do so with greater richness and
92
spontaneity. This gives in-depth levels of information, whilst the quantitative tool is
usually collected data from the sample group. The sampling is selected on the basis of a
theoretical framework criteria, which is the main difference in analysis and interpretation
of the results (Bryman, 1992). Quantitative research is strongly associated with social
survey techniques such as structured interviewing and self-administered questionnaires,
experiments, structured observation, content analysis and the analysis of official statistics.
Qualitative research is typically associated with participant observation, semi-and
unstructured interviewing, focus groups, the qualitative examination of texts and various
language-based techniques such as conversation and discourse analysis. The qualitative
tools consist mainly of subjective inputs, which often do not intend to measure something
of a numerical nature. This leads to arguments about the results from positivists.
Quantitative tools involve either the extension of historical data or the analysis of objective
data, which usually avoids personal input that could invalidate the results (Brannen, 1992).
However, Brannen (1992) stated that data collection and analysis techniques of the
scientific method are not adequate on their own in areas of human activity. The same view
is held regarding the findings from qualitative methods and has a similar argument that
they are not reliable on their own because of a lack of statistical support. Both
methodologies are not complete by themselves, as discussed. Therefore, the mixture of
qualitative and quantitative research has been chosen as the most appropriate method for
conducting this research.
In the next section, details of using a combination of qualitative and quantitative methods
will be discussed and how this has been applied for this thesis.
4.3.2 Choices of research approach
The choice of research approach is normally dependent on the types of research questions
and the research objectives. There are two major research approaches i.e. the theory
testing approach and hypothesis testing. Devlin (1995) suggested that the qualitative
approach is suitable for theory building by helping to develop hypothesis, whilst the
quantitative method is appropriate for hypothesis testing by empirical work. Marshall &
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Rossman (1980) (also in Deshpande, 1983) stated that when quantitative and qualitative
methods are used together, they produce triangulation. They provide checks and balances
on each other since their strengths and weaknesses tend to be complementary. This helps
the researcher to get a more complete picture of the data. Other researchers have also
agreed with the benefits of the multi-method approach. Bryman (1988) pointed out with
this methodology, the validity of findings and the degree of confidence in them will be
enhanced by the deployment of more than one approach to data collection. This research
aims to develop a new quantitative framework for the adoption of electronic banking in
Thailand. Therefore, a positivist paradigm is an appropriate approach for the hypotheses
testing, whilst the qualitative paradigm is the appropriate approach for developing the
framework and the hypotheses. Hence, this research uses the qualitative method to
determine the hypotheses and the quantitative method to validate the data. Therefore, the
qualitative methods work as a facilitator of the quantitative methods.
There were two stages of data collection in this research. The first stage was to use the
qualitative methods for gathering data. The focus group interviews were chosen as a tool
to conduct the qualitative research. Hence, the data from the focus group interviews
addressed the information about the Thai banking industry and the data was used to refine
the framework, which has been developed from the literature. This method helped to
develop the appropriate measurement scale, which was suitable to be measured for the
sample.
The second stage used quantitative methods (i.e. questionnaires) for collecting data from a
large-scale survey. The results are used to test the hypotheses. The research then proceeds
through the process of refining the initial framework, which has been developed through
the literature review. The second stage of the research was to use quantitative methods to
further test the framework using a positivist approach by testing the hypotheses by logical
empiricism. The questionnaire survey is chosen as a tool for data collection. The details of
the use of the quantitative method will be discussed in chapter seven.
4.4
The objectives of the exploratory research
94
1) To examine the definition of electronic banking from the Thai bank customers
perspective.
2) To examine the factors, which the customer perceived is concerned with service
quality of banking in general.
3) To examine the factors that the customer perceives are concerned with service quality
in the electronic banking services and the effects these factors have on the customers
decision regarding the adoption of services.
4) To examine the key important factors that affect the rate of adoption of technology
based financial service for electronic banking from the customers perspective.
5) To examine the adopter characteristics of electronic banking in Thailand.
4.5
Data collection method
A data collection method that is widely used in marketing research is the interview. There
are two interview methods i.e. exploratory interviews and standardised interviews.
Exploratory interviews are normally used to develop ideas and research hypotheses whilst
standardised interviews are used for large-scale data collection (Oppenheim, 1992). The
benefits of exploratory interviews as a data collection method are that they allow the
researcher to observe the respondents opinion regarding the research topic. However,
conducting individual interviews is time consuming and expensive. The alternative method,
which yields similar benefits, is a group interview. This method is a common tool in
marketing data collection.
To decide the data collection method, the researcher considered the following factors,
namely low cost, time-consumption and the research objective response. Therefore, group
interviews were used in this research to conduct the qualitative data and questionnaires for
collecting the quantitative data. However, this chapter has only discussed the qualitative
method. The details of the quantitative methods will be discussed in chapter seven.
4.6 Designing the focus group interviews

There are three kinds of data collecting by groups that have been widely used in qualitative
research i.e. participants observation in groups methods, individual interviews and focus
95
group interviews. The reason that we have chosen focus group interviews to do this
research is because the benefits of focus groups match the nature of the study. Also the
focus group interviews combine the elements of individual interviews and participant
observations in the group methods. Thus, focus groups give the advantages of both
methods, particularly in the case of obtaining access to a group of data, which is difficult
to get from the other two methods. The focus group interview has been popular in
marketing research since the 1980s (Morgan, 1988).
The main advantage that focus groups offer is the opportunity to observe a large amount
of social interaction for a topic in discussion groups during a limited period of time, and it
is a cheaper method if compared with conducting individual interviews. Moreover, the
focus group interviews are easy to conduct if compared with other qualitative methods. In
addition, it is suitable for the project when time and/or money are essential considerations.
Another benefit of focus groups is its suitability for exploring topics and generating
hypotheses. Group interviews can produce useful data with relatively little direct input
from the researcher, which is a distinct advantage for generating data during group
discussions. This is different from other interviewing techniques. The disadvantages of
focus groups are that the researcher has less control over the data if compared with
individual interviews.
The next section involves determining the sample frame, sample size, the data collection
method, and designing the questionnaire and interview structure. We have already
identified the research problem and the research questions from the previous sections.
4.6.1 Sample population
The survey population is the bank customers in Bangkok, Thailand. The reason that the
researcher chose to collect data only in Bangkok is described for the following reasons:
Bangkok is the capital city and like other developing countries the capital of the country is
also the centre of its financial, business and educational activities. The outside of Bangkok
has very different demographic characteristics and a much lower take-up of bank services.
Compared with the average Thai population (see details in Chapter Five),
96
Bangkok has a higher average income, higher educational level and higher status of
occupation.
The group of frequent electronic banking users is likely to be those living in metropolitan
centres, and those in white-collar occupation (Prendergast, 1993). This group of people
are well paid and do many financial transactions compared with the group of lower income
earners who generally get paid on a day-to-day basis. This group normally do their
financial transactions once, at the end of the month, to withdraw their salary. Professional
groups usually work during office hours and are less likely to have time to use the banks
counter services during normal opening hours, so are most likely to adopt new technology
products/services to make their life easier. High status jobs or white-collar workers in
Thailand are normally required to have a university and secondary level of education.
Companies and government departments are also mainly located in Bangkok. The
diffusion of technology services in Thailand is also due to the fact that new electronic
banking services are generally introduced in Bangkok first, before opening in the other
cities in Thailand. Moreover, some of the advanced technology services are provided only
in Bangkok. Lack of infrastructure such as telephone lines have caused some of the
problems in introducing electronic banking services such as on-line systems. The last and
most important reason is that Bangkok is one of the biggest Asian cities and also has a
large influence on business in the whole Southeast Asian region. Thus, Bangkok can be
used to represent the overall picture of other big cities in other countries in Southeast
Asia.
4.6.2 Sampling group selection methods
The selection of interviewees is made through a screening process based on their

demographic characteristics and consumer patterns for three types of electronic banking.
This criterion was used to ensure that the group represented all the groups of bank
customers. The assumptions of the classified groups were based on previous research. The
previous research (Dickerson and Gentry, 1983) has found that early adopters of
innovations have a higher education, higher income and a higher status of occupation and
are a younger age than non-adopters.
97
Therefore, the criterion of recruiting the groups interviewees was diversified by age,
occupation, and gender. The interviewees ages were classified by dividing them into a
range of ages as follows: teen (under 20 years), 20s(21-30 years), 30s(31-40 years),
40s(41-50 years), 50s(51-60 years) and 60s more than 60 years old. The recruitment
criterion also involved diversifying the groups of occupation. Normally the level of income
in developing countries reflects occupation. We tried to ensure that the group interviewees
represented the majority of occupations who are considered as potential customers. For
gender, each group was recruited by considering the equivalent number of males and
females.
For consumption behaviour, most of the previous studies have compared the groups of
adopters and non-adopters. This research also studied both of these groups which we
defined as non-adopters and adopters of electronic banking.
In this research we focused on three types of electronic banking i.e. sophisticated ATM,
debit card and telephone banking. Debit card and telephone banking users were subdivided into categories of adopters who use the service and non-adopter who do not use
the services regularly.
For the group of sophisticated ATM users, the potential bank customers can be
categorised into four groups. Firstly, the non-adopter (NA) - this group is the group of
bank customers who have an account but do not use any technology services. Secondly,
the partial adopter (PA) who has an account and ATM card but rarely uses them. Thirdly,
the basic adopter (BA) who has an account and ATM card and uses them but does not
adopt any other kinds of technology services. Fourthly, the adopter (A) who has an
account ATM card and uses other kinds of technology services. However, it will not be
helpful just to focus only on the group of the non-adopters who have never used any kind
of technology services before. The reasons for this are that if we find a group that does not
use ATMs this group will usually also not have a bank account. These groups nearly
always contain people with low incomes or are elderly. This group is not the potential
target group of banks. The real benefit of our findings is to try to discover the reasons the
partial non-adopter groups do not adopt new technology services.
98
For purposes of research, non-adopters of new technology service are defined as those
who never use technology or those who use basic ATM functions only (cash withdrawal).
There are three adopter groups, namely regular users of sophisticated ATMs, users of
debit cards and users of telephone banking.
4.6.3 The details of the group participants
Table 4.1 Group 1. Non-adopter group (pilot group) recruited by the researcher
Participants
Gender
Age
Bungon (BA)
Female
50s
Kamon (BA)
Pimon (BA)
Sudarat (BA)
Female
Female
Female
40s
40s
40s
Sumpan (BA)
Somboon (PA)
Male
Male
40s
40s
Occupation
The kind of service
Lecturer
ATM (withdraws money, update

book)
Accountant ATM (only withdraw)
Accountant ATM (update passbook)
Small business ATM (only withdraw)
owner
Lawyer
ATM (only withdraw)
Financial analyst
ATM (only withdraw)
Table 4.2 Group 2. Non-adopter group recruited by the bank. (This group is mixed
between non-adopters and partial adopters)
Participants
Pongpet (NA)
Dongporn (PA)
Gender
Age
Female 60s
Female 50s
Occupation
Shop owner
Dentist
Mali (NA)
Pronjit (NA)
Female
Female
50s
60s
Udom (PA)
Male
60s
Sura (PA)
Male
60s
Housewife
Business woman
and housewife
University lecturer
(retired)
Businessman
(retired policeman)
The kind of service

None
ATM
(Only in emergency)
None
None
ATM (only to withdraw)
ATM, credit card
99
Table 4.3 Group 3. Non-adopter group recruited by the researcher
Participants
Usanee (BA)
Gender
Female
Age
20s
Occupation
Car sales woman
Patchara (BA)
Female
20s
Pairat (BA)
Male
20s
Pramote (BA)
Male
20s
Jedsada (BA)
Male
30s
Government
financial officer &
accountant
Industrial
salesman
Computer
controller
Money exchanger
Thiti (BA)
Male
30s
Administrator in
oil company
The kind of service

ATM
(only withdraw money)
ATM
ATM
ATM
ATM
ATM and update bank
account
Table 4.4 Group 4. Non-adopter group recruited by the researcher
Participants
Nitaya (BA)
Gender
Female
Age
20s
Occupation
Secretary
Putachard (BA)
Female
20s
Clerk
Sririwan (BA)
Female
20s
Unemployed
Watana (BA)
Male
20s
Salesman
Panat (BA)
Male
30s
Ghan (BA)
Male
20s
Administrator at
private company
Administrator
The kind of service

ATM
(deposit and withdraw)
ATM
ATM
ATM
ATM
ATM
100
Table 4.5 Group 5. Adopter group recruited by the researcher
Participants
Geritisuk
Tawee
Gender
Male
Male
Age
30s
30s
Occupation
Import-export
Technician
Thongsuk
Male
30s
Surat
Female
20s
Supa
Female
20s
Nipa
Female
20s
Radio station
(government DJ)
Industrial
salesman
Administrative at
water supply
Assistant reporter
sport newspaper
The kind of service

ATM, telephone banking
ATM (deposit and
withdraw money)
Table 4.6 Group 6. Adopter group recruited by the bank
Participants
Nutaporn
Gender Age
Male
30s
Chaivit
Male
30s
Boonmee
Female
30s
Somjit
Female
30s
Amala
Female
30s
Peonpit
Female
40s
Occupation
Credit officer for
leasing company
Technician
Accountant at
property
development
Administrative
diploma
Administrative
(import-export
company)
Small business
owner
The kind of service

ATM, telephone banking.
ATM, update bank
account, deposit cash with
machine
ATM, telephone banking,
VDO banking
ATM and deposit cheque
ATM, cheque deposit
ATM, deposit cheque with
machine, telephone
banking
101
Table 4.7 Group 7. Adopter group recruited by the bank
Participants
Tang
Gender Age
Male
Teens
Occupation
2nd year student
Tan
Male
Teens
2nd year student
Yui1
Female
20s
3rd year student
Yui2
Female
Teens
2nd year student
Wan
Female
Teens
3rd year student
Ying
Female
20s
4th year student
The kind of service

ATM(only withdraw money),
telephone banking
telephone banking
telephone banking
telephone banking
telephone banking
Table 4.8 Group 8. Adopter group recruited by the researcher
Participants
Parinya
Ganok
Kotch
Gender Age
Male
20s
Male
20s
Male
20s
Armonrat
Female
30s
Ratchadawan
Female
20s
Ladda
Female
20s
Occupation
Industrial salesman
Sales - insurance
Administrator at
court
Teacher
The kind of service

ATM (deposit and withdraw
money), deposit cash
express
ATM, cash deposit machine
Supervisor in
department store
Telecommunication ATM, deposit express.
company's operator
4.6.4 Sampling approach for the focus group interviews
This section will discuss the method of sample recruitment and the process of conducting
the focus group interviews which will be discussed in detail in the following section.
102
4.6.4.1
The recruitment of the sampling group
The groups of interviewees were recruited from two sources i.e. banks recruiting from
their customers and the researcher recruiting from the Rajabhat Chandrakasem
Institution.The recruitment method involved contacting five major banks for help. Two of
the contacted banks, namely Krung Thai Bank and Sri Ayudthaya Bank, responded with
offers to help. Each bank provided one focus group whose members were taken from
customers at their branches and at the Thamasart University. The other six groups of
interviewees were recruited from part-time students at Rajabhat Chandrakasem. The
institution provides a high level of education and the students are both full-time and parttime, numbering around 10,000 students in total, of which approximately 80% are parttime students who normally work in the daytime and come to classes in the evening. The
sample was randomly selected from the group of adopter and non-adopter bank customers
based on their use of technology-based service delivery in Thai banking.
4.6.5 The sample size
There were eight groups of interviewees where each group consisted of six people. The
total sample size was thus forty-eight people. The first two groups consisted of adopters
and non-adopters and were used as a pilot study. From the remaining six groups of
interviewees, three groups were selected consisting mainly of adopters and the remaining
three groups containing non-adopters. Group interviewees had diverse demographic
characteristics to correspond with those of typical Thai bank customers. Each group had
similar incomes, ages, and education levels and had equal proportions of males and
females. To determine the adopter and non-adopter group interviewees, we preinterviewed each person using general questions about their age ranges, incomes and
consumption behaviours. These pre-interviews were completed before interviewing each
group. The methodology that was used to select interviewees for the focus groups was by
asking the banks to select customers willing to participate and recruiting from students at
the Rajabhat Chandrakasem institution during June 1999. Each focus group was held in a
103
small seminar room in a hotel (Chandrakasem Park Hotel) located in the Chandrakasem
institution. For the groups recruited by the banks we did the interviews at the banks
offices. The period of time allocated for each focus group interview session was
approximately between 45 minutes to 1-hour, during which a series of questions were
asked and the answers were tape-recorded. Free and general comments about the
questions were encouraged. After the end of each group session notes about the themes
discussed were made, recording important quotes and ideas that were discussed by the
group and reviewing any problems that had occurred during the session to try to improve
the other group interviews yet to be done. The focus group interviews were scheduled for
one group to be held every 1 or 2 days, which left sufficient time to review the process and
the questions.
4.6.6 The process of conducting the focus group interviews
The interviews were informal and unstructured and were organised as follows. Firstly, we
allowed interviewees to talk about the topic generally concerning the research questions.
We then asked each person to define the meaning of service quality, technology-based
service delivery and good banking performance. Secondly, we tried to make interviewees
understand the researchers subjects point of view.
4.6.7 The structure of the focus group interviews
An instrument was developed to guide the focus group discussions. This comprised openended questions to explore personal characteristics, usage of electronic banking and a
summary section.
The structure of the questions asked at the focus groups had three important parts as
follows:
4.6.7.1
Introduction
This section included an introduction about the researcher and the purpose of the study.
This section also asked the permission of the interviewees to use a tape recorder during
104
the group interviews. Next, the researcher relaxed the interviewees with general questions
that encouraged the participants to talk, such as asking everyone to introduce him or
herself. Everyone was told that only a single person at a time must speak and the
interviewee should say their name before they started talking. This introduction period
lasted no more than 5 to 10 minutes.
4.6.7.2
Content
This section lasted 30 to 40 minutes. It started with general questions that introduced the
general topic of electronic banking and provided participants with an opportunity to talk
about their connection with the overall topic. After this the meaning of important concepts
that were going to be used in the group interviews were defined, such as the types of
technology based financial services for electronic banking. The main questions were raised
about the meaning of service quality of banking services and electronic banking in general
e.g. Factors influencing the adoption of electronic banking, the problems arising from
using electronic banking, the factors that may have an influence in making a decision to
choose a specific bank and finally the important factors that affected their decision whether
to use electronic banking.
4.6.7.3
Summary and conclusions
This section lasted between 5 to 10 minutes. All of the key questions and ideas that had
emerged from the discussion were concluded and summarised. The participants were then
asked to add anything further that they thought might be relevant.
4.7 Chapter summary

This chapter discussed the research approach and the data collection methods that were
used for this research. It also discussed the research methodology that was chosen and the
philosophy behind it. In addition, it has illustrated how the theoretical framework was
determined from the literature review and previous qualitative work. This chapter also
105
discussed the first stages of conducting qualitative data collection and the research
methodology was discussed in detail. The objectives of the study was to examine the
definitions of electronic banking to investigate the service quality of banking in general and
electronic banking services from the customers perception to examine the key factors that
affects the customer adoption of electronic banking and the effects these factors have on
the customers decision regarding the adoption of services and to examine the adopter
characteristics of electronic banking in Thailand.
This chapter discussed the description of the procedure conducted, sample population,
sampling selection methods and the sampling approach. The second stage of data
collection, which used the quantitative method, will be illustrated in Chapter Six.
The qualitative methodology instrument was the focus group interview, which was used as
a tool to develop the hypotheses and refine the framework that has been developed from
the literature review in chapters two and three. However, before discussing the details of
the data analysis, the next chapter will illustrate the general state of Thai banking and its
electronic banking services.
106
Chapter 1
5. Thailand and the Thai banking industry
5.1
Introduction
This chapter will present information about Thailand and the Thai banking industry.
Section one describes Thailand in general, including demographic information about the
size of the population categorised by age, gender, education level and monthly income per
household; the economic status; social system and Thai culture. This information will give
a better understanding about the characteristics of Thai customers.
Section two will examine the Thai banking industry, including a brief history and some
general background. This research examines the banking technology services so we will
examine the four main Thai banks that provide the new technology services that we are
going to study i.e. ATM, sophisticated ATM, and telephone banking.
5.2
Demographic data
This section will give a general picture of Thailand in terms of its demographic
characteristics i.e. the size of the population, gender, age structure, levels of education,
income and occupation. The demographic data is considered as one of the major factors
that may affect the adoption of electronic banking.
107
5.2.1 Population
The population of Thailand is approximately 61 million people. The number of males is

29,850,200 and 30,767,100 are females. 32.9% of the total Thai population is aged under
20, whilst 57.6% of the population are in the group of 20 to 59 years old, and 9.5%
represents the group of the population aged 60 years and over.
The population in Bangkok is 6,320,200. 47.6% of the Bangkok population are males and
52.4% are females. However, the number of the population who are legally registered
residents is lower than the real number of population who actually live in Bangkok due to
the seasonal immigration of jobs and temporary immigration by students. 26.1% of the
Bangkok population is under 20 years old, 65.7% is aged between 20 to 59 years old
whilst people aged more than 60 years accounts for 8.4%. Therefore, a higher proportion
of the Bangkok population are of working age than the Thai overall population, which
means Bangkoks population contribute a greater amount to the Thai economy than the
general Thai population.
Table 5.1 Comparison of the population of the Thai kingdom and Bangkok by age
(Population in
thousands)
Areas
Percentage
Age
Under 20
20-29
30-39
40-49
50-59
More than 60
Total
Whole Thai
Kingdom
19,962.8
32.9
10180.1
16.8
10835.6
17.8
8726.4
14.4
5199.2
8.6
5713.1
9.5
60,617.2
100.0
Source: Thai National Statistic office, 1998
Bangkok
Percentage
1651.0
1439.6
1241.0
950.0
506.1
532.0
6,320.0
26.1
22.8
19.6
15.3
8.0
8.4
100.0
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5.2.2 Number of employed people by level of education
Thai law requires the population to stay for at least six years in elementary school.
Therefore, the majority of the populations educational level is to elementary and
secondary school, which accounts for 90.9.9%, whilst the percentage of the populations
education level to diploma and university level is approximately 8.2% (Thai National
Statistical Office, February 1999).
When the Thai overall education levels are compared to Bangkok, only 76% of Bangkoks
population education level is to elementary school and secondary school, whilst the levels
of the population in Bangkok, which have a higher level of education to diploma and
university level, are 21.7%. Therefore, this indicates that the Bangkok population are
generally at a higher level of education than the majority of the Thai population.
The low proportion of higher educated people in Thailand may create a barrier to the
adoption of electronic banking.
Table 5.2 Comparison of the population by education attainment level between the
whole Thai kingdom and Bangkok
(Population in thousands)
Education
level
Elementary
Secondary and
vocational
college
Diploma
Undergraduate
Post graduate
Etc.
Total
Whole Thai
kingdom
32,593.2
13,064.0
1266.5
2,880.4
234.1
199.9
50238.1
Area
Percentage
Percentage
64.9
26.0
Bangkok
metropolis
2055.8
2089.2
2.5
5.7
0.5
0.4
100.0
292.2
918.3
131.5
95.7
5582.7
5.2
16.5
2.4
1.7
100.0
36.8
37.4
Source: Thai National Statistical Office, 1999

5.2.3 Income and expense
109
The average number of persons in each Thai household is 3.7. The average monthly
income is 10,779 Baht (approximately 63 Baht equals one Pound Sterling) per household,
whilst the average monthly expenditure is 9,190 Baht per household (Thai National
Statistical Office, 1998). However, this number is significantly higher in Bangkok areas. As
has been shown, the value of the average Bangkok income per household is approximately
2 times higher than the total average income of the whole Thai kingdom. In addition, the
average household size in Bangkok is still relatively smaller than the whole Thai kingdom.
Therefore, most Bangkok families are financially better off than families living in rural
areas outside Bangkok. They, generally, have a higher disposable income and are more
likely to use financial services.
Table 5.3 Comparison of average monthly income and expenditure per household
between the whole Thai kingdom and Bangkok
(The exchange rate approximately 63 Baht equals one pound, 1999)

Region
Average
Average monthly
household size income/household
Bangkok
Metropolis
Whole Thai
kingdom
3.2
21,947
3.7
10,779
Average monthly
expenditures
/household
17,418
9,190
Source: Thai National Statistic Office, 1999

5.2.4 Occupation
Approximately 34 million people are employed. The unemployment rate is 1.9%, which
rose to 4% in 1998 due to the economic crisis caused by the financial services industry
(Thai National Statistic Office, 1999).
Agricultural and fishery workers are the majority occupation in Thailand, which accounts
for 50.9%. This is different in Bangkok where the majority of the occupations (22.2%) are
in the service sector followed by 25.5% who are at management and professional level.
110
This shows that Bangkok has a higher proportion of high status workers. This is because
most of the Thai government departments and business head quarters are located in
Bangkok.
Table 5.4 Population, 15 years of age and over by occupation
Occupation
Legislators, senior
officials and managers
Professionals
Technicians and
associate professionals
Clerks
Service workers and
shop and market sales
workers
Skilled agricultural and
fishery workers
Craft and related trades
workers
Plant and machine
operators and
assemblers
Elementary occupations
Armed forces
Unknown
Total
5.3
Whole Thai
kingdom
1,677.1
Percentage
1,669.0
806.9
4.9
2.4
422.0
281.0
13.1
8.7
800.3
3268.8
2.4
9.6
304.0
714.5
9.5
22.2
17,363.5
50.9
39.3
1.2
2,109.2
6.2
295.6
9.2
1,827.6
5.4
370.0
11.5
4,001.7
11.7
332.3
175.4
0.51
35.3
419.1
1.23
21.6
34,119.3
100.00
3215.4
Source: National statistical office, 1999
10.3
1.1
0.7
100.0
4.9
Bangkok Percentage
Metropolis
399.9
12.4
Economy
The economic Gross Domestic Product (GDP, 1998 price) is 3,056 Billion Baht, which is
growing by 1.3% per annum. Composition by sector: Agriculture: 9.5%, Services and
others 51.62%, Manufacturing: 33.9% and Construction 4.98% (Bank of Thailand,
1999).
111
5.3.1 Economic crisis
Between 1990 and 1997, Thailand was one of the Worlds fastest growing economic
countries. Economic growth reached 10% per year in 1990 (Thai National Statistic Office,
1999) and continued until 1996 (8.8%). This extraordinary growth caused the economy to
overheat.
In 1997/98, the Thai economy was in deep recession as a result of the severe
financial problems facing many Thai firms, particularly the banks and finance companies.
This caused economic growth to drop to 0.4%. Banks and other firms borrowed funds in
dollars and lost considerable amounts of their assets when the economy crashed devaluing
the Thai currency. These banks financed a property boom that began to stop in the mid1990s. In addition, export growth collapsed in 1996. The Thai National Bank tried to
defend the currency but with no success. In August 1997, the IMF program re-established
financial stability. An economic turnaround required the rescheduling of debts of Thai
firms, restoring high rates of export growth to finance foreign liabilities, and re-capitalising
the banking system. This affected the Thai banking system.
5.3.2 Infrastructure
One of the important requirements of any electronic banking infrastructure is the

availability of the telephone. Like other developing countries, the problems of under
developed infrastructures such as telephone systems often obstruct the expansion of
business into some of the remote areas. Therefore this may be a major reason why banks
have not provided telephone banking services to rural areas. However, the Thai
government has licensed a private telephone company, TelecomAsia, which has
accelerated the growth of telephone services outside Bangkok. The communication
problems have also been partially solved in remote areas by the introduction in recent
years of mobile phones. The number of telephones in residences is 1,698,933 while mobile
phone numbers are 1,802,426 (Thai National Statistical Office, 1998).
5.4
Society and culture
112
Thailand, formerly known as Siam, is one of the oldest established countries. It has its own
unique culture and language. Thai people have a strong sense of identity in cultural,
linguistic, religious and political matters. Although there are many ethnic groups, there are
no racial or religious problems in Thai society. Thailand receives a significant income from
the tourist industry. Thai people are very tolerant and friendly and always control their
temper in public. Thai culture has a traditional respect for age-seniority, so the younger
people always pay great respect to their older people. It is very common for Thai
households to include extended families. Religion has a strong influence on Thai personal
conduct too. Buddhism is a very tolerant religion that affects the Thai lifestyle. Thai
culture has strong relationships with friends and family, if compared with Western society,
which may have some influences on the adoption of innovation.
5.5
Thai banking industry
5.5.1 History and background
After Thailand opened itself up for free trade and abolished government monopolies in
1855, the unexpected growth in trade caused problems in the Thai monetary system,
which used old minted silver currency. Foreign traders could not change enough local
currency. King Mongkut implemented an initial reform by starting to mint coins with
imported machines from Britain. The concept of the commercial bank was soon afterwards
introduced by the West, chiefly the British. The first bank was a chartered institution
owned by Britain. However, the problem of the local currency shortages did not get
resolved until King Chulalonkorn added bank notes into the Thai money system. This
solved the problems and encouraged businesses to grow faster. A British delegation lead
by Sir Andrew Clark proposed a system to form a central bank and regulate monetary
policy on behalf of the Thai royal government. However, King Chulalongkorn still has
control of the authority for reviewing and granting permission for requests to open private
commercial banks. The first bank that was allowed to open a branch is the British-owned
Hong Kong and Shanghai Bank in 1888. HRH Prince Mahisara Ratchaharuthai founded
the first Thai commercial bank in 1906 called The Siam Commercial Bank(Thai Farmer
113
Bank,1999). At the present time, Thailand has 13 Thai national banks, and 21 foreign
banks as shown in table 5.5 and 5.6
5.5.2 Structure of the Thai banking system
Just like many other countries, the Thai banking system has a central bank. The Thai
National Banking Bureau (former name) was established in 1939 as a department in the
Ministry of Finance. Initially the only central banking functions were the managing and
issuing of government bonds, receiving deposits from and lending to the government and
other commercial banks. Also this central bank controlled the transferring of funds around
the country. Later, this institution was changed to be the Bank of Thailand in 1942, by the
Bank of Thailand Act. The Minister of Finance supervises the Bank of Thailand, with
policy control and direction being assigned to a committee, that comprises the governor
and deputy governors, appointed by the King, as chairman and vice chairmen respectively
and at least five other members appointed by the Cabinet.
Bank of Thailand has summarised their duties as follows:

- Formulate monetary policy to maintain monetary stability.
- Supervise financial institutions to ensure that they are secure and supportive of economic
development;
- Act as banker to the Government and recommend economic policy to the government;
- Act as banker to financial institutions;
- Manage the international reserves;
- Print and issue bank notes.
There are two types of banking institutions in Thailand:

-
Commercial banks
Specialised banks
Commercial banks provide the financial services to Thai bank customers under the control
of the Bank of Thailand. Two types of service are normally provided i.e. personal banking
and business and investment banking. Specialised banks provide a specified type of the
114
banking services, which are owned by the government and run under strict control by the
Ministry of Finance/Bank of Thailand. Four types of specialised banking in Thailand exist,
namely the government savings bank (GSB), Government Housing Banks, The ExportImport Bank of Thailand (EXIM-Bank) and Bank of Agriculture and Agricultural
Cooperatives (BAAC). However, this thesis focuses on Thai commercial banking.
115
Table 5.5 The list of banks in Thailand
No.
Name
Operation date
Incorporated in
Bangkok Bank Public Co. Ltd.
1 December 1944
Thailand
Thai Farmers Bank Public Co. Ltd.
8 June 1945
Thailand
Krung Thai Bank Public Co. Ltd.
14 March 1966
Thailand
Thai Military Bank Public Co. Ltd.
8 November 1957
Thailand
Thai Danu Bank Public Co. Ltd.
8 April 1949
Thailand
Siam Commercial Bank Public Co. Ltd
1 April 1906
Thailand
Siam City Bank Public Co. Ltd.
24 May 1941
Thailand
Radanasin Bank Public Co. Ltd.
20 December 1948
Thailand
Nakornthon Bank Public Co. Ltd.
11 October 1933
Thailand
10
Bangkok Metropolitan Bank Public Co. Ltd.
21 April 1950
Thailand
11
Bankthai Public Co. Ltd.
11 March 1949
Thailand
12
Bank of Asia Public Co. Ltd.
2 October 1939
Thailand
13
Bank of Ayudhya Public Co. Ltd.
2 April 1945
Thailand
Source: Bank of Thailand, 1999
Table 5.6 Foreign banks
No.
Name
Operation date
ABN-AMRO Bank N.V.
3 January 1919
Netherlands
Standard Chartered Bank
- March 1894
United Kingdom
The Chase Manhattan Bank, N.A.
1 January 1964
United States
Oversea Chinese Banking Corp. Ltd.
2 July 1909
Singapore
The Bank of Tokyo-Mitsubishi, Ltd.
1 April 1996
Japan
Citibank, N.A.
1 November 1885
United States
The Sakura Bank, Ltd.
22 November 1952
Japan
Sime Bank Corp. Ltd.
28 February 1964
Malaysia
No.
Name
Operation date
Incorporated in
Incorporated in
116
The International Commercial Bank of China
10 October 1947
Taiwan
10
Bank of America N.T. & S.A.
1 December 1949
United States
11
Credit Agricole Indosuez
27 February 1897
France
12
Bharat Overseas Bank, Ltd.
23 December 1947
India
13
The Hongkong and Shanghai Banking Corp. 2 December 1888
United Kingdom
14
Ltd.
Deutsche Bank AG.
1 July 1988
German
15
The Dai-Ichi Kangyo Bank, Ltd.
28 May 1997
Japan
16
Dresdner Bank AG.
22 January 1997
German
17
Banque National de Paris
15 September 1997
France
18
The Sumitomo Bank, Ltd.
6 March 1997
Japan
19
The Industrial Bank of Japan, Ltd.
23 January 1997
Japan
20
The Bank of China
10 March 1997
Republic of China
21
The Bank of Nova Scotia
2 July 1997
Canada

5.5.3 The Thai banking situation
At the beginning of 1998, after the economic crisis, the Thai banking industry had been
drastically restructured according to IMF (International Monetary Fund) policy. Many
banks had to increase funds and some had to be taken over by the government. This
changed the Thai banks from traditional institutions, owned by a few private individuals, to
be more public. There are only four major commercial banks that survived the economic
crisis, namely Bangkok Bank, Thai Farmer Bank, Thai Military Bank and The Bank of
Ayudhya. The other banks that needed increased funds by foreign countries were, namely
Bank of Asia and DBS Thai Danu Bank. The other six banks that have the Thai
government as a major shareholders are namely Krung Thai Bank, Siam Commercial
Bank, Siam City Bank, Bangkok Metropolitan Bank, Bank Thai, Radasin Bank and many
smaller banks have been restructured and taken over by the Thai government as a major
shareholder. The financial crisis started when the Thai government closed 56 financial
institutions in 1997. The crisis made the Thai people lose confidence with Thai commercial
banks, particularly the smaller banks. This has led to many Thai people moving their
money from small, less stable banks to larger more stable banks. This caused a cash
117
reserve crisis for many small banks and the banks that the government took over after the
economic crisis of 1997.
However, in general, most banks have had to face the serious
problems of a shortage of liquidity during the economic recession. The Bank of Thailand
tried to solve this problem by borrowing money from the IMF Recovery Fund to improve
liquidity and use a policy of low interest rates. In addition, new tight regulations were
imposed by the IMF about the proportions of reserve liquidity that has forced banks to put
stricter conditions on new loans. The economic turmoil had caused companies to reduce
new investment and cancel or delay expansion of their business. Consequently, banks
were in severe trouble because they had very little income from interest rates and have had
to find income from other sources to cover the cost of cash deposits interest. They have
launched many new services, particularly in the technology services areas, such as
telephone banking, and a variety of debit and credit cards etc. The banks can charge fees
for these extra services to generate income. The banks are trying to reduce their costs by
re engineering their operational systems to be more efficient, reduce bank staff and use
more technology. At the same time the trend of increasing branch numbers is now
reversing, as can be seen in table 5.7
Table 5.7 The number of branches between 1993-1998
Thai Banks
Head office
Full branches
Sub-branches
Total
% Change
Year
1993 1994 1995 1996 1997 1998
15
15
15
15
15
15
2,685 2,823 2,957 3,138 3,284
3,259
248 356 464 565 603
551
2,948 3,194 3,436 3,718 3,902
3,810
8.3
7.6
8.2
4.9
-4.1
Source: Bank of Thailand (October, 1998)

Most of the big banks are now successful. In 1998 the banks reduced the cost of employee
expenses as follows: Siam commercial bank 25.64% (the highest reduction), Thai military
bank 22.37%, Thai Farmer bank 14.05% and Bangkok bank 11.32% (Manager, 1999).
The trend of reducing bank staff, and reducing the operational costs will continue for the
competitive banking market in the future.
118
5.5.4 The four big Thai banks
This section will examine the products and services from the four big banks, namely Siam
Commercial Bank (Thai panit), Bangkok Bank, Krung Thai bank and Thai Farmer Bank,
to show the overall picture of the Thai banking industry, which is decided from the assets
and the number of branches shown in table 5.8 and 5.9.
Table 5.8 Banks assets
Bank
Bangkok Bank
Krung Thai Bank
Siam Commercial Bank
Thai Farmers Bank
Bank of Ayudhya
Thai Military Bank
Siam City Bank
Bangkok Bank
Metropolitan Bank
Bank of Asia
DBS Thai Danu Bank
Nakornthon Bank
Bank Thai Radanasin
Assets: Million Baht

1,244,491
1,063,658
701,133
741,902
489,013
348,671
271,860
166,044
149,162
132,682
71,339
241,739
48,286
Source: Bank of Thailand (March 1999)

Table 5.9 shows the total number of branches and sub branches in Bangkok. About 33% of
all branches are located in Bangkok, which is a very high proportion if compared with the
other 67% left distributed to the other 75 provinces outside Bangkok. This indicates that
Bangkok is the centre of finance and business.
Table 5.9 Number of commercial banks branches as of December 1998
Banks
Bangkok
Bank
Krung Thai
Bank
Siam
Branches
Branches
Branches
Bangkok
Outside
Bangkok
363
Total
118
Sub branch
Bangkok
481
Sub branch
Outside
Bangkok
52
Total
Grand total
61
524
122
447
569
30
45
75
644
113
270
383
33
73
106
489
119
Commercial
Bank
Bank of
Ayudhya
Thai Military
Bank
Siam City
Bank
Bangkok
Metropolitan
Bank
Bank of Asia
DBS Thai
Danu Bank
Nakornthon
Bank
Bankthai
Radanasin
Bank
Full Branches
Grand Total
106
227
333
28
57
85
418
82
243
325
29
36
361
43
127
170
21
20
41
211
56
100
156
12
21
177
40
36
49
47
89
83
21
7
6
5
27
12
116
95
37
28
65
68
41
60
101
11
15
116
23
20
49
13
62
21
957
2315
21
3,272
237
301
538
21
3,810
5.5.5 Siam Commercial Bank or Thai Panit
The Siam Commercial Bank is the first Thai owned bank, and was established in 1906.
HRH Prince Mahisorn whose name is known as The father of Thai banking. The Siam
Commercial Bank is regarded as the prototype of the modern Thai commercial banks. This
bank has continued its close relationship with the royal family since the banks founding.
There are still links, at the present time, with the Crown Property Bureau that still holds
the largest amount of the shares.
5.5.5.1
Products and services
120
Siam Commercial Bank has an electronic banking division that supports many
products/services, such as Tele-Cash/Pin pad, Tele-Banking and SCB Cash Management
service. The following information has been taken from the Siam Commercial Bank public
website (1999).
Tele-cash/pin-pad
This machine is located in the branches that have no ATM machines. This machine only
allows customers to withdraw cash.
Tele-banking
Customers can use telephone access to the banks computer system, requesting account
balances, real time stock prices, interest rates, foreign currency exchange rates, account
transfers, payment transfers and bank statements; requesting actions on cheques, payment
stoppage and account suspension; or requesting data on credit card balances due for
payment. This service operates from 06.00am to 11.00pm. Membership is required .
Cash management services
This service uses Internet web technology and membership is required. Customers need to
have a personal computer (PC), modem and a telephone line to link up with the banks
computer system. Customers can receive and transmit data on their deposits and other
business information through transactions on items, such as checking rates, foreign
5.5.6 currency exchange rates, and other business data. This service operates from 06.00am to
11.00pm.
T
h
ai Farmer Bank
The Thai Farmer Bank was the first bank to re-engineer the format of its branches to
appear more modern from the traditional bank, and also changed its front office operation
systems. This has led to major changes to the bank branch operations. For these reasons,
the image of the Thai Farmer Bank is one of being the leader of introducing new
technology services and a new modern style of Thai banking.
5.5.6.1
Products/Services
121
Like other banks, Thai Farmer Bank has set up Electronic banking which is responsible for
all the products/services. The following information has been taken from Thai Farmer
Bank public website (1999) as follows:
ATM
With an ATM card or any of the banks credit cards, you can withdraw money,
transfer funds, make a deposit, check your balance, pay utilities (including the
telephone bills), request a cheque book, or apply for insurance. There is 24-hour
operation at most ATM machines and they are compatible with any ATM machine
provided by the other Thai commercial banks. Daily cash limit withdrawal amounts
of 20,000 Baht per day.
Visa Electron
The Thai Farmers Bank is the first bank to issue Visa Electron in Thailand. Funds
are debited directly from cardholders' accounts when a purchase is made. This
product can be used to purchase goods and services from over 26,000 merchants
in Thailand and 8 million merchants throughout the world. Daily cash limit
withdrawal amounts of 100,000 Baht per day. The Electron card also allows
cardholders to access telephone banking services to request financial information,
carry out transactions relating to their deposit accounts or pay service bills free
of charge.
"Telephone banking
Customers can contact their banks Computer system by using a touch-tone phone.
However customers have to pay an annual fee of 200Baht to obtain these extra
services: Balance inquiry, fund transfer, cheque cancellation, statement request,
credit card service, usage balance inquiry, payment balance, due date inquiry,
transferring money from current account or saving account for credit card payment
and merchandise payments.
These services are available everyday from 06:00am to 22:00pm. However for
business organisations this bank provides Home banking. This provides a service to
customers through an electronic on-line system. Customers can use the home
banking service to transfer funds or to make payments by phone or a fax machine.
This service uses real time systems.
122
5.5.7 Bank Krung Thai
This bank has been established since 1966 through the merger of the Agricultural Bank
Limited and the Provincial Bank Limited with the Ministry of Finance as its major
shareholder. It has been renamed Krung Thai Bank Limited. This bank has taken over all
the assets and liabilities of the Sayam Bank Limited. Moreover, Bank Krung is the first
bank that had installed ATM in all 73 provinces nationwide by June 1988. The major
shareholder is still the Ministry of Finance with 30.8%; the financial Institutions
Development Fund 29.27% and various other legal entities 35.7%, individuals 3.26% and
the Crown Property Bureau at 0.97% hold the remainder. The Thai government has a
policy to transfer its government employees salaries via this bank so most Thai
government officers have a bank account and ATM card with this bank.
(http://www.ktb.co.th/eng/index_about.html).
123
5.5.7.1
Products/Services
The following information has been taken from KrungThai Bank public website(1999).
ATM
The ATM services are available everyday from 05:00am to 23:00pm. The banks ATM
cards currently in use are classified as follows:
Krung Thai ATM Card: A maximum of 20,000 Baht can be withdrawn per day. The
cardholders can also inquire about account balances and other account information.
Krung Thai Gold ATM Card: The cardholders can withdraw 50,000 Baht per day.
Accident insurance to the amount of 100,000 Baht is also provided for the cardholders.
ATM Smile Card: This type of card is issued in association with the Media Plus Group.
The cardholders are entitled to use various entertainment services and programs
organised by the Media Plus Group.
ATM Institution Card: This is a joint program between the bank and participating
educational institutions or organisations. The card can be used as the banks ATM card
as well as students identification card or employees identification card for the purpose
of registering academic courses and paying registration fees. It can also be used in
working hours to check the cardholders account and for obtaining other services
through the banks Tele-bank system.
Krung Thai Tele-Bank
This is an optional service to help the customers in using the banks various services
through the touch-tone account telephone at number 1551. The customers are able to
request their account information and the banks services information. Krung Thai TeleBank can also facilitate buying and selling of open-end funds, academic registration for
study at Sukhothai Thammathiraj University, and other services.
Mobile banking
This provides the customers with a deposit-withdrawal service by mobile ATMs and
mobile foreign currency exchange services at various places.
5.5.8 Bangkok Bank
As previously indicated, foreign banks started the Thai banking industry. However the
Second World War restricted the foreign banks operations in Thailand and they were
temporarily shutdown. Bangkok Bank is one of the earliest established commercial banks
124
in Thailand. The Bangkok Bank Co. Ltd. was established in 1944. The head office is
located in the China town area of Bangkok. This is the centre of business and the location
of the president of the bank. In 1954, the Bangkok Bank opened its first overseas branches
in Hong Kong followed by the Tokyo, and Singapore. Technologically, the Bangkok Bank
has been a pioneer in the use of modern technology in its operations as well as in the
introduction of electronic banking products to the domestic market.
Bangkok Bank has grown steadily and is today the largest Thai commercial bank, and
one of the largest banks in Southeast Asia. Total assets stand at approximately US$40.00
billion, and the present workforce numbers about 25,000 people.
5.5.8.1
Products/services
The following information has been taken from Bangkok Bank public website (1999).
ATM
Bangkok Banks ATM can be used at any banks ATM machine in Thailand. Also
included in this network are over 850 ATM machines which providing 24-hour
service. In addition to the deposit and withdrawal features, fund transfers can be
made to a third party through its ATMs. The transfer feature is available to the third
partys accounts, which are with Bangkok Bank.
Also included in its ATM service features is the ability to buy and sell Open-end
Fund units. This feature is available at all Bangkok Bank ATMs and requires prior
registration at the branch where the ATM card was issued. An additional benefit to
the banks ATM card is the ability to use its 24-hour telebank services, Bualuang
Phone. No application is required.
There are two kind of ATM service: Bualuang ATM and Bualuang Premier
Both of them can be used at any ATM chain of every Thai commercial bank
throughout the country. The difference is Bualuand ATM can withdraw up to
20,000 Baht and Premier can withdraw 40,000 Baht. Additionally, cash
withdrawal can be made abroad with any ATM machine within the PLUS system,
which is located in 81 countries around the world.
Telebanking
125
Bualuang Phone is a banking service available though touch-tone telephones,

catering for holders of Bangkok ATM and credit cards. This service is available
24 hours daily. telephone banking provides many services as follows:
Balance Inquiry Service
Balance inquiries on savings or current accounts within the ATM card accounts.
This service uses voice activated response technology.
Money Transfer Service
Money transfer service facilitates fund transfers from and to accounts, which are
linked by the same ATM card. This can be done since one ATM card can link up to
ten accounts under one name
5.5.9 Thai electronic banking market
The electronic banking systems of the Thai banks have introduced many products/services
as we have already discussed in previous sections. We conclude with describing the main
products/services in the following section.
5.5.9.1
Automatic Teller Machine (ATM)
The ATM is the main technology product service that every bank concentrates on in this
market. Banks receive a fixed income from the annually charged fee (table 5.10). The
other benefit is that the banks can reduce the number of people who use the services at the
banks branch and thus reduce staff and branch costs. ATM has been introduced since early
1980 and has been developed so that it can provide more services and functions. At the
present time most banks have an agreement with each other to pool the use of their ATM
machines, which allows customers to use Thai ATM cards with every bank. This gives
customers, who hold ATM cards, a better and more convenience service. ATM is
becoming more popular which can be seen from the increasing numbers of transactions
done in each year, shown in table 5.10.
Table 5.10 The ATM card holding and daily withdrawal amounts by banks
126
( Thai Baht)
Banks
BBL
KTB
TFB
SCB
BAY
TMB
SCIB
BMB
BOA
TDB
BT
NTB
RSB
Total
ATM Card holding

amount
amount
984
762
697
591
443
497
170
185
92
115
90
56
62
4,744
Limited
withdraw
locally
Abroad
Application
fee
Charge
amount
4,100,000
20,000
40,000
50
3,771,717
20,000
30
2,586,482
20,000 100,000
50
1,785,458
20,000
50,000
50
892,404
20,000
50
1,017,004
20,000
50
394,053
20,000
50
258,868
20,000
50
112,134
40,000
50
473,865
20,000
50
207,000
20,000
20,000
50
69,490
20,000
50,000
50
71,000
20,000
50
15,739,495
Source: Thai Farmer Bank (1998)
100
100
100
100
100
100
100
100
100
100
100
100
100
Withdrawn
in different
province
10
10
10
10
10
10
20
20
10
20
10
10
10
The numbers of bank customers who held ATM cards decreased because of the
economic crisis that occurred during 1997-1998. The number of customers who were
holding cards reduced from 17.8 million cards in 1997 to 15.7 million cards in 1998 (see
table 5.9) and the total reduced again in 1999. Banks reduced their annual fee to
encourage bank customers to keep their ATM cards. Additionally, table 5.10 shows the
amount of application charges and annual fees that customers have to pay for applying
and holding an ATM card. These fees are very similar for all Thai banks. The other costs
that customers have to pay are to withdraw their money from different provinces from
their bank account branch province. Moreover, customers have to pay more if they
withdraw money from a different bank machine for each transaction. Approximately 32.8
million are employed and are potential owners of ATM cards. More than half of these
people are from rural locations employed in agriculture that would not normally apply
for an ATM card. Therefore, nearly all of those who are eligible for an ATM card have
obtained one.
Table 5.11 Number of ATM cards and ATM machines in Thailand
127
Year end
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
Numbers of
ATM cards
ATM card
usage
Volume
Numbers of
ATMs at
branches
7,345,495
132,934
790
7,660,852
174,422
897
9,085,243
205,756
1,055
10,851,034
300,161
1,203
12,808,785
316,286
1,386
15,246,947
421,498
1,715
13,944,388
536,356
2,165
15,558,753
656,120
2,686
17,824,896
780,815
3,142
15,698,011
818,562
3,300
Source: Bank of Thailand (1999)
Numbers of
ATMs at
remote
areas
146
202
272
315
376
600
1,003
1,474
1,753
1,888
Total
936
1,099
1,327
1,518
1,762
2,315
3,168
4,160
4,895
5,188
Table 5.11 shows the location of ATM machines, which in the early stages were mostly
located at the bank branches. However, banks are now trying to distribute them outside
of branches and in remote areas. In Bangkok, ATMs can now be found almost
everywhere in shopping centers, convenience stores and educational institutions. Banks
are also trying to give cardholders a feeling of more convenience and security. The banks
themselves are trying not to establish any more new machines than necessary by pooling
systems with other banks. At the present time bank customers can use an ATM at any
machine from any bank. ATM usage volume has been increasing significantly more than
the increasing percentage of the numbers of cardholders. This means that existing Thai
bank customers are using ATMs to manage their financial transactions to a far greater
extent than during the past. However, when customers use their card with a different
banks machine, the customers bank has to pay a transaction charge to the bank that
owns the ATM machine. The banks absorb some of this cost but also charge part of the
cost to the customer to offset the operating costs of the system (table 5.10). For
example, the fee charged when using a different banks ATM machine to withdraw money
is 5 Baht, to transfer money is 4 Baht and to request a balance is 3 Baht (Thai Economic,
10 January 1999). However, at present (2003) the banks have removed the fee for the
first three times customers withdraw or check their balance but 3 Baht for subsequent
uses of the services.
128
Table 5.12 The value of money withdrawn by ATM. Average by month (million
Baht)
Year
Customer's bank
1994
1995
1996
1997
1998
Other bank customers
Foreign customers
18,327
6,666
21,856
15,828
26,069
20,777
40,222
26,440
42,008
26,425
Source: Bank of Thailand (1999)
43
47
92
200
178
Total
25,036
37,731
46,931
66,862
68,611
Table 5.10 shows that the amount of money withdrawn from ATMs increased even if table
5.11 shows the amount of cardholders decreased in 1998. This table supports the fact that
the numbers of people and the volume of ATM usage are increasing. Moreover, the value
of the money withdrawn by customers using other banks ATMs is stable whilst the value
of money withdrawn with their own bank is still increasing. This may be the result of the
extensive promotion that banks did during 1998 to encouraging customers to use the
ATMs of their own bank. Many banks are trying to promote their customers to use only
their machines, which are represented in table 5.13. They are encouraging their customers
to use cards with their own machines by using Slip ATM promotions to give customers
discounts at certain shops as shown in following table.
Table 5.13 Bank promotion programme

Banks
Company
Duration of campaign
Bangkok bank
Siam comercial
Bank
Bank of Ayudthaya
7-Eleven
Dunkin Donut
3 months
2 months
KFC
2 months
Bank of Asia
Lions Tops
3 months
Discount benefits
2-10 Baht
Discount +
one drink Pepsi
Discount 5 Baht
for fried chicken
15 Baht discount
with detergent
Source: Tan Ar Thit Vi Chrok, (1998)

The trend of increasing competition in the ATM market and other technology services will
continue in the future because banks will want to charge increased annual fees to
compensate for the lack of deposit interest income. For the reasons that we have already
explained, banks are going to reduce the number of bank staff. Banks will focus on
129
introducing new types of cards and improving the quality of new technology services,
which is a far cheaper solution than the cost of operating one new branch will be shown as
follows:
Table 5.14 The average cost of establishing one branch

Cost detail
Building and land
Decoration
Employee payroll
(based on 25 employees/branch)
Office equipment
Facilities cost
The cost of using each service at the
branch
Total
Source. PuchadKan (Manager), 1999.
Expense (Baht)
3,000,000
9,000,000
200,000
160,000
25,000
12
13,385,012
The total cost of operating one bank branch is approximately 13 million baht comparing to
ATM machine costs of 1,000,000 Baht/machine.
5.5.9.2
Sophisticated ATM machine
Banks are investing heavily in developing the ATM machine. However, a large proportion
of bank customers are still only aware of the old image that ATM can only be used to
withdrawn money. Therefore to combat this banks have changed the name of their
machines to Cash Express, Deposit cash machine etc. These machines are normally located
at branches and can only be used to deposit money. This is a different service from ATM
where the customer can put money into an envelope and put it into the machine. However,
the customer does not receive any confirmation receipt of the transaction. The
sophisticated ATM machine allows customers to put cash directly into the ATM machine.
The machine will accept cash (bank notes) and after completing the transaction, the
customer will receive a slip confirming the transaction and showing the amount that they
have deposited in the machine.
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5.5.9.3
Telephone banking
This service has been available since 1996. However, it has not been very popular because
of a lack of marketing and promotion by the banks. Recently, banks have now become
more focused on using technology services instead of extending new branches, as they did
in the past. The market is highly competitive at the present time with all the big banks
providing a telephone banking service and most have separate divisions taking care of all
their technology services such as ATM, telephone banking, home banking etc. Records of
the volumes of these transactions have not been published, however, it can be assumed
that there is increasing numbers of bank customer who are adopting these services. There
is a problem with telephone banking in that there is no access mechanism for obtaining
cash if compared with ATM machines which have this facility and also the customer who
wants to use this telephone banking service has to pay an annual fee and charges for usage.
However this service is better than ATM in terms of what the bank customer can do
conveniently from their home or office by using the telephone if compared with using
ATM, where the bank customer has to find a machine.
5.5.9.4
Debit card
Debit cards were introduced during the 1990s by Bangkok banks but were not well
accepted by customers because not many stores accepted the cards. The other reason is
that money will be taken directly from the customers account. Thai people prefer to use
credit cards than money because they have 45 days free credit to put the money into their
account. However, the banks are trying to introduce new debit cards and increase the
number of stores that accept these cards. This market is still in the introduction stage
(1999). There are still many bank customers who are not aware of this new type of
product. However, four years later (2003) many customers are aware of this products
availability because the banks have spent significant marketing and promotional effort, but
customers have still not widely adopted the service because they do not perceive any
benefits over credit cards.
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5.5.9.5
Internet banking
Internet Banking is the latest new electronic banking service, which both Thai Farmer
Bank and Siam Commercial Bank (Thai Panit) have just launched (August, 1999). The
other banks are doing pilot services to investigate customer adoption. Thai Farmer Bank
uses Internet banking to inform customers about its services so they can apply for credit
cards, whilst the Siam Commercial Bank is more advanced by providing bill payment
services via the Internet allowing customers to do many transactions like telephone
Banking.
5.6
Chapter summary
The Thai country has faced severe problems arising from the recent financial crisis. This
has affected the whole Thai economy, especially the banking industry. Banks have also
been affected by the high competition from domestic and outside pressures in terms of
increasing funds by foreign banks. This has given an opportunity to foreign banks to have
more influence in the Thai banking industry in many ways such as introducing new
technology systems, new technology services and a new professional management style,
which is different from the traditional Thai bank. However, Thai banks have realised that
they were in a bad situation due to the economic recession period and have confronted the
high competition. The big banks in Thailand have responded by re-engineering their
organisations to use more technology, reduced the numbers of staff and aimed to get
additional income from sources other than from customers deposits interest rates by
increased use of fees and charges for added value services. For these reasons the banks are
trying to introduce new technology services. We examined the Thai bank customer to see
if they are ready to adopt these new technology services and what are the factors that will
affect their decisions. The first step was to collect data by focus group interviews, which is
described in the next chapter.
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Chapter 1
6.
6.1
Focus Group Interviews

Introduction
This chapter will explain the findings from the focus group interviews, which are presented
as follows: section 6.2 explains the data analysis process; section 6.3 describes the
definition of electronic banking from the Thai bank customers perspective; section 6.4
explains the meaning of service quality as perceived by bank customers towards their
bank; section 6.5 describes the meaning of service quality as perceived by bank customers
towards electronic banking services; section 6.6 investigate the key important factors as
perceived by the adopter and non-adopter groups and section 6.7 discusses in detail the
perceived service quality attributes, namely reliability, trust/confidence, brand and bank
image. The final section examines the adopter characteristics, which includes demographic
characteristics, attitude and perceptual factors, consumption patterns and social interaction
and communication behaviour.
The findings suggest that there are two key important factors for classifying the groups of
adopters and non-adopters, namely the perceived attributes of electronic banking and
personal characteristics. The findings are consistent with earlier research. However,
several other factors have emerged including perceived service quality (reliability; trust and
confidence), which also appears to affect the adoption of electronic banking in Thailand.
6.2 Analysis and results

In this stage we interpreted the data and presented it as general results. The raw data was
transcribed from audio recording tapes into a computer using the NUDIST program. After
this the data was coded, deriving the concepts and ideas and noted them on paper as the
categories. Strauss and Corbin (1998) discussed the meaning of categories as The
categories were created from major themes, concepts or ideas that stand for phenomena
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and important analytic ideas, issues and matters that are important to those being
studied.
The next step was to do axial coding which is the act of relating categories to subcategories along the lines of their properties and dimensions. The themes, concepts and
ideas that were not linked with categories and sub categories were separated and grouped
as other categories. The categories were keyed into the Nudist program. The raw data
was installed as text files e.g. groups 1, 2 and 3. Each group of data was coded into
categories and indexed for easy access to the group of the data that it was related to. This
gave a quick retrieval mechanism. Finally, we integrated and refined the categories and
their properties to form a theoretical framework based on the literature review in chapter
three. Rogers framework only partially fitted the data. The new conceptualisations, which
have been presented from recent studies, have also found significant findings contributing
to the study.
The main findings are divided into five main areas:
1. The definition of electronic banking
2. The meaning of good service quality
3. The perceived service quality regarding electronic banking
4. The perceived attributes influencing the adoption of electronic banking
5. The adopter characteristics of electronic banking
6.3
The definition of electronic banking
The results show that the majority of the non-adopter group referred to electronic banking
as only including ATM and updating of their passbooks. Only a small number of nonadopters could explain the meaning of electronic banking and had also heard about any
electronic banking services. However, almost all of the adopter group participants could
give examples other than ATM and they understood the meaning of electronic banking.
One of the non-adopter participants gave their definition of the meaning of electronic
banking as follows:
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Bungon (NA) Firstly I think about ATM, then I can update my passbook at the machine
Compare this attitude with participants from the adopter group who understand that the
concept of electronic banking services involved not just ATM. One adopter participant
explained that:
Ratchdawan (A) It should mean that depositing money by computer or electronically is
faster so I dont need to use services at the counter and we can do other services without
going to the bank because the banks use electronic systems to deliver service
Sophisticated ATM appears to be the main technology service that most people are
familiar with. Group interviewees mentioned using electronic machines that are located in
their banks that they can use to deposit their money (Cash Express). Other group members
spoke about depositing cash and cheque machines, and updating their passbooks by
machine. Other benefits of electronic banking mentioned concerned paying utility bills
such as electricity and their water supply, by using sophisticated ATM. The adopter groups
also added telephone banking and home banking. One participant worked in a company as
an accountant whose job was involved with VDO banking (the linking of computer
systems from the business organisations to the bank).
Therefore, we summarised the definition of electronic banking as ATM, debit card (which
in Thailand group interviewees understand as an ATM card which can be used to pay for
goods and services), deposit cash or cheques by machines, telephone banking and Internet
banking (which the banks have just introduced to the Thai bank market). However, we did
not include video banking in our definition because this service is provided for the business
sector rather than the consumer market.
6.4
The meaning of good service quality of banks
There are many factors which are involved with a good service quality of banking that is
expected by Thai bank customers i.e. staff, tangibles, efficiency and reliability.
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Firstly, most participants explained their own meaning of a good service quality by being
concerned about the services that they received from bank staff in terms of a warm
welcome, polite manners, a friendly enthusiastic attitude, and responsiveness to provide
services for them. The staffs willingness to help customers and provide a prompt service
was shown from the study to be a major factor that influenced Thai bank customers
regarding their perceptions of a good service. For this reason the quality of service from
bank staff can be representative of the overall service quality of that bank. We found that
nearly half of both adopters and non-adopters referred to bank staff when discussing
service quality.
Nitaya (A) A good service quality should be about the bank staff because before a good
quality of service can start it must start with the bank staff. It is dependent on bank staff
who are willing to provide a good service for their customers.
The second major factor is tangibles. This is the layout (decoration in the bank etc.), bank
atmosphere, physical facilities, the number of branches and the variety of products/services
available. The Thai Farmer Bank was the first bank to re-engineer its systems and the
layout of its branches to make them appear more modern. The other banks have copied
this initiative and have also reorganised their branches. However, the modern bank look is
still widely seen as that of the Thai Farmer Bank. The layout of the bank is one of the
factors that customers used to evaluate the service quality. Bank customers prefer a layout
that makes the different services convenient to use and this might also include a signpost in
front of each counter that helps customers find out information about the types of services
offered. The building should also be bright and clean. The amount of seating can also make
customers feel the service is more convenient. The number of branches that are distributed
over the local area should make their access convenient to use. In addition, adequate car
parking space is considered important.
Bungon (NA) I like the Thai Farmer Bank because they have a good layout. When I
walk into the bank, they have clear signposts at each counter
The third important factor, the group participants referred to, was the efficiency of the
bank staff and its systems i.e. waiting times and queuing systems.
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Comparing the meaning of service quality by the non-adopter groups and adopter groups,
the results show that half of the non-adopter groups refer to service quality as being
dependent on staff, tangible factors such as the layout of the bank, the number of branches
and the provision of a good variety of services.
For the adopter group, the results found that half of the group of participants were
concerned about the responsiveness of staff and the efficiency of the services. Only a small
number of the adopter group referred to tangibles such as the layout and the queuing
system.
Reliability is a low concern for both groups of participants when they were asked about a
good service quality at their bank. This is because it is normally rare for bank customers to
find any mistakes after using the services at their branch because Thai bank customers
have a passbook, which contains all their transactions. Therefore customers feel confident
when using services at their branch because all transactions are recorded. However, this
result is the opposite of the responses given when asking about electronic banking because
there is no record of the transaction in a pass book, which we will discuss in the next
section.
6.5
The meaning of good service quality of electronic banking
Group interviewees perceived the financial technology services as helping to improve

banking services by making them faster, more convenient and reducing waiting times.
Some participants also referred to the back-office technologies such as the online systems
that enabled banks to be able to do transactions across all the branches in a very fast and
more efficient manner. One of the participants said:
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Ratchadawan(A) Banks should be able to provide the service as fast as customers

requirebanks should have a network that can provide services for their customers
everywhere, even in the remote areas
Ganok(A) Banks should have available and accessible electronic networks that can
provide service, for example, if I want to use services outside Bangkok
The reliability factor is important because the services that the banks provide to customers
involve money. Participants who expected a good quality of service from their banks had
raised the factor of reliability. As we have discussed previously, some bank customers feel
that if they use the services at their branch and something goes wrong, they should be able
to contact the banks staff immediately. However, when dealing with an ATM machine or
via telephone banking, these customers felt it would be more difficult to resolve any
problems that might occur. The reliability factor refers to the accuracy of the transactions
and the security of the systems. These include the reliable of the machines and services.
In the next section we are going to present the key factors that customers will use to
decide whether to adopt electronic banking services.
6.6
The key important factors for adopting electronic banking services
The main objective of the study was to examine the important perceived attributes of
innovations that affect the adoption of electronic banking. The perceived attributes were
composed of relative advantage, compatibility, complexity, trialability and observability
(Rogers, 1983,1995), costs (Gastingnon and Robertson, 1989; Lockett and Littler, 1997)
and perceived risk (Ostlund, 1974; Murdock and Franz, 1983; Rugimbana and Iversen,
1994; Lockett and Littler, 1997; Sathye, 1999), reliability (Dabholkar, 1996) and the
image of the bank (Evans et al, 1996; Gronroos, 1988). These are the important factors
regarding the adoption of new technology services. Moreover, we have also discovered
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some new factors that have emerged from the focus group interviews, namely trust and
confidence. We will present the results in the following section in more detail.
6.6.1 Relative advantage
This characteristic relates to the advantage that the customer will receive from the
provided service in terms of increased convenience and providing a better or faster service,
and additionally, saving time. The results show that the adopter groups perceived greater
benefits than the non-adopter groups. The typical characteristics of the adopter group
interviewees are that they were from the middle classes and live in the major cities.
Wasting time is a more serious concern for most adopters. For the adopter group we
found that the available time to do their transactions at the bank is limited (typically
9.30am - 15.00pm). Normally, they would have to use their lunchtime, which is the busiest
time because some of the bank staff go for lunch. The problem of crowds during lunch
time, not enough staff and services taking a long time meant that some customers could
not get back to work on time, and many missed lunch. This poor quality of service had
motivated the adopter group to discover new ways of using technology to reduce the time
taken using services at the bank counter by adopting electronic banking services.
Therefore, when the groups were asked questions about the factors that they thought were
important influences in whether they would adopt new electronic banking such as
telephone banking and Internet banking, we found that most of the adopters used
sophisticated ATM to withdraw and deposit money or cheques, whilst telephone banking
was used for checking their balance, paying facilities bills and transferring money. The
benefits of these kinds of services are different so bank customers used these services for
different purposes. The main benefits that the adopter group found was that they received
increased convenience, a faster service and 24 hour availability. When we asked the
questions about benefits to the adopter group it was quite clear from the answers that they
considered there were many benefits of using the new technology services.
One participant explained the reasons why they adopted new technology services:
Ying(A) I think it is fast and convenience. I dont need to go to my bank.
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Thongsuk(A) for me I dont want to use the service at the bank because it takes too
much time. I prefer to use electronic bankingI use telephone banking to pay for my
utility bills. Its very convenient. I dont want to waste my time to go to the bank
However, when we asked the groups to compare the benefits of using services at their
branch against electronic banking services, the majority of the non-adopter groups
indicated that they would still prefer to use the services at their branch.
Putachard(NA) I think I go to deposit my money with branch. It is better than using
sophisticated ATM. For ATM machines, it is very quick but they might make some
mistakes
We also found that the non-adopter groups were more concerned with what they would
gain from the new services, whereas the group of adopters already knew the benefits they
were getting from using the technology services.
Supa (A) I use telephone banking because it is fast and convenient. Instead of going to
the bank, we can call. I think people who work in offices want to use this kind of service
The non-adopter group failed to recognise the benefits of electronic banking. As one of the
non-adopter participants said:
Panat (NA) I want to know more about the benefits that are going to be added for the
customer before Im going to use any technology service
Pronjit(NA) I think that Im going to wait and see or study first what is the benefit
However, the other benefits that have emerged from our study are learning new
technologies and updating personal knowledge. These are the benefits that the group
interviewees found to be important factors for adopting new technology services. These
factors emerged from the adopter groups, whilst the non-adopter groups failed to
recognise these benefits.
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Wan (A) I will try to follow new technologies

Ladda (A) I use new technology services for my convenience and increasing my
knowledge
We have also found that about one third of both the adopter and non-adopter groups
participants appeared to receive a very unsatisfactory level of service quality when they
used the services at their bank branch. However, we found that problems were raised more
often among the group of adopters than non-adopters. Moreover, the adopter groups
explained that this lack of service quality at their bank branches was why they preferred to
use the banks technology services rather than use the services at their bank branch i.e. the
customer use electronic banking because they anticipate a better quality of service. The
problems arising from using the services at the bank branches were raised during the group
interviews, which will be summarised as follows:
The bank staff did not make any effort to give a warm welcome to their customers.
The long queuing system is very frustrating.
The bank staff are often inefficient and the limited bank opening hours are not
convenient.
One participant said:

Thongsuk(A) sometimes, when I walk to the counter to ask a question, bank staff
ignore me and it seems like they dont want to waste their time to talk with me
Nipa (A) Each time I go to the bank, I have to wait for a long time. Yes, the bank knows
that this bank branch always has long queues and a lot of customers but they dont do
anything to improve their service.
The results show that relative advantage is one of the important factors influencing the
adopter groups decision to adopt new electronic banking. We found that almost all of the
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adopter group participants perceived relative advantage, while only one quarter of the
non-adopter group have perceived any relative advantage of using electronic banking.
In summarising the meaning of relative advantage, a focus group referred to the benefits
that they would get from the new technology services, such as being better, faster, and
more convenient. This is supported by the previous studies (e.g. Marr and Predergast,
1993; Rugimbana and Iversen, 1994). However, we have also found that saving time
travelling to the bank, learning new technologies and updating their personal knowledge
also emerged as important factors from the study. All these sub factors refer to relative
advantage. The group interviews showed this to be an important factor for adopting new
technology services.
6.6.2 Complexity
This refers to how difficult an innovation, product or service is to understand and use by a
group of potential customers. The majority of the group interviewees have not
experienced problems with the complexity of the ATM systems and debit cards (most Thai
bank customers understand debit cards as a single type of ATM card). However, the nonadopter group (group 2) that was aged between 50 and 60 explained that using the ATM
meant they needed to remember a password. One of the participants said:
Pongpet(NA) I think that if I walk to the bank, it is easier than trying to remember the
password. Maybe I will make a mistake
The reason that group interviewees felt it was not too complicated to use ATM machines
was because ATM has been available in Thailand for many years. Therefore, most bank
customers are familiar with the ATMs operation.
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For new services provided by sophisticated ATM machines such as depositing money,
paying facilities bills and transferring money, the majority of the non-adopter groups had
found significant usability problems because when ATM initially started they could only be
used to withdraw money. These new services are more complicated to operate. For these
reasons some groups of interviewees, particularly the non-adopters, did not feel
comfortable using any of the new services with the ATM machines.
Pimon(NA) When I tried to use it to pay my telephone bill, I followed their on-screen
instructions but it did not work. So Im not sure that the transaction was completed or
not. So I returned to paying at the counter again
For telephone banking, the adopter groups found that they had very few problems using
the telephone system because they were already familiar with using the telephone in daily
life.
Yui1(A) to use telephone banking to register. I think it is very convenient. By myself, I
havent found any problems. I think that to deal with a machine is better than to go to
register at the university
For new electronic banking services such as Internet banking, some participants were
already familiar with its use, such as the group of students (group 7), and the group of
people who work with computers. However, for the non-adopter groups, particularly in
groups 1 and 2 whose members were in the older age group, they perceived complexity
attributes in terms of the difficulty of use and understanding far more than the younger
non-adopter groups (groups 3 and 4). The findings show that it is unlikely that Internet
banking will be adopted widely by these two groups of older non-adopters. One of these
non-adopters said that:
Bungon (NA) I will not use it absolutely. It is difficult to adopt this service because it is
too complicated and I dont like to use computers
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The findings show that nearly half of the non-adopter group, with most of them being in
older age groups, perceived high levels of complexity, whilst the adopter groups perceived
low levels of complexity.
In summary, the findings found that complexity was one of the important perceived
attributes of electronic banking that affected the rate of adoption by group interviewees.
However, the results show that the non-adopter groups perceived higher levels of
complexity attributes of new electronic banking as being far more important in influencing
their adoption than the adopter group.
6.6.3 Compatibility
This refers to the degree to which an innovation is perceived by a person as being

consistent with their existing values, past experiences, and the needs of potential adopters
(Chapter Three). Rogers (1995) explained that an innovation could be compatible or
incompatible with previously introduced ideas; with socio-cultural values and beliefs; with
the clients needs for the innovation.
We found that one in three of the non-adopter groups (mostly from groups one and two
whose ages are in the 40s to 60s) did not use ATM. The reasons that these non-adopter
groups gave as to why they did not want to use any technology services was because they
preferred to use services at their branch which they were familiar with and was their
traditional way of dealing with bank staff and using their passbook to record the
transactions at the bank branch.
One participant said:
Sura (NA) Yes I want to see the transaction done with my own eyes and touch (the
transaction slip) by my hands
We have found that peoples compatibility with telephone banking spread very quickly
among the groups of the banks customers very soon after the banks introduced these
services, if compared with other services such as ATM or debit cards. The reason that
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telephone banking is doing so well is because bank customers are familiar with using
telephone services in general. The other reason is that telephones are easy to access from
anywhere in the house or office.
However, debit cards, which have been introduced to Thailand for 4 to 5 years, are not
doing as well because they are incompatible with previous services such as credit cards
that allow customers to pay their bills after 45 days. Some participants of the study have
not seen any benefits from using debit cards when they compared them with their credit
card. One of the participants said:
Sura (NA) I think that credit cards are better because the banks give us 45 days to pay
back the money If you use a debit card, the bank will take the money directly from my
account immediately and I might have needed to use that money.
Internet banking was found to be a very new technology for Thai bank customers. This
was a problem for the group of people who are elderly and not used to using computers.
Computers have only been diffused in Thailand in the last ten years therefore the older age
group (40+) have found computers are incompatible with them. This was highlighted when
we asked a question about the interviewees experience of using computers. Only a few
from groups 1 and 2 indicated any experience with computers.
The other point regarding compatibility that we have already discussed in the literature
review (Chapter Three) is that new technology should be compatible with the social values
and beliefs of the society in which it is used. Traditionally, in Thailand, the transactions
between the bank and the customer are recorded in a passbook that the customer keeps
and uses to do their transactions every time they go to use any services at their bank.
However, when electronic banking, such as ATM, has been introduced to the Thai banking
market, people have been concerned about losing their traditional way of holding their
usage records in their passbook which they believed gave them evidence of any
transactions as a record. Therefore when they used ATM, they still wanted to keep a
record. People can use some types of ATM to withdraw and deposit money, but using
ATM in Thailand is only an acceptable solution for withdrawing money instead of doing
both transactions (withdrawing and deposits). This is because Thai bank customers still
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value the evidence of doing transactions that will give a record, which they get with a
record (slip) when they withdraw money. But when they use ATM to deposit money they
have to put the money in an envelope and push it back into the machine and they will not
receive any record slip. For these reasons depositing money with ATM machines is still not
widely adopted. The other contributing factor is the law does not protect the customer if
they have any problems with ATM transactions.
Pairat (NA) I never use any other technology services. Even if I use only ATM, I still
have problems and the slip cannot be used as evidence in terms of law
This means that when a customer has a problem, the customer has to get proof of a fault.
Some customers have lost their money by requesting a withdrawal from a machine and
then did not receive their money and the bank has refused to refund them. According to
the social culture of Thai bank customers, they expect to have physical evidence if
something goes wrong, so they can claim their lost money. Depositing money with ATM
machines gives no record slip or any evidence that is legal. Therefore, participants are not
confident when using the service, even in the group of participants who preferred to adopt
new technology services. The banks have recently addressed this problem by introducing
sophisticated ATM machines for depositing money. This machine gives a legally acceptable
receipt slip, which has been welcomed by bank customers. However, the banks still have
problems from people who do not trust or have any confidence with depositing their
money with the machines. So when the banks launched a new ATM service, they changed
the name from ATM to Cash Express. The Cash Express machines have complied with
the customers needs because they dont have to spend unnecessary time waiting in the
queue to use the services at the counter.
Telephone banking has been well accepted by the group of adopters because it is
convenient. They can use the telephone at the office or home to do their transactions. The
other benefit of this technology service is that it gives confidence to the customer because
if they want to confirm their transaction they can ask for a fax confirmation from the bank
or call again to check the results.
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For future products like Internet banking, many people will still have some compatibility
problems with their previous experiences of using the Internet and computers. Also the
problems from lack of transaction evidence affected some of the groups decisions whether
to adopt Internet banking.
Pramote(NA) Im not going to use it. I dont trust it. We have no law to cover the
criminal using the Internet
The final compatibility issue is regarding the needs of the customer. The findings support
the previous studies of customers needs for adoption that in this study we refer to as an
adopter who wants to use technology services so they can save their time and do not need
to go to use the services at their bank branch. One participant said:
Supa (A) If I want to use new services, they should give me more convenience and give
me evidence so I can prove any transaction that I do with the bank.
The non-adopter groups (group 3 and group 4), whose age is around the 20s to 30s, gave
different reasons than the older peoples group why they did not use any other
technologies except ATM. This was because they did not normally do many transactions
with the bank as they did not earn a high enough salary. Therefore, they just used ATM to
withdraw their money.
One of the participants said:
Jedsada (NA) I have no need to use other kind of technology service, I have only my
small salary
The results show that more than half of the adopter groups are familiar with technology
services such as telephone banking, cash-deposit and cheque-deposit machines, using
computers and most of them have a need for adoption of technology services. However,
half of the non-adopter group interviewees in the study were found to have no experience
of using computers and other technology services except ATM or updating passbook
machines and they claimed that they had no need to use any technology services.
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The findings also showed that compatibility is the second of the three discovered
important perceived attributes of electronic banking for adopters, In addition,
compatibility is the most important factor for the non-adopter group affecting their
In summary, the findings support our initial framework that the compatibility of electronic
banking is one of the important perceived attributes that affect the rate of adoption. The
results show that the adopter group is more compatible with electronic banking than the
group of non-adopters.
The compatibility of new electronic banking services is referred to as being compatible
with social values (a need for evidence from transactions), previous experience of using
technology (telephone banking) and customers needs for adoption (necessity).
6.6.4 Observability and communicability
Communicability (Rogers, 1983) is described as the ease with which a product can be
communicated to potential customers. The more highly visible the product, the more easily
it is adopted. One of the problems regarding the adoption of new technology in Thailand is
that most of the non-adopter participants said that they have not been given sufficient
information from the bank on how to use the services or were unaware of the new
technology services available. One of the participants illustrated that:
Somboon (NA) The problem is that the bank doesnt communicate. Banks never tell us
how to use the technology services
Consumers are not using ATM to deposit money in Thailand because we found that they
are worried about the reliability and risk factors perceived from using the machines and
also that they do not have enough information to confidently use the technology services.
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In answer to the question of why some people did not use electronic banking services, one
participant replied that:
Thiti(NA) I haven't used it because I have no confidence in this service and secondly I
have no information about these new technology services.
This leads to a problem with new technology services such as the ATM machines, that can
withdraw and deposit money, not being diffused. This situation is so serious that most
banks have kept out of the market and have introduced a new Cash Express machine that
is actually an ATM machine just for depositing money.
Another example is the use of debit cards that have been introduced to the Thai market for
many years but are still not diffused because of compatibility problems that we have
discussed in the previous sections. However, another problem with debit cards is that there
are limited places where they can be used. Most customers who hold debit cards do not
realise the differences between normal ATM cards and ATM/debit cards. The lack of
marketing promotions is also causing a general lack of awareness of the services offered.
However, during the time the focus group interviews were taking place, some banks had
re-launched a new concept of debit card that should give more information about the
benefits of using their cards.
Cash Express, which we named as a sophisticated ATM machine, has replaced the way
cash is traditionally deposited by putting money in an envelope, by inserting each bank
note into the machine and giving the customer a receipt slip and balance to prove the
transaction has occurred. The success of cash or cheque deposit and updating passbook
machines is because all the machines are located in the branch so when customers go to
use services at the bank they can observe how easy it is to use this kind of service from
watching other people. For example some customers who do not know how to use the
services to deposit money by machine can try them with the help of bank staff. After this
they may became an adopter. One participant explained that:
Ladda (A) Bank staff give me good advice so that I don't need to waste my time if I
want to deposit not more than 5,000 Baht. I can now do this by myself.
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New technology services, such as telephone banking, need greater promotion from the
banks because customers have no opportunity to observe other customers using these
services in public areas. Some of the adopter participants in the focus groups have not
tried new technology services such as telephone banking. They said that after they had
heard about the services, they might try them.
One participant explained that:
Armonrat(A) It sounds very interesting about telephone banking. I think it can save
our time and be more convenient. I might use it
Pairat(NA) They never give me any information about how to use this kind of service so
we dont know how to use it
The Internet has diffused among students in universities and employees who use
computers in offices. Therefore, most banks used students as the target group of
innovators when they launched the Internet banking service to the banking market. These
kinds of services can be observed by other people who share the room or office. However,
many people do not feel secure doing financial transactions observed by other people.
We found that both groups are aware of this observable factor influencing their adoption
of new electronic banking services. However, the results show that nearly half of the nonadopter groups and only a few from the adopter groups claimed that they did not know
the services were available and that they do not know how to use the services. However,
most of the adopter groups were already using the services and getting additional
information on how to use the new services that will be available in the future.
Gotch(A) when first I started to use it, I always made a mistake by putting the wrong
password in when I try to use telephone banking, because they are new for us. I dont feel
familiar with it. However, after I use it for a while, Im getting used to itI feel that all
these kinds of services have a benefit.
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In summary, observability and communicability attributes have been found influencing the
adoption of new electronic banking services. The study found that there are three main
factors that refer to observability (or communicability) i.e. the promotion of the services
that are available, the information (instructions) on how to use the services and the chance
to observe the services being used by other users.
6.6.5 Trialability
Rogers (1995) stated that trialability is defined as the degree to which an innovation may
be experimented with on a limited basis.
If bank customers have a chance to try the
service this will affect the adoption process.

For some technology services such as ATM, the trialability of services can support the
adoption of technology. For example the diffusion of ATM in Thailand has been successful
because banks have allowed customers to try out the new technology services before
charging a fee for their use.
Tawee (A) The first time is free of charge for ATM use so I started to use it but after
that they charged me an annual fee.
But for other services trials have not occurred (at the time of conducting the research,
some banks are giving free periods to try out some of their services) because customers
cannot try the service without paying the fee, such as for telephone banking, debit cards
etc. Bank customers have to pay a charge to get the special user number and password to
call the bank. Cost is not the only factor that affects the ability to try out new services. If
the customer is not familiar with the service or it is judged to be too high a risk for a trial,
the customers will not participate in the service.
In summary, we found that trialability factors affected the rate of adoption. In the previous
sections the results show that some of the adopter group interviewees expressed their
views that trialability affected their adoption of electronic banking. However, the non-
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adopter groups failed to recognise this attribute. The trialability of electronic banking in
Thailand is limited by costs (fee charges), risk and compatibility. Therefore, the nonadopter groups, who are more concerned about cost, have a high perceived risk and
incompatibility with new technology services and were not influenced by trialability factors
to the same extent as the adopter groups were.
6.6.6 Perceived risk
Most of the participants had some bad experiences from using ATM machines or had heard
from other people about problems. Some participants believed that they were taking
significant risks by using new technology services. From the initial framework in Chapter
Three we referred to five risks observed by Ho and Ng (1994) i.e. from financial,
performance, physical, psychological/social risk and time-loss. However, the findings of
our focus group interviews found that the main risks perceived by Thai bank customers
were regarding financial, performance (errors from transactions), physical and time-loss.
We have not found any evidence of psychological or social risk from electronic banking.
Performance risk refers to errors from the transaction. Group interviewees always
appeared to have had some problems with the machines being out of order or keeping
their cards without any explanation. Bank customers have a high perceived risk of errors
generated by the bank machines. Moreover, they still feel there is a risk of card damage.
ATM cards in Thailand appear to have problems from magnetic damage to the cards strip.
Customers cannot keep cards with other magnetic cards, or leave them in a car that is too
hot. If customers have problems with their cards and they want to change to a new one,
they have to pay for a new card. Therefore, participants perceived that they have a large
risk when they used ATM.
We also found that many interviewees perceived a time-loss risk. This was because they
perceived a performance risk from using ATM machines and also that they may have to
waste their time contacting the bank to try to resolve any problems. Customers said that
they have had a lot of problems getting their ATM cards back from the banks. However,
these problems are dependent on the internal processes of the individual banks. Some
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banks had to get into contact with the branch that the customer had their account with.
Sometimes they had to contact the bank where they had used the ATM machine when their
card was kept by a different banks machine. This process normally took between two
weeks and one month to resolve and customers could only contact the bank during office
hours. Most of the people who use ATM are in the middle classes so they work during
normal office hours. This caused a lot of difficulties to customers who have experienced
problems with ATM cards.
In the case of financial risks, some participants had experiences where they had lost money
through bank transactions. Although, most of the banks eventually returned the money
caused by the errors of their machines, there were some cases where the banks refused to
accept any responsibility and the customers lost their money.
Ganok(A) I have had problems with the Srinakorn Bank, when I wanted to withdraw
money 2,000 Baht. After I waited the machine returned my card but it didn't give me my
money When I checked with the bank manager, he said that the money had been
withdrawn. I have a friend who works in the banking industry who said the bank should
return my money. But the bank did not return my money and said it was not their
responsibility.
Thai bank customers have experienced this problem since they started to use ATM. The
banks appeared to recognise that there is a problem but have not produced a satisfactory
solution. The customer is still liable for any errors made by the ATM machines.
The risks from physical attacks were also raised during the group interviews. This is
different from the major causes of risk that research has shown in the USA and the UK.
The risk occurs when customers are doing transactions with ATM. One of the participants
told of her experiences:
Pimon (NA) I have had a frightening experience using ATM with my friend. When the
money came out someone behind us took the money and ran away.
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However, the banks have tried to locate their machines in places that are more secure,
such as in front of department stores, in convenience stores, and at offices or universities.
Regarding the physical risk, we found from the study a new risk, which is the criminal risk.
The criminal risk includes physical risk, security and other risks. For example there was
information from the Thai newspaper that gangsters were interfering with the machines so
that the ATM did not return the card to the owner. The owner thought that the machine
had kept the card (which can frequently happen). However after the owner of the card had
gone the gangsters took the card out of the ATM machine and fraudulently used it. In the
case of telephone banking, some participants (non-adopter) perceived the same risk
(criminal risk) that gangsters may find out how to interfere with the service.
Regarding telephone banking, we found only a few perceived risks from performance such
as the system being down in the same way as ATM during the end and beginning of the
month. The perceived risk is one of the most important problems. We found that nonadopters have a higher perceived risk of using ATM than the adopter groups. The majority
of the risks are involved with performance and physical risk. The results showed that one
in three of the total focus group interviewees had problems, or had heard from friends and
family of problems when using ATM. This affected their confidence about the other
electronic banking services such as telephone banking and Internet banking. The results
indicated that half of the group of interviewees perceived some risk when using electronic
banking, particularly with ATM. Around two thirds of these reports came from the nonadopter group. The results also showed that the majority of non-adopters who perceived a
high risk were aged between 40 and 60 years.
We also found that the financial risks and performance risks are increased when involved
with large cash transactions. For example, in the group of interviewees who used ATM for
withdrawing or depositing money, they would only use the service for withdrawing small
amounts of money. However, when they needed to do large cash transactions, they
preferred to use the services at the branch. This result is opposite to the findings from Ho
and Ng (1994), but may be due to the different characteristics of products between
EFTPoS, credit cards and normal ATM.
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In summary, we found that the interviewees perceived risk as one of the important factors
in adopting new technology services. Particularly in the non-adopter groups, the risk was
considered as the most important factor the participants were concerned about. Therefore
this leads us to conclude that the non-adopter groups perceived a higher risk than the
adopter groups. The non-adopter groups who perceived a higher risk were from the older
age groups. The kinds of risks, that the study found in Thailand, which may be different
from previous research, are the criminal risks. These were from physical risk, security and
criminal acts.
6.6.7 Cost
Cost has become one of the important factors to the Thai bank customer in making
decisions whether to adopt new technology because all the services that the banks provide
customers have extra usage fees, such as for ATM. In addition, Thai bank customers have
to pay an annual fee to use an ATM card and telephone banking. In the initial framework
(Chapter Three) cost is referred to as a usage cost, annual fee cost and time cost. The
study has shown that Thai bank customers are concerned about the annual fees and usage
charges from using electronic banking services such as ATM cards, debit cards and
telephone banking. For example, having ATM and debit cards means that the bank will
also reserve some money in the customers account as a safety buffer for using the card.
For ATM, customers have to pay an extra charge if they use a different banks machines or
use services in different provinces from where they opened their account. For example
people who have an account in Bangkok have to pay an additional fee when they
withdraw money outside Bangkok. The other cost that they have to pay is when they lose
their card or if the machine has kept their card for any reason. Bank customers have to pay
a fee to get a replacement card. Therefore, when we discussed the factors that the group
considered important when using new technology services, they highlighted the fees that
the banks charged for their services.
One of the participants said:
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Usanee (NA) Customers will think about the cost first when using new electronic
banking if they have to pay a fee. They will decide whether the service gives value for
money and any benefit.
Thiti(NA) I think if affects me (to use the electronic banking service). Because we have
already paid an annual fee for using ATM, so we should not have to pay more. Banks
have a lot of income from interest. They shouldnt charge us more.
Regarding the time costs, we found some evidence that customers compare costs and
benefits from saving time when they want to adopt new electronic banking. One of the
participants stated:
Nipa(A) If they can provide a better service, I dont mind to pay more. Because if we
go to the bank, it takes a long time to do the transaction
Geritisuk (A) If we use a different banks ATM machine we have to pay a small fee
which is not too much money. If we can use other different bank machines and they give
us more convenience I think that Im happy to pay for it.
Both the adopter and non-adopter groups considered that cost affected their decision to
adopt new technology. However, one in four of the members of the non-adopter groups
indicated that they were concerned about cost when they used new technology services,
whilst only one in five of the adopter groups were concerned about this factor.
In summary, we found from the study that costs are one of the most important factors
considered by customers when deciding whether to adopt new technology services. The
results show that non-adopter groups perceived high costs while adopter groups perceived
relatively lower costs. However, some participants compared the benefits that they would
get with the costs that they had to pay. The costs mentioned from the group interviews
referred to annual fees and usage costs.
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6.6.8 Control
Electronic banking can allow customers to keep control of their financial business. This
factor was not mentioned directly from focus group interviews. However, group
participants, mostly from the adopter groups, have given reasons of why they are using
electronic banking as being because they can easily check their account balance, which
they would normally do via ATMs or telephone banking services.
Ying(A) .I use telephone banking for checking my account balance
Geritisuk(A) Im satisfied with telephone banking service to check balance and
transfer money to pay bill
In the next section we will represent three factors as perceived service quality attributes
which are referred to as: reliability, brand and the image of the bank; and trust and
confidence.
6.6.9 Perceived service quality affecting the rate of adoption
In the initial framework in Chapter Three, we chose reliability and brand and Bank image
as important factors that can represent the service quality of electronic banking. However,
we have found that other factors of service quality have emerged from the study, namely trust and confidence. For these reasons we will represent three factors (reliability, brand
and bank image, trust and confidence) as perceived service quality.
6.6.9.1
Reliability
Reliability refers to the accuracy and dependability of the transactions that banks do for
their customers. The importance of this factor of reliability has been raised when
participants were asked about the factors that affect the rate of adoption. This may be
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because it is a characteristic of all financial services that they are associated with money.
From the previous sections, we also found that Thai bank customers perceived a very high
risk when using electronic banking services in Thailand. The results show that the adopters
perceived electronic banking as more reliable than the non-adopters. The results show that
more than half of the non-adopter groups were concerned about reliability and accuracy of
new electronic banking.
Nitatya(NA) My feelings about comparing bank staff and ATM. I think that there is
greater accuracy and less risk when I am dealing with the branch rather than using an
ATM .
Pramote(NA) I think that the machines are convenient and fast but there is some doubt
about reliability and accuracy.
The adopter group had an opposite opinion:
Geritisuk (A) I think the machines have no problem. I think the problem is from the
people who use it.
Boonme(A) The electronic machine is more accurate than doing transactions at the
branch. It is more reliable, because we can see the details of the transaction. It can
show me the results immediately...
Reliability, which we refer to as the service quality of new electronic banking, is one of the
important perceived attributes of electronic banking which was discovered from the
groups considerations of using technology services.
The focus group participants were concerned about service quality. This may be explained
by the problems that they had experienced when using electronic banking services such as
ATM. These problems caused a perception of lost time and money. The group participants,
particularly in the non-adopter group, perceived that the banks did not accept sufficient
responsibility for these errors and failures in transactions and the ATMs operation.
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In summary, the study findings show that reliability is one of the significant sub factors of
perceived service quality and is an important perceived attribute in the decision of
adoption of electronic banking in Thailand. Reliability refers to a dependable and accurate
service. If the banks can improve the reliability and accuracy of technology services and
provide enough information for customers, they will increase the rate of adoption. We also
found new factors emerging i.e. the responsibilities of the bank.
6.6.9.2
Trust and confidence
This factor is part of the perceived service quality that relates to reliability of services,
perceived risk and compatibility (with previous experiences) that customers have received
from technology services such as ATM. There are problems with bank customers lack of
trust and confidence to use ATM services. The previous studies (Hewer and Howcroft,
1999) stated that the trust of channels affected the usage of technology services. However,
in the Thai banking industry, bank customers perceived the risk of using the service
whether it occurred by direct or indirect experiences, as we have already explained in the
previous sections. These perceived risks also affected the adoption of other electronic
banking services in the non-adopter group. Normally, if there is a problem with machine
errors or card damage, customers have to make a major effort to contact their own branch
or pay money to get a new card. This destroys the trust and confidence of customers.
We found that one in four of the total group of interviewees expressed a strong opinion
that the service provided by their bank could not be trusted and did not give customer
confidence. Moreover, we found that two out of three of those interviewees, who
expressed an opinion, were from the group of non-adopters. The results show that the
non-adopter group is lacking trust and confidence in using new electronic banking
services, whilst the adopter groups had only a few people who were concerned with this
factor. If non-adopters are doubtful that the service is going to be reliable, they will not
adopt the electronic service.
Three participants illustrate why they did not trust the ATM machine:
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Watana (NA) Sometimes when I went to use the ATM it doesnt work When I went to
contact the branch, I found that the card had a problem with damage to the magnetic
strip. I have just got a new card back and I have had the same problem, so why does this
problem happen? If I have to accept another new card again I will feel that the card is
not efficient enough.
Jedsada(NA) I normally use ATM only to withdrawn money. I never deposit my money.
My reason is I lack confidence to use this service. Im not sure that when I put my money
into the machine whether or not my money will go to my account
Pimon(NA) Im confident to deal with humans more than deal with the machine.
While adopter groups, who already used the service, seem to be satisfied with the service:
Geritisuk(A) I am satisfied with their telephone banking service to check my balance
and transfer money..they(voice response system)will confirm the amount of money that
I want to transfer again before processing the transaction. So Im quite sure about their
service
Thai bank customers are concerned about trust and confidence when using new
technology services, particularly the group of customers who have had some bad
experiences with old technology services such as ATM. Banks have not been able to make
customers feel more confident, therefore the non-adopter groups raised the issue of
comparing the service quality of using services at their branch and electronic banking.
Kamon(NA) If the bank can provide new technology services as well as the branches do
and can make me confident to use that service, I would use it.
The trust and confidence issue was raised when respondents referred to important factors.
Customers know that most Thai technology is imported from abroad and they are still
worried whether it works properly in the Thai banking systems. They are not confident
that the banks have provided enough human resources to maintain their systems. One
cause may be the shortage of trained technicians that is always a problem in developing
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countries, particularly in Thailand. There have been serious problems, not only in financial
services, because new technologies have been brought in without properly training the
staff who are going to use and support the technology. The problem of a lack of trust and
confidence may arise from the customers side because there is not enough knowledge or
understanding about how the systems work.
Interviewees answered the questions about the important factors for adopting new
electronic banking services. Some of the group participants, particularly from the nonadopter groups, chose the confidence factor first:
Jedsada (NA) I need confidence like Pramote. If the bank can make me more confident,
I will use their services.
We also found problems about trust from using telephone banking. One of the non-adopter
participants explained the reasons that they do not use the telephone banking service is
because of a lack of trust:
Pronjit (NA) Im not sure about the integrity of the Thai bank staff. I dont think that the
new system can be trusted because I think Thai people cannot be trusted enough in
running telephone banking. If the transaction is in error who is going to take
responsibility? They said that they are going to record the conversation. How do we know
that they will do it? How can we trust them? I dont trust them.
Sudarat(NA) Bank customers have more confidence to deal with humans(front-line
staff) than machines
The problems found with Internet banking are that the group participants did not trust or
have confidence enough to use the Internet system in Thailand, which is generally
inefficient. This will affect the trust and confidence for using Internet banking services.
In summary, trust and confidence is considered as one of the important factors of
perceived service quality that the study group interviewees considered affected their
decisions regarding adoption. This factor emerged from the study of the focus group
interviews in Thailand because Thai bank customers are concerned about the service
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quality of electronic banking in Thailand, which supports the proposed framework in

Chapter Three. However, we believe that this factor has emerged because the
characteristics of product/services in electronic banking have a very high perceived risk.
6.6.9.3
Brand and image of the bank
The concept of brand and bank image emerged from Gronroos (1988) and Evans et al
(1996). They concluded that there is a link between brand and bank image and trust.
Therefore, it would be beneficial to investigate this factor and how it affects the adoption
of electronic banking. The effects of financial crisis have made many customers lose their
trust and confidence in the Thai banking services. Prospective bank customers are
concerned about the banks reputation and its stability as well. These two factors involve
some of the issues associated with building a banks good image. These factors relate to
the other factors that we have already discussed i.e. reliability, trust and confidence. These
three factors are very closely linked to the image of the bank, which will also be
considered as a perceived attribute of electronic banking influencing the adoption rate.
This is because if the bank has a very good image of being a leader in technology services,
bank customers will have more trust and confidence to adopt its new technology services.
However, this factor did not appear directly from the focus groups answers when we
asked about the important factors, but it emerged when we asked about what factors
affected their choice of services and bank.
Ladda (A) I think that I will choose by the reputation of the bank now it would be
Bangkok Bank.
Ghan(NA) I will choose the bank that has a good reputation and stability. If it is a small
bank I feel unsafe.
The other factor that we found involving the image of the bank was a modern look. One
Thai bank in particular, Thai Farmer Bank, has built its image as the leader in technology
services because it was the first bank to re-engineer its branches to appear more modern.
These changes also affected the image of the banks services and products.
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Yui1 (A) I like the atmosphere in the bank which I think makes it look more reliable. I
believe that the trust comes from how they decorate the bankI think it has an influence
for the customer
However, the findings do not show enough strong evidence that this factor affects the
adoption of electronic banking. The results show that the effects of the physical
environment at the branch have an impact on the perception of the bank image. The results
also show that the adopter groups are aware of brand and bank image when they choose
to use the service. We found that nearly half of the adopter groups accepted that they
considered services from banks with a strong brand and image whilst only one in four of
the non-adopter groups agreed with this issue.
In summary, brand and the image of the bank have affected the trust and confidence of
bank customers. However, it is too early for firm conclusions about the impact on the
6.7 Adopter characteristics

The difference between adopters and non-adopters, which we have concluded from the
characteristics of group interviewees, is as follows:
6.7.1 Demographic characteristics
The adopter characteristic of Thai bank customers in Thailand is likely to be the same or
very similar to the previous studies (see Chapter Three). These indicated that adopters are
the group of people who generally are of a younger age, have high incomes and a high
status of occupation e.g. accountants, import-export officers etc. Whilst the characteristics
of the non-adopter groups are usually the groups of older aged people with lower incomes
and a lower status of occupation e.g. clerk, unemployed, secretary etc. However, we
found that these demographic characteristics should be taken into consideration together
and not individually. It is dangerous to consider any one or two variables alone. For
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example some non-adopter groups (one and two) have a high income and status but they
do not adopt technology services because of their ages and attitudes toward change.
We also found that income and occupation are just one of the many pieces of demographic
data that can be used to classify the adopter and non-adopter groups. However, when we
were collecting data we could not ask directly about income in the groups participating, so
we linked this information to occupation. The adopter groups are the group of people who
work in occupations that get paid sufficient money to do more transactions with the bank
and can afford to pay the annual fees that are charged every time that they use the service.
These groups of people are more concerned about the use of their time than the nonadopter group.
The levels of education that has been seen from the study suggest that there were no
differences between undergraduates, postgraduates or diplomas in terms of classifying the
adopter and non-adopters directly. However, in developing countries the level of education
can refer to income and the status of occupation.
We have not found any differences between males and females regarding the rate of
adoption. However, from the ten perceived attributes of electronic banking in our new
framework, the results show that females take perceived risk, complexity and reliability far
more seriously than males. Moreover, for relative advantage, as a perceived attributes of
electronic banking, we found that females are far more concerned about convenience than
the male group, whilst males are more concerned about the benefits of new electronic
banking than females. This also supports previous studies (Chapter Three, Stafford, 1996).
However, we did not have enough results to make conclusions at this stage. We needed
more evidence in terms of the quantitative validation of the findings.
6.7.2 Attitude and perceptual factors
One of the differences between the adopter and non-adopter characteristics clearly shown
from the study is the attitude toward change and the willingness to take risks. We found
that adopters have a positive attitude toward change and a willingness to take risks by
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using new technology services such as electronic banking to a far greater extent than the
non-adopter groups.
Tawee(A) I will try it because I want to try new technologies so I may be helping Thai
to develop the country using more modern technology
Geritisuk(A) I agree that if we use it banks will develop the other new technologies to
provide us a better service.
Non-adopters expressed their attitude toward self-service banking:
Panat(NA) If we go to use the service at the counter of the bank I feel more convenient,
safe and accuracy etc. than using self service banking
6.7.3 Consumption patterns
The study shows that the adopter groups were more likely to do transactions with the
bank than the non-adopter groups. We also found that the adopter groups would normally
use many types of electronic banking and are far more familiar with technology than the
non-adopter groups.
6.7.4 Social interaction and communication behaviour
The social interaction observations do not all come directly from the group interviews.
However, we found that the adopter groups friends and family influenced their decisions
whether to adopt new electronic banking services, whilst the non-adopter groups did not
take any other persons opinions into consideration when considering their decisions about
adoption of electronic banking services:
Yui(1) I think that if my friend uses electronic banking services, it has an influence on
me a lot, I want to update myself
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Tawee(A) I think my friends have a lot of influence to motivate my use.

This is further explained by other interviewees as:
Nipa(A) It makes me more interested in the service
The question was asked to the group of non-adopters about the recommendations from
friends. A non-adopter said:
Pronjit(NP) I dont know. I dont want to have any more cards
In summary, the study represents the number of group participants in each attribute. The
purpose is to distinguish between the adopter groups and non-adopter groups, and also
present the weight of important factors between the two groups. However, because of the
nature of focus group interviews, not every member of the group answered every
question, therefore the number of group participants will be representative of the active
contributing group participants who answered the particular question. We realised that
some of the other participants did not contribute to answering the questions, which does
not mean that they did or did not agree with the question. During the group interviews, we
encouraged everyone to participate as much as possible. However, the level of
participation depended on the personality of the interviewees. Moreover, the questions
involved asking about attitudes, which meant that it could be very difficult to interpret the
real meaning from some of the answers. Validation of the quantitative data was done by an
empirical study and a second stage of data collecting.
The next section will illustrate the hypotheses development as follows:
6.8
The development of the hypotheses
The findings from the focus group interviews and the initial proposed framework from
Chapter Three has lead us to develop the propositions as follows:
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P1: The attributes of an innovation that affect the adoption decision for electronic banking
are different in a developing country context when compared with a developed country
context.
There are two major factors that are considered in this study, namely perceived attributes
of innovation and personal characteristics. Perceived attributes were presented in H1 and
personal characteristics were presented in H2.
H1: There is no difference in the perceived attributes of innovations namely relative
advantage, complexity, compatibility, observability, trialability, cost, perceived risk, and
control between adopter and non-adopter groups.
This hypothesis is based on testing the existing Rogers framework of innovation and the
application in developing countries in the context of Thailand. Rogers work has been
widely acknowledged in adoption research across many industries including financial
services. Five perceived attributes are referred to relative advantage, compatibility,
complexity, observability and trialability. This includes four new additional perceived
attributes, which are found to be significantly influencing the adoption of innovation in
recent financial service studies. Therefore, nine perceived attributes will be presented to
test the hypothesis as follows:
H1.1: Adopters perceived more relative advantage of electronic banking than nonadopters.
This factor is based on the assumption that the adopter groups perceived more benefit and
economic gain from electronic banking in terms of increased convenience, better or faster
service and saving their time and effort to use services at their bank branch. The majority
of adoption studies e.g. Rugimbama and Iversen (1994), Lockett and Littler (1997) have
found factors influencing the adoption of innovation across products and services. The
results from the focus groups also supported the findings that the Thai bank customers,
who become adopters, do so because they have seen the benefits of using the service.
H1.2: Adopters perceived less complexity from electronic banking than non-adopters.
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Perceived complexity or ease of use as it is widely referred to in many studies (e.g.

Dabholkar, 1996; Rugimbana, 1995; Sathye, 1999; Szmigin and Bourne, 1999). This
factor refers to how difficult electronic banking is to understand and use by the customer.
This assumption is based on adopter groups perceiving less complexity of using the
electronic banking service than non-adopters. The findings from the focus groups also
show that the non-adopter group perceived more complications when using the service
than the adopters group.
H1.3: Adopters perceived more compatibility with electronic banking than non-adopters.
This is based on the assumption that electronic banking is more compatible with adopters
existing beliefs, values, experiences and needs. This refers to how they are going to change
their behaviour from preferring to use a majority of services at the branch to starting to
use services with ATM machine. This also refers to how familiar services are, such as debit
card, which has been previously introduced as part of the ATM card service. This also
refers to the customers needs and the limited office hours that users have to visit their
bank. Therefore, electronic banking may be an option. Many studies (e.g. Rugimbana and
Iversen, 1994; Black et al, 2001) have found the compatibility of services influencing the
adoption of innovations.
H1.4: Adopters perceived observability of electronic banking more than the non-adopter.
This factor is based on the assumption that if customers have more chance to observe the
service or received more information about services available and how to use the services,
this would have a positive effect on adoption. The results from the focus group interview
suggested that non-adopter groups claimed that they have not received enough
information and do not know what services are available. This supports the findings of
Sathye (1999) who found that one of the reasons that Australian customers are not
adopting Internet banking is because of a lack of awareness of the service.
H1.5: Adopters perceived less trialability of electronic banking than the non-adopter.
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The diffusion of electronic banking is likely to happen when customers are able to try out
the service. This factor is a very important issue particularly in financial services that are
involved with high risks of losing money and the costs of using the service. Lockett and
Littler (1997) found in their study that non-adopters have perceived more trialability of
service than adopters of direct banking. The results from focus group interviews also
confirmed that some customers become adopters after they have tried out the service.
H1.6: Adopters will perceive the cost of electronic banking, in terms of purchase costs
and usage costs, to be less important than the non-adopter.
This is one of the new additional factors to Rogers framework that influences the
adoption of electronic banking. Lockett and Littler (1997) have found in their study that
costs have impacted the adoption of telephone banking. This is supported by Sathye
(1999) who found cost had the most impact on the resistance of adoption of Internet
banking.
The results from focus group interviews also confirmed that adopters are willing to pay
additional costs for getting better service that could save them time, while the group of
non-adopters are highly concerned about cost because Thai banks normally charge the
customers for additional services including an annual fee for holding ATMs cards.
Therefore non-adopter groups perceived cost as a significant factor of whether they had
received value for money and they did not perceive a significant enough benefit from the
electronic banking service to pay the additional costs.
H1.7: Adopters perceived less risk from electronic banking than non-adopters.
Risk includes financial, performance risk and physical risks associated with trying an
innovation. There is much evidence from studies showing that perceived risk has an impact
on resistance of adoption of innovation (e.g. Ostlund, 1974; Ho and Ng, 1994; Mitchell
and Boustani, 1993). This factor has a very high relationship with trust and complexity.
The results from the focus group interviews also found that this is one of the major
concerns for the non-adopter groups. This is supported by Sathye (1999) who found that
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security concerns were one of the reasons that Australian bank customers did not adopt
Internet banking.
H1.8 Adopters perceived more control over electronic banking services than nonadopters.
This factor is based on the assumption that adopters of electronic banking felt that they
have more control over the process or outcome when they are dealing with their financial
business than non-adopters. Guiry (1992 quoted in Dabholkar, 1996) concluded that
control would be important to customers in any type of service delivery. Dabholkar (1996)
found that control is one of the three important factors that customers use to evaluate
technology-based self-service options. However, she had not discovered any findings of
any significant impact when she conducted her research by qualitative methods. This also
occurred in our findings in the focus group interviews. Control was found to be important
indirectly from participants who mentioned that they used electronic banking because it
allowed them 24-hour access to their bank account to obtain cash and statements via ATM
or telephone banking services.
However, there are other studies that have found evidence that control has had an impact
on the adoption of innovation. Hewer and Howcroft (1999) found that the feeling of
control was one of the characteristics of the delivery channel which customers perceived
when they used PC banking and services at the branch.
P2: Perceived service quality should be addressed as one of the important perceived
attributes of innovations that may affect the rate of adoption.
H2: Adopters perceived service quality of electronic banking as more important to them
than non-adopters.
Reliability and accuracy of technology-based service delivery has been raised in recent
adoption studies (e.g. LaBay and Kinnear, 1981; Rugimbana and Iversen, 1994;
Rugimbana, 1995; Dabholkar, 1996; Joseph et al, 1999), whilst trust was found in some
studies (Hewer and Howcroft, 1999; Szmigin and Bourne, 1999). The results from the
focus groups also found that the perceived service quality affected the adoption and in this
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study is refereed to as reliability (including accuracy and trust including confidence). This
assumption is based on adopters perceiving service quality of electronic banking more than
non-adopters. The findings from the focus groups show that this factor was a concern by
non-adopters because customers have perceived past experiences by themselves or by
friends and family that electronic banking such as ATM machines are not reliable.
Therefore, this factor would discourage them from adopting the service. They perceived
that dealing with the branch, would give a better service quality in terms of accuracy and
reliability compared with electronic banking.
P3. Adopters of electronic banking can be distinguished by demographic characteristics,
attitudinal and perceptual factors, consumption patterns, social interaction and
communication behaviour.
This can be divided into four hypotheses from H3.1-3.4 as follows:
H3.1: Adopters of electronic banking will be more likely to be male, more academically
qualified, have a higher status of occupation, will earn higher incomes, work longer hours
and move house more frequently than the non-adopter.
There is evidence supported from previous studies suggesting that demographic
characteristics can be used to classify groups of adopters and non-adopters. The reason
that we consider these factors together is because some are linked. For instance, groups of
people who have high status or professional groups are likely to earn a high income. This
is likely to be a male group. It has been found in many developing countries that males get
better opportunities than females. However, this gap has appeared to narrow in recent
years but not many studies have found significant differences in western countries. The
groups of people who have high income and status would normally have high levels of
education and skill. In addition, for general demographic characteristics, we also consider
the group of people who work longer hours because this group have very little time to use
the services at the bank branch. The final factor is people who move house often. It is not
generally easy to move bank, therefore Thai people normally hold more than one bank
account, which is dependent on where they live or work. In Thailand, particularly in
Bangkok, there are significant problem with traffic congestion and space for parking cars.
Normally people will move house to follow their job rather than choose a job near the
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house. Therefore, we consider this factor may be useful for classifying groups of
customers. The focus group interviews show that the adopter groups were more likely to
be the group of high income, high status of occupation and have no time to use the
services during branch opening hours. However, we have not found a link between moving
house and adoption. This partly supports the study by Lockett and Littler (1997) who
found that adopters of direct banking were likely to be earning higher incomes, working
longer hours and had moved house more frequently than non-adopters.
H3.2: Adopters of electronic banking will be characterised by a more favourable attitude
towards change, and will be more venturesome than the non-adopter.
This assumption is based on groups of customers who have a positive attitude toward
change or are more willing to take risks, which were found more likely to be adopters.
Locket and Littler (1997) found that adopters have a more favourable attitude toward
change and risk. This result is also supported from the findings from the focus group
interviews.
H3.3 Adopters of electronic banking will be more involved with social activities, read
more printed media and perceive more influence from friends and family than nonadopters.
The assumption for this hypothesis is that adopter groups were more likely to have social
interaction in terms of participating in social activities, reading print media and have
motivation to use the new electronic banking via friends and family. The findings from the
focus groups also show that friends and family have influenced the adopter group to make
decisions about adoption of services.
H3.4 Adopters of electronic banking will be more involved than the non-adopter in related
areas of financial and technology products.
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This assumption is based on the adopter groups likelihood to be the group of people who
have more financial activities and frequently use technology products more than nonadopters. They may do this because it is not convenient to use the services at their branch.
This is supported by the studies of Dickerson and Gentry (1983); Lockett and Littler
(1997). The results were confirmed from the focus group interviews.
P4. There is no difference between adopters characteristics and perceived attributes for
the prediction of electronic banking adoption.
H4 The perceived attributes of innovation are better predictors than personal
characteristics.
This assumption was examined from the findings of H1-3. However, most studies (e.g.
Ostlund, 1974; Rogers, 1962, 1983, 1995; Rugimbana and Iversen, 1994; Lockett and
littler, 1997) have found that perceived attributes of innovation are better at prediction
than personal characteristics.
6.9 Chapter summary

This study indicates that seven perceived attributes of electronic banking i.e. relative
advantages, complexity, compatibility, trialability, observability or communicability,
perceived risk, control and cost from previous studies about adoption of innovation, can
be applied to classify the adopter and non-adopter groups. Moreover, the perceived
service quality is composed of reliability and trust/confidence, which supports the
proposed framework in Chapter Three.
The results show that perceived service quality is one of the most relevant perceived
attributes that affect the adoption of new technology services. Reliability (including
accuracy) and trust/confidence were raised as important issues by group interviewees for
the perceived attributes of electronic banking. The findings found that this may be linked
to the high-perceived risk in the new technology services. However, there are different
importance rankings of perceived attributes of electronic banking between the adopter and
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non-adopter. Adopters are more concerned about relative advantages as the most
important attributes influencing the rate of adoption, followed by reliability, compatibility
and cost, whilst the non-adopter groups were more concerned about perceived risk,
reliability, trust, confidence, and complexity. This ranking was observed by the number of
issues raised by group interviewees.
The demographic characteristics of adopters are that they are younger, have high incomes
and a higher status occupation and are more concerned about using their time efficiently.
We also noted the difference of perceived attributes between males and females.
For the attitudinal and perceptual factor, we found that the adopter groups have a positive
attitude toward change and a willingness to take risks. We also found that the adopter
groups do more banking transactions than the non-adopter groups. Finally, we found that
friends and family have influences for adopters to use new technology services.
The group interviews have given significant benefits in terms of finding new emerging
factors from the group discussions. It is not surprising that the results show that some new
factors were found, however, further research was done to validate the data, which is
described in the following chapters.
Finally, the findings from focus group interviews which helped to develop the hypotheses
were discussed.
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Chapter 1
7.
7.1
Methodology Part II
Introduction
This chapter is dedicated to presenting the second stage of the methodology. The survey
questionnaire was used to collect the data. The first stage of the methodology was
collected by a qualitative method using focus group interviews, which we have discussed
in Chapter Four. The method developed an existing conceptual framework using the new
results, which emerged from the focus group interviews. This chapter will outline the style
of the research that has been adapted in order to address the research questions.
The chapter contains five sections as follows; Section 7.2, describes the issues of
measurement; Section 7.3 discusses the methods of data collection, which includes the
questionnaire design and the use of survey questionnaires to collect the data and then
Section 7.4 discusses the issues of reliability and validity of the survey methods and also
discusses the benefits of using a questionnaires survey and the process of the questionnaire
design and distribution will be examined. Section 7.5 describes the statistical methods used
for the data analysis. The final section provides a chapter summary.
7.2
Issues of measurement
Measurement is the process that involves using numbers to represent the findings from
phenomena using scientific methods. The function of scientific methods is to investigate
the numerical structure and the structure of the variables being measured. These can be
divided into four levels of measurement i.e. nominal, ordinal, interval, and ratio. In this
research the majority of the measurements used interval measurements, which are used to
measure the attitude, opinion and predisposition judgements of the adopter and nonadopter groups of electronic banking. The measurement procedures are highly sensitive to
data transformation and measurement error. Measurement error refers to the accuracy and
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consequent consistency of the measuring instrument itself (Kinnear and Taylor, 1996). This
involves measuring the reliability and validity of the methods, which these two elements
use to underlie the sources of measurement error. Therefore, the concept of measurement
is directly related to validity and reliability.
7.3
Method of data collection
This research used a combination of methodologies namely qualitative and quantitative

methods. The qualitative methods have already been discussed in Chapter Four. Therefore,
this chapter discusses the quantitative method used. The objective of this method is to
explore the findings by empirical study, which relies upon numerical and statistical
methods determined from a large-scale sample for the main testing of the hypotheses. The
method used as an instrument to be employed for data collection is the questionnaire
survey. The benefits of using questionnaires are that it is a tool that can provide direct
answers from specific questions. In this research we have used closed-ended questions
because these types of questions can be analysed very effectively using statistical
techniques. These statistical techniques can directly find the research question answers in
the questionnaire results that cannot be found by simply using focus group interviews.
Also another reason that we used the questionnaire as a research tool is because this
method is simple and economical to use to collect data from large sample groups.
Moreover, it also reduced any bias or influences in the answers from the researcher.
Respondents may need time to read and understand the questions, particularly when asked
about their attitudes and consumption behaviour, before they answer the question.
However, questionnaires also have some disadvantages such as the low response rates,
which is common, particularly from mail questionnaires. In this thesis we reduced the low
response rate problem by waiting for the questionnaire to be filled in with the respondent
and picking it up from the distribution point.
7.3.1 Sampling unit
The questionnaire method was used to collect data in Bangkok, Thailand. The sampling
unit is the group of Thai banking customers. A quota sampling method was used to
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distribute the questionnaires. This method was used to get similar proportions of age,
gender, status etc. in each sample group. The sample is the bank customers who are
adopters and non-adopters of the following kinds of electronic banking services i.e.
sophisticated ATM, debit card and telephone banking. However, Internet banking has been
omitted because this service had just been started during the research period (1999),
therefore it would have been difficult to find the adopter group.
Questionnaires were distributed by two methods. The first method of distribution was at
various shopping centres and financial institutions around Bangkok. The second method
used part-time students at The Rajabhat Chandrakasem Institution. This sample group may
not be representative of the overall picture of the Thai population, however this sample
will represent the picture of the potential Thai bank customers in Bangkok. The main
benefit of using a group of part-time students is because this is a good way of accessing a
sample social group that is likely to be one of the relevant target markets for the electronic
banking services, because the characteristics of part time students are similar to the
characteristic of adopters, which we have learned from previous studies are the group of
higher incomes, work longer hours, high level of education and younger age.
7.3.2 Representativeness
The researcher was concerned that the sample group should be diversified and represent
the overall characteristics of the Thai bank customer in Bangkok. Moreover, the target
group is the bank customers who are potential users of new electronic banking. A good
sample can give a meaningful judgement and produce useful information from the data set.
The method of collecting samples was designed to be concerned with the reliability and
validity of scaled measures. The researcher used quota samples, which diversify by type of
service used, income, gender and occupation etc. Although a lot of research has studied
the demographic characteristic of the adopter and non-adopters, the conclusions of these
demographic studies is still far from conclusive and varies with different types of service
and the socio-economic environment. Therefore, this study will address these issues.
Variables will be defined by using usage (user and non user) and service usage (telephone
banking, debit card and sophisticated ATM). The number of sub-samples equals (2 * 3) = 6
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with each cell consisting of at least 50 cases. Therefore, the sample size is 300 cases.
These characteristics have different influences on the rate of adoption. Therefore, we used
these characteristics to classify the group of respondents to represent the overall
characteristics of the Thai bank customers.
7.3.3 Sampling distribution
Six hundred questionnaires were distributed to a group of Thai bank customers during
August - September 2000. These samples were from the group of people who were aged
between 18 to 60 years old, diversified by occupation, income and education level. The
researcher selected the sample from 150 users and 150 non-users of electronic banking.
The group contained 100 respondents in each type of products/services i.e. Telephone
banking, debit card and sophisticated ATM.
The researcher used three types of questionnaire forms i.e. telephone banking, debit card
and sophisticated ATM. The questionnaire contained questions about respondents banking
attitudes and consumption behaviour; perceived attributes of innovation; respondent
personal data and future interests.
7.3.4 Questionnaire design
There are many attitude-scaling methods, which are used to measure the attitudes of
respondents. Oppenheim (2000) summarised that Guttmans method is appropriate for the
study of attitude changes and Thurstone methods are best for studying group differences
and Likert scales are suitable for the study of attitude patterning or to explore theories.
Therefore, in this thesis, a Likert scale is the most appropriate method. Although a Likert
scale can have more than five scores, this research will use a five-ranking score system of
5,4,3,2,1 scaled from strongly disagree to strongly agree. The reason that we introduced
five options is because any more items than this will add complexity for respondents
answering the questions. The general requirement of the Likert scale is not to have any
extremes either side or many neutral values. The advantage of the Likert scale is that it is
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reliable and gives order to the measuring of the attitude. Moreover, the Likert scale is a
widely accepted scoring method (Oppenheim, 1992).
For these reasons, in this thesis, the researcher has developed the questionnaires by using
the Likert scale to measure attitudes towards electronic banking. In each statement or item
the issue in question has equal importance and weighting. The attitude of the respondent
will be measured using a scale of five categories i.e. strongly agree, agree, neutral,
disagree and strongly disagree.
The questions in the questionnaire have been determined from the focus group interviews,
previous research and adaptations from the questions, which were used in the work of
Lockett and Littler (1997) and McKechnie (1999). These were re-written as a series of
statements in five sections. New emerging factors were found from the previous studies
and the group interviews referred to the important factors for adopting new technology.
The details of the formulation of the questionnaire are shown in the next section.
7.3.5 Constructing the questionnaire
The questionnaire contained closed-ended and scaled questions that respondents were
asked to answer to determine their attitudes and bank consumption behaviour. The
research aim was to test the results from the focus group interviews. Numerical rating
scales are more suitable than seeking open-ended answers. Scaled questions can explain an
answers precise meaning. In addition, numerical scaled questions can also facilitate
statistically analysable data. To cover the research questions and encourage the respondent
to complete them, the layout of the questionnaire is divided into five sections, which are
Section-A asked about the respondents banking. Section-B asked about attitudes and
consumption behaviour. Section-C requested information about the perceived attributes of
electronic banking, which we have divided into three categories i.e. Telephone banking,
debit card and sophisticated ATM. Section-D is regarding the personal data of respondents
and Section-E asked about their future interests. The questionnaire had three different
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forms. The questions are the same for all three forms but there were differences in sectionC, which depended on each type of the characteristics of service/products.
In section-A, questions 1 to 4, asked information about the respondents banking
consumption. In questions 1 to 3, we used closed-ended questions whilst question 4 used
a rating scale i.e. Never, Rarely, Sometimes, Mostly and Always.
In section-B, the researcher asked about attitudes and consumption behaviours. Some
questions were adapted from Locket and Littler (1997) and
Joseph et al (1999).
However, new questions were developed to cover the adopter characteristics framework
by Robertson (1971). Question 5 used the Likert Summated Rating in a matrix format.
Likert Summated Ratings are used to screen each statement and to generate the scores.
The respondent indicates their level of agreement and disagreement with each statement.
Therefore, respondents found it easier to respond because the response categories allowed
the strength of expression of their feelings to be represented, whilst the researcher can
summarise the scores for each statement. The Matrix format is a method of organising a
large set of rating questions that have the same response categories. Researchers use five
rating scales such as Strongly agree, Agree, No opinion, Disagree and Strongly
disagree.
In section-C, question 6, scaled items were used to measure the respondents perceptual
characteristics of electronic banking which were different for each type of service i.e.
telephone banking, debit card and sophisticated ATM. Some of the questions about
perceived attributes of innovations were adopted from Lockett and Littler (1997) who
studied the adoption of direct banking (telephone banking). The developed questionnaire
for telephone banking was then used as a model applied to debit card and sophisticated
ATM. Therefore, there were different contents of the questions in this section between the
three different types of services. However, all the scale items covered all nine perceived
attributes of electronic banking. The respondents were asked to indicate the perceived
attributes of electronic banking that they felt affected their adoption.
In section-D, for questions 7 to 14, the researcher asks information about the respondents
personal data such as occupation, level of education, frequency of moving house, number
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of working hours and the frequency of reading any printed media. The researcher used
closed-ended questions. Question 14, asked about technology services/products
experiences.
Section-E, question 15, the researcher asked about future interests in new electronic
banking.
The questionnaire was designed to be completed within approximately 15 to 20 minutes.
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Contents of the questions:

Table 7.1 Section one - Perceived attributes of telephone banking
Factors
Relative advantages
Questions
By using telephone banking, transactions can be
done at any time outside of banking hours.
Time is saved when using telephone banking
compared to using services at the branch.
There would be less use of the services at the
branches if all banking business could be done
over the telephone.
Telephone banking is not useful to me.
If we can do all our bank transactions via
telephone banking, it means there is no need to
use the services at the branch
Compatibility
I would be quite happy to conduct the majority of

my banking business by telephone
Some financial transactions are too important to
be arranged over the telephone (e.g. mortgage)
I find bank branch opening hours to be very
inconvenient
Complexity
Telephone banking services are too complicated

to operate.
It is easy to remember the passwords and security
questions involved in telephone banking
Trialability
It would be better to try telephone banking before

committing oneself
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Factors
Observability
Questions
It is a good idea to observe someone using
telephone banking before I use it
Bank staff give enough information about
telephone banking so new customers can use
them
Cost
It is better to pay the price of the phone call to

conduct my banking business over the telephone
than have to make the time and effort to visit a
bank branch
I am prepared to purchase/rent any equipment
purely for the purpose of telephone banking
Perceived risk
I feel apprehensive about conducting banking

business over the telephone because anybody
could be listening.
There is a greater risk of error when conducting
banking business over the telephone than dealing
with a person in the bank branch
Control
Using telephone banking gives control over my

financial business.
Perceived service quality:

-Reliability
I felt that telephone banking is able to conduct

transactions as accurately as the bank branch
Routine banking services are better conducted by
telephone banking through an impersonal voice
response system than with a human operator.
-Trust/confidence
Telephone banking can be guaranteed by the bank

that all the transactions have taken place.
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Table 7.2 Section two - Perceived attributes of debit card
Factors
Relative Advantages
Question
Using debit cards means there is no need to carry
cash
Paying by debit card saves time
Debit cards are similar to mobile phones. At first
we wondered why we needed it but in time we
come to wonder how we would do without them
Debit card is not useful to me
Using a debit card means doing less transactions
at the branch
Compatibility
The debit card is familiar because it is a

combination of traditional ATM and the credit
card.
inconvenient.
Complexity
It is very easy and convenient to use debit cards

because they can be used like cash.
Observability
Observing others using debit card,

before first use, is a good idea.
Before using a debit card you should find out as
much information about how to use it as possible
Trialability
It would be good to try debit cards before

committing myself.
Perceived Risk
There is a greater risk of criminal acts when using

debit cards rather than cash
There is concern about using debit cards because
they could be stolen and used.
Factors
Question
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Cost
Paying the annual fee for a debit card to give

more convenience is acceptable
Control
Debit cards control the use of money more than

credit cards

-Reliability
Debit cards are good because they give a slip to

prove that all the transactions have taken place.
-Trust/ confidence
Debit cards give confidence because they dont

have any problems using them
Table 7.3 Section three - Perceived attributes of sophisticated ATM
Factors
Relative Advantages
Questions
Using a sophisticated ATM rather than
standing in a queue waiting for service at a
counter would save time.
It would not be necessary to enter a bank
branch if banking business could be done by
sophisticated ATM
Compatibility
Sophisticated ATMs are not useful to me

I would be quite happy to conduct the
majority of my banking business by
sophisticated ATMs
inconvenient
Complexity
It is easier to remember the password for

using a sophisticated ATM.
Sophisticated ATMs are less complicated to
use if compare with depositing money with
the traditional ATM
Factors
Observability
Question
It is a good idea to observe someone using
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sophisticated ATM before I use it.

Bank staff give enough information about
sophisticated ATM before new customers use
them.
Trialability
It would be good if we have a chance to try

the service before we use it
Perceived Risk
There is a great risk of error when doing

transaction with sophisticated ATM.
Security is a concern when doing transactions
with sophisticated ATM
Cost
Sophisticated ATM is worth paying a fee for
Control
Sophisticated ATMs give control over my financial

business.

-Reliability
It is reliable to deposit money and cheques with

sophisticated ATM because it gives a record slip.
Sophisticated ATM is able to conduct transactions
accurately as well as if the transactions were done
at the counter
-Trust/Confidence
Sophisticated ATM can guarantee that all

transactions have taken place.
Sophisticated ATMs give confidence because they
do not have any problems using them
These sections will present the same questions for all three type of electronic banking
Table 7.4 Section four - Personal characteristics
Attitude
Questions
186
Willingness to take risks
I am willing to try new ideas

I like to buy new and different things
I am usually one of the first to try new products or
services
I generally see my self as a risk taker rather than
being conservative on decisions I make
Attitude toward change
I am up to date on most things

I am interested to hear about new technological
developments
I believed that technological developments have
affected our lives
I like to pay by cash as much as possible
I like to visit my local bank branch
Friend and family influences
When purchasing new technology products I trust

my own instincts more than advice from others.
Friends and family have influenced me when
buying new products/services
I would only consider using other financial
services if someone personally recommended
them to me
I am often asked for my advice on financial
matters
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7.3.6 The validation of the questionnaires
The Researcher was concerned with the validation process, which was also involved with
developing the questionnaires. From the literature on questionnaire design we used a
general rule of thumb stating that the questions should be clear, unambiguous and use
simple, plain language that is easy to understand, otherwise respondents may make errors
when they completed the questions. In addition, pre-testing of the questionnaire reduced
the mistakes in the questionnaire design. Therefore, we pre-tested initial drafts of the
questionnaire (in Thai) to a pilot group of ten Thai students in the UK. Next, a single pilot
questionnaire was produced and trailed with a small group of thirty part time students,
who were asked to comment on the questionnaire. The results of this pre-testing of the
questionnaire resulted in a few minor changes to the final version, which clarified any
remaining ambiguities and problems.
The validation of questionnaires was only one part of the measurement of the validity and
reliability of the research. This is very important in social science research because
validation indicates whether the research is acceptable as a scientific method in the
positivist paradigm. Therefore, in the next section the concepts of validity and reliability
will be discussed in detail.
7.4 Validity and reliability

The concept of validity is to confirm that the research instrument is measuring the
underlying construct that it is supposed to be measured. Validity is concerned with
whether the researchers are measuring what they think they are measuring.
Validity can be specified as four different types; concurrent validity, criterion-related
validity (predictive validity), content validity, and construct validity (Oppenheim, 1992).
However, in this thesis we used three measures of validity, namely concurrent validity,
content validity, and construct validity. We have chosen not to use Criterion-related
188
validity (predictive validity) because it limits the amount of time to do further sample
measurements.
7.4.1
Concurrent validity
This involves examining the relationship between the measurement structures of one study
compared to other studies. Oppenheim (1992) suggested, The validity can be measured
by how well the test correlates with other, well validated measures of the same topic,
administered at about the same time. This thesis has conducted its study for three types
of electronic banking services, namely telephone banking, sophisticated ATM and debit
cards. Therefore the concurrent validity was measured by comparing the similarities
between these three electronic banking services. The details will be discussed in Chapter
Eight.
7.4.2 Content validity
This involves the assessment of whether the instrument is appropriate for the
measurement. The content validity can be measured by examining whether the instrument
is appropriate in relation to the initial pilot study and the previous studies and the response
from the pre-test stage. This involves the researchers subjective assessment of the
instruments appropriateness, which can be achieved by asking expert individuals to review
the instrument and assess whether they feel it adequately covers that which is being
studied. In this thesis, the questionnaire instrument was chosen to assess the sample group.
Test questionnaires were assessed by other researchers who had done similar research in
this area in terms of the measurements relationship to the content.
The questionnaires were originally developed in English and then translated to the Thai
language by the researcher. Next, a lecturer at Rajabhat Chandrakasem translated the
questionnaires back from Thai to English and then the researcher compared both of the
English versions to see that they still kept the same meaning. The researcher had requested
the lecturer in the Management Science faculty at Rajabhat Chandrakasem University to
189
assess the questionnaires in terms of language to check that they had the same meaning as
the original English version. The language was also examined to see that the questionnaire
was easy to understand and did not use ambiguous language to mislead respondents. This
language assessment was followed by a pre-test session with a prospective group of the
sampling unit. The test questionnaire was revised after this pre-test to make it clearer.
7.4.3 Construct validity
Construct validity is used to assess the measuring instrument by relating it to statistical

methods and observing whether the results are consistent with the concepts in the
hypothesis. There are two types of construct validity, which are widely accepted i.e.
Convergent and discriminant validity. Frankfort-Nachmias and Nachmias (1996)
concluded, convergent validity represents the concept of the two measurement
assessments of the same property, which should correlate highly with each other even
though they represent different methods, and a discriminant validity represents the two
measurements of the different properties, which should not correlate highly with each
other even though a similar instrument is used. They also suggested that this validity
could be measured by examining the correlation coefficients from the factor analysis
results.
The construct validity can be evaluated by examining the results of the factor analysis
applied to the research instruments. The validity of the scales can be confirmed by
reasonable factor pattern outcomes and acceptable statistics results (Devlin, 1995). The
details will be discussed in Chapter Eight.
7.5
Reliability
Reliability refers to the results obtained from a measuring process that is consistent and
can be reproduced using the same measurement instrument.
190
There are four generally accepted ways to assess reliability i.e. test/retest methods, Parallel
forms or alternative-forms techniques, the split half method and the internal consistency
method. The first three methods have limitations that have made them unsuitable for
application in this thesis. These limitations are now examined.
Firstly, the test/retest sampling technique involves repeated measurement of the same
person or group using the same scale under similar conditions. However, it is very difficult
for social science researchers to measure the same group under exactly the same
conditions.
Secondly, the Parallel form or alternative-forms technique involves giving the subject two
forms, which are judged equivalent in meaning but are different in content. This method
has the same limitations as the test/retest method because it requires two test forms with
the same group of samples carried out on two different occasions (Carmines and Zeller,
1994). The main problems with using the Parallel form technique is that it is very difficult
to develop two test forms with identical meanings but are different enough to give good
reliability results.
Thirdly, the Internal Consistency Method is a way of estimating reliability that does not
use either the splitting or repeating of items techniques. Instead, this method requires only
a single test application and provides a unique estimate of reliability for the given test
application. As a group, these variables are called measures of internal consistency. The
most popular of these estimates is given by Cronbachs alpha (Cronbach, 1951 quoted by
Carmines and Zeller, 1994).
Cronbachs alpha is suitable for any multiple-item scale application. It is easy to use
because it only requires a single test administration. It is also accepted as a very general
reliability coefficient. Individual items that appear to be highly correlated with each other
are said to be internally consistent. The greater the consistency in responses among items,
the higher the alpha coefficient will be. This is likely to be the case when the scale is
reliable and has a low error component. If items on a scale are ambiguous and require
individuals to guess or make unreliable responses, there will be a lack of consistency and
internal consistency estimates of reliability will be small (Green et al, 1997). Cronbachs
Alpha gives an estimate of the proportion of total variance not due to error and thus
191
provides a representation of the reliability of the scale. The value of Cronbachs Alpha
varies between zero and one.
For these reasons, the researcher decided to use the Cronbachs Alpha technique as a
measurement of reliability.
7.6 Analysis method

The objective of this study was to examine the possible factors (perceived attributes) of
electronic banking adoption derived either to support the existing theoretical framework
(Rogers, 1983) or to add new factors that have been developed in this thesis. Therefore,
we consider that there were three phases of data analysis in this research. Firstly,
descriptive analysis aims to give a general description of the respondent, such as age,
education level, gender etc. For the second phase the factor analysis is used to identify the
factors affecting the adoption of electronic banking. The final phase used logistic
regression to examine how well the model predicted the adoption and to test the
hypothesis. The details of each phase are discussed as follows:
7.6.1 Descriptive statistics
The first phase was to get the general characteristics of the data. We used simple
descriptive statistics to analyse the data. This type of statistics enabled the researcher to
summarise and organise the data in an effective and meaningful way. They provided tools
for describing collections of statistical observations and reducing information to an
understandable form (Frankfort-Nachmias and Nachmias, 1996). The aim was to explore
and compare the overall different characteristics of the adopter and non-adopter groups.
We assessed variables by conducting bivariate correlation analysis and tested the
significance of each variable by using Pearsons correlation coefficient. This statistical
analysis ensured that the variables had a very high level of significance. The levels of
significance in this thesis were at the 5% level of significance obtained by using a one
tailed test.
192
7.6.2 Factor analysis
The second phase explored the relationships of all the variables together by using factor
analysis. Factor analysis is a technique for data reduction, which is commonly used in
marketing research. The factor analysis procedure was used to summarise a large number
of variables (factors) into a smaller set under a new constructure or dimension without
loss of important information (Hair et al, 1998). The new dimension underlies
(represented) the relationships among sets of many variables by considering the
intercorrelations of the variables (Tabachnick and Fidell, 1998). When this method works
well, it points to interesting relationships that might not have been obvious from the
examination of the raw data alone. Therefore, we considered factor analysis was an
appropriate method for use in this research. However, there are two types of factor
analysis i.e. exploratory analysis and confirmatory factor analysis. Exploratory factor
analysis tries to discover structures in the variables used, whereas confirmatory factor
analysis chooses variables to confirm the structure (Child, 1991). Therefore, this research
employed exploratory factor analysis that was judged to be more suitable with our study
objectives. Factor analysis is used to determine the perceived attributes of electronic
banking. Pearson correlation coefficients between each of the variables addressed in the
questionnaire were computed, and the intercorrelations of items within each logical
category were examined. Factor analysis procedures were then used to derive groupings
of the perceived attributes of electronic banking reduction. These groupings were derived
either to support Rogers classifications (1983) or suggest new factors.
In general, factor analysis required three stages i.e. appropriateness of the factor analysis
method, factor extraction and factor rotation.
The first stage was to examine the appropriateness of the data to use with factor analysis.
There are many ways to measure the appropriateness of the data. The commonly used
method is the Kaiser-Meyer-Olkin (KMO) measurement. This method involved measuring
the sampling adequacy and analysing the value of the variance. The reason that we chose
this method is because it is compatible with the principles of component analysis (Child,
1991). In addition, Field (2000) also concluded that when the number of variables is less
than 30 and the sample size is more than 250, then Kaisers method is more suitable.
193
Kaisers measure gives the overall sampling adequacy and a measure of the sampling
adequacy for each indicator. Also Kaiser and Rice (1974 was quoted in Sharma, 1996)
suggested that values more than or equal to 0.9 are very good. However, values greater
than 0.8 are generally acceptable. Values below 0.6 are unacceptable (Sharma, 1996).
The second stage involved extracting the factors. The main aim of factor extraction was to
examine a set of measured variables and make an initial decision about the number of
factors. In the study, the criteria for the number of factors to be extracted were obtained
from the latent Root or Eigenvalues. The acceptable range of this value, that is considered
significant, should be greater than one or equal to one.
The third stage is the rotation of the factors by making them more interpretable and to
make the final decisions about the numbers of underlying factors (Green et al, 1997). The
objective of rotation is to hopefully give meaning to the final decision by selecting a final
set of factors. The two rotation methods are orthogonal or oblique. The most common
method is to use orthogonal rotation, where the rotated factors are orthogonal to each
other. The orthogonal method allows two ways to rotate factors i.e. Varimax or
Quartimax. In this thesis we used Varimax Rotation with the major objective being to have
a factor structure, where each variable loads highly on only one factor. This means that a
given variable should have a high loading on one factor and near zero loading on any other
factors. This structure represents a characteristic construct for each factor.
The final stage involved interpreting the derived factors. However, the results of the factor
analysis should not be the only tool used in making decisions, but should be used together
with what is known about the construct or constructs that the items or scales assess
(Green et al, 1997).
7.6.3 Logistic regression
The results of the factor analysis were that the data could be divided into small groups of
factors. Therefore, these factors were further examined for the impact on adoption.
Logistic regression is appropriate to use when the dependent is a dichotomy variable and
194
the independent variables are continuous variables, categorical variables, or both. We

found this to be a very useful statistical tool for our study. The dependent variables in this
study are referred to as the adopter and non-adopter groups. Moreover, logistic regression
analysis is normally used to test the hypotheses and get the results to answer the research
questions. There are two major methods that can be used in logistic regression namely the
forced entry method and stepwise method. The forced entry method is the method in
which all the predictors are forced into the model simultaneously. However, this method
should only be applied when the researcher has theoretical support to do this. Moreover,
stepwise methods are based only on a statistical basis and the program will select the best
predictor outcome variables, so this is independent of the researcher. For these reasons,
the forced entry method was more appropriate to this study, which we aimed to use to test
the theoretical framework. The application of the logistic regression method will be
discussed in detail in Chapter Nine.
7.7
Chapter summary
This chapter has provided a detailed description of the methodology and the use of the
quantitative methods used to conduct the research. The objective of the study was to
explore the perceived attributes of electronic banking, which will affect the adoption rate.
The new emerging factors were found from the literature review, focus groups and a
survey, which adds to the existing Rogers framework, and were tested by factor analysis.
The survey instrument was the questionnaire. The questionnaire was examined in detail
with questions and scales being related to the hypotheses that was developed in previous
chapters. The structures of the questionnaires was designed to parallel the three main
electronic banking services i.e. sophisticated ATM, debit card, and telephone banking. The
factor analysis method was used to derive original variables by assessing correlations
among group of variables (perceived attributes). Finally, logistic regression was used to
study the factors influencing adoption as well as testing the hypotheses.
195
Chapter 1
8.
Data Analysis I
(Descriptive Data Analysis)
8.1
Introduction
The purpose of this chapter is to present a descriptive analysis of the data by using
frequencies, independent T-test, Crosstab (Chi-square) and factor analysis. The descriptive
discussion was useful to provide preliminary insights into the data, including general trends
and patterns. The results of the survey are based on the adopter and non-adopter groups
for three different types of electronic banking. The results are divided into five sections.
The first section consists of a description of the study respondents. The second section
addresses the results of a comparison of the mean of the perceived attributes related to
three electronic banking services. The third section addresses the adopters and nonadopters demographic characteristics, attitudinal and perceptual and social interactions.
The fourth section concludes the relationship between the variables in the factor analysis
model. Finally, we test the validity and reliability of the sample.
8.2
General descriptive analysis of respondents
This section presents the general descriptive analysis of the sample compared with the
characteristics of the general population, which it is hoped will adequately represent the
bank customers of Bangkok and the boundary areas. This section aims to give a brief
description of the sample.
150 questionnaires were distributed in three of Bangkoks main business areas (Central
Ladproa, Sukumvit and Ramkhamhaeng). However, only seven completed questionnaires
were returned from this group. Of the remaining questionnaires, 210 were distributed to a
telecommunications company, and to two institutions, namely the National Housing
196
Association and Electricity Generating of Thailand. A further 600 questionnaires were

distributed at the Rajabhat Chandrakasem Institution so we could target part-time
students. In total 960 questionnaires were distributed by hand. The questionnaire covered
three products, namely, sophisticated ATM, telephone banking and debit cards. Each
respondent received one questionnaire. In addition, there were three different types of
questionnaire, each associated with a different type of electronic banking product. Before
distributing the questionnaires, the respondents would be asked to classify which type of
service they had mainly been using. For the non-adopter group, the respondent would be
asked whether they have ever used these types of products before. 501 questionnaire
papers were collected at the distribution points and by mail, however, 55 of the
questionnaires returned were unusable, giving a response rate of 52.18%.
Table 8.1 Composition of the people who responded
Users
Financial product
Sophisticated ATM
Debit card
Telephone banking
Adopter
110
66
54
Non-adopter
53
98
65
It was found that there was a problem when distributing the questionnaires to the business
areas. These areas produced a very low response rate when we gave the questionnaires to
people on the street and asked them to return the questionnaires by post. None of
questionnaires were returned by post. However, the questionnaires that we did receive
were filled in at the distribution point, at the time of the distribution.
Because of time limitations and the reduced returns from other distribution methods a
larger proportion of questionnaires were given to part-time students at the Rajabhat
Chandrakasem Institution. However, this group of part-time students consisted of a
variety of occupations, incomes, ages and from different locations. The process of
distribution of questionnaires involved getting permission from the lecturers in the
educational institutions for questionnaires to be given out in the classes and arranging for
them to be picked up the following week.
197
Table 8.2 Questionnaires distribution
Total numbers
distributed
Distribution
numbers for types
of questionnaires:
Questionaires Returned from:

Company
University
Business areas
and
students
institution
210
600
150
-Telephone
banking
-Debit card
-Sophisticated
ATM
70
70
70
200
200
200
50
50
50
Total number of
returned
questionnaires:
48
446
7*
-Telephone
banking
-Debit card
-Sophisticated
ATM
20
15
13
112
158
176
2
3
2
Total
960
501
(Including
unusable
returns)
8.3 Characteristics of the adopter and non-adopter

This section is mainly focused on the general descriptive analysis of the sample. It aims to
give a brief description of the characteristics of Thai bank customers comparing adopter
and non-adopter groups as well as three different types of products. The frequency
analysis and Crosstab Chi-square analysis method were used to examine the data.
8.3.1 The gender of respondents
The results show that 71.25% of females in the sample had adopted sophisticated ATM,
compared with only 63.85% of males. However, the results were the opposite for the
findings for debit card and telephone banking respondents, which showed that 43.75% of
198
males had adopted debit card, compared with only 36.9% of females. Moreover, 53.33%
of males have adopted telephone banking, compared with only 37.28% of females.The
National Statistical Office report of the labour force survey for 1999-2000 concluded that
the number of males that are employed (55.56%) is more than the number of females
(44.43%). The report also illustrated that males have a higher proportion of jobs in
professional, technical, managerial and administrative jobs than females. These areas of
employment are the target groups of electronic banking customers. Therefore it is not
surprising that the results show the group of adopters (telephone banking and debit card)
are more likely to be from the group of males than females.
Table 8.3 The gender of the adopter
Gender
Type of
Product
Telephone banking Debit card
frequency
frequency
(Percent)
(Percent)
Adopter
54
66
(% Of all
(45.37)
(40.24)
respondents)
Adopter female
22
31
(% Of all female
(37.28)
(36.90)
respondents)
Adopter male
32
35
(% Of all male
(53.33)
(43.75)
respondents)
(Figure in brackets is column percentages)
Sophisticated ATM
frequency
(Percent)
110
(67.48)
57
(71.25)
53
(63.85)
Chi-square Tests
Telephone
banking
Value
Pearson
Chisquare
0.351
Debit
Sophisticated
card
ATM
df Asymp. Value df Asymp.
Value
df Asymp.
Sig.
Sig.
Sig.
(2sided)
(2-sided)
(2-sided)
1 0.553 0.798 1 0.372
0.909
1
0.340
199
To test the differences between genders in relation to the adopter and non-adopter groups,
we used Crosstab Chi-square statistical analytical methods, which were suitable for
examining the relationships between variables. We produced the Pearson Chi-square
statistical values to see whether the two variables were independent. The results show that
the difference is not significant between men and women in relation to the adoption of
electronic banking at the 5% level.
8.3.2 The age of the respondents
The majority of the respondents were aged between 21 and 40. This is the highest
proportion of the total sample. This represents the situation for the majority of Bangkoks
population, where 64.54% are employed and are aged between 20 and 39. 15.76% of
Bangkoks population are aged 40 to 49 and 10.67% are aged 50 and over. 9.01% are
aged less than 20 (Thai National Statistical Office, 1998) and are considered to be the
minority of bank customers using electronic banking. The Pearson Chi-square was used to
test the relationship between age and the adoption of electronic banking. The results
showed that the age differences were not significant between the adopter and non-adopter
groups at the 5% level for telephone banking and debit card. The limitations of the Chisquare statistical method is that it is not a suitable method when there are large differences
in the sample groups, such as we have in some of the demographic characteristics of
sophisticated ATM users. In addition, the Chi-square test is not suitable when the expected
frequency is less than 5. Therefore we omit the sophisticated ATM from the test.
Table 8.4 The age of the respondents
Telephone Banking
Debit Card
Sophisticated ATM
Age
Adopter Non-adopter Adopter
NonAdopter
NonFrequency Frequency Frequency
adopter
Frequency
adopter
(Percent) (Percent)
(Percent) Frequency (Percent)
Frequency
(Percent)
(Percent)
21-30
22
35
36
55
64
30
(40.7)
(53.8)
(57.1)
(59.8)
(61.5)
(58.8)
31-40
22
22
22
23
34
19
(40.7)
(33.8)
(34.9)
(25.0)
(32.7)
(37.3)
200
41-50
Total
10
(18.5)
54
(100.0)
6
(9.5)
63
(100.0)
5
(7.9)
63
(100.0)
14
(15.2)
92
(100.0)
6
(5.8)
104
(100.0)
2
(3.9)
51
(100.0)
Chi-square Tests
Telephone
banking
Value
Pearson
Chisquare
3.292
Debit
card
df Asymp. Value df Asymp.
Sig.
Sig.
(2sided)
(2-sided)
2 0.193 2.929 2 0.231
8.3.3 The marital status of the respondents
The marital status percentage of the respondents represents the overall picture of the
Bangkok population. The Thai population has a very low divorce percentage rate (4% in
Bangkok). In addition, the majority of this group, who do divorce, are young people.
Therefore, it is not surprising that the results show a low percentage of widows in this
group.
Table 8.5 The marital status of the respondents
Status
Single
Married
Total
Telephone Banking
Sophisticated ATM
Debit Card
Adopter Non-adopter Adopter Non-adopter Adopter Non-adopter
Frequency Frequency Frequency Frequency Frequency Frequency
(Percent)
(Percent)
(Percent)
(Percent) (Percent) (Percent)
23
33
50
26
37
49
(42.6)
(50.8)
(45.5)
(49.1)
(56.1)
(50.0)
29
(53.7)
54
(100)
31
(47.7)
65
(100)
60
(54.5)
110
(100.0)
27
(50.9)
53
(100.0)
29
(43.9)
66
(100.0)
49
(50.0)
98
(100.0)
201
8.3.4
The education level of the respondents
Previous studies by Rogers (1995); LaBay and Kinnear (1981); Lockett and Littler (1997)
suggested that the adopter groups were more likely to have a higher level of education
than the non-adopter groups.
In this study, the majority of the respondents have been educated to bachelor degree level,
followed by a group at diploma level, whilst the levels at lower or higher education is a
smaller proportion. Pearson Chi-square results were used to test the relationship between
the educational level and the adoption of telephone banking and debit card, whilst we
omitted sophisticated ATM where the expected frequency is less than 5. There was no
significant association between the adopter and non-adopter groups for education at the
5% level for telephone banking and debit card. However, this may be due to a large
respondent group response from the University.
Table 8.6 The level of education between groups of adopter and non-adopter
Telephone banking
Debit card
Education Adopter Non-adopter Adopter
Non-adopter
Level Frequency Frequency Frequency
Frequency
(Percent) (Percent) (Percent)
(Percent)
Diploma
(%)
Bachelor
(%)
Other.
(%)
Total
(%)
16
(29.6)
25
(46.3)
13
(24.1)
54
(100.0)
24
(36.9)
27
(41.5)
14
(21.5)
65
(100.0)
28
(43.1)
28
(43.1)
9
(13.8)
65
(100.0)
28
(28.6)
58
(59.2)
12
(12.2)
98
(100.0)
Sophisticated ATM
Adopter
NonFrequency
adopter
(Percent) Frequency
(Percent)
36
21
(33.6)
(39.6)
58
28
(52.7)
(52.8)
14
4
(13.0)
(7.5)
110
53
(100.0)
(100.0)
Chi-square Tests
202
Pearson
Chi-square
Telephon e banking
Debit card
Value
df Asymp. Sig. Value df
Asymp. Sig.
(2-sided)
(2-sided)
0.703
2
0.704
4.393
2
0.111
8.3.5 The monthly income of the respondent
Previous studies indicated that there is usually a difference between the adopter groups
and non-adopter groups monthly income levels (Rogers, 1995; LaBay and Kinnear, 1981;
Lockett and Littler, 1997). The Thai National Statistical office reported (1999) that the
average household income of the Bangkok Metropolis and greater areas per month is
21,947 Baht whilst expenditure is 17,418 Baht. The average number of people in a
household is 3.2 per family.
Per capita monthly income was 7,866 Baht whilst expenditure was 6,192 Baht for the
Bangkok metropolis and greater areas. Although the data has shown that the majority of
the sample was from the group of people with higher incomes than the average levels of
the Bangkok population, the sample was representative of the Thai potential bank
customers. This research study targets the group of bank customers who had the potential
for using electronic banking and who were earning sufficient money to regularly use
financial transactions. The data shows that the adopter groups of telephone banking and
sophisticated ATM users had a higher income than the non-adopter groups (table 8.7). For
telephone banking, the Pearson Chi-square result shows a significant difference at the 5%
level, indicating adopters and non-adopters have significant associations with incomes. The
results show that higher income groups were more likely to adopt telephone banking.
However, for debit card users, we have found no statistical evidence between the two
groups.
Table 8.7 Monthly incomes

(The exchange rate is approximately 63 Baht equals 1-Pound Sterling, 1999)
Telephone banking
Income/ Adopter
Non-
Debit card
Adopter
Non-
Sophisticated ATM
Adopter
Non-
203
month
Below
8,000 Bt
8,00116,000 Bt
16,00124,000 Bt
More than
24,001 Bt
Total
(%)
Frequency adopter Frequency adopter Frequency adopter

(Percent) Frequency (Percent) Frequency (Percent) Frequency
(Percent)
(Percent)
(Percent)
7
(13.0)
24
(44.4)
10
(18.5)
13
(24.1)
54
(100.0)
22
(33.8)
29
(44.6)
8
(12.3)
6
(9.2)
65
(100.0)
20
(30.3)
30
(45.5)
9
(13.6)
7
(10.6)
66
(100.0)
28
(28.6)
36
(36.7)
18
(18.4)
16
(16.3)
98
(100.0)
32
(29.6)
59
(54.6)
10
(9.3)
7
(6.5)
108
(100.0)
24
(45.3)
23
(43.4)
3
(5.7)
3
(5.7)
53
(100.0)
204
Chi-square Tests
Telephone banking
Deb it card
Value
df
Asymp. Value df Asymp. Sig.
Sig.
(2-sided)
(2-sided)
Pearson 10.101
3
0.018
2.242 3
0.524
Chisquare
8.3.6 The occupation of the respondents
The respondents occupation is one part of the demographic characteristics that can be
used to identify the adopter and non-adopter groups. Previous studies suggest that the
adopter groups were more likely to have a higher status of occupation than the nonadopter groups. The occupations of respondents in this thesis were classified into six
categories, which is a similar representation to the Thai national statistics for nonagricultural groups. Although the sample does not represent the overall majority of the
Thai population in terms of occupation, it does however represent the occupations of
people who were likely to be users of electronic banking.
The data shows that the adopters of electronic banking had a higher status of occupation
than the non-adopter groups. This supports the results from previous studies (Rogers,
1995; LaBay and Kinnear, 1981; Lockett and Littler, 1997) indicating that the adopter
groups tend to have a higher status of occupation. These types of occupation normally
require the high use of regular banking transactions. In addition, these groups tend to have
very little spare time to do any transactions at the bank branch. Therefore electronic
banking serves their needs when doing financial transactions outside of branch hours or via
telephone or by using a debit card. 48.9% of adopters of sophisticated ATM, 59.2% of
adopters of telephone banking and 39.2% of adopters of debit card were from the groups
of professional, managerial or administration staff. The reason that these categories of
occupations used telephone banking may be that it reduced the time needed for services at
their bank branch. However, the majority of the non-adopter groups were from the groups
of professionals etc. there were also some people associated with the low-income groups,
particularly the group of students, the unemployed and housewives (see Table 8.8).
205
Table 8.8 The occupation of the respondents
Telephone banking
Occupation
Adopter
NonFrequency adopter
(Percent) Frequency
(Percent)
Entrepreneurs,
13
retailer and own (24.1)
business
Professional,
32
managerial and
(59.3)
admin staff
Government
3
and
(5.6)
privatisation
officer
Clerical, sale &
5
service workers
(9.3)
Professional
1
technology staff
(1.9)
Others i.e.
0
student,
(0)
unemployed
housewife
Total
54
(%)
(100.0)
Debit card
Adopter Non-adopter
Frequency Frequency
(Percent)
(Percent)
Sophisticated ATM
Adopter
Frequency
(Percent)
Non-adopter
Frequency
(Percent)
2
(3.1)
6
(9.1)
6
(6.1)
10
(9.1)
3
(5.7)
14
(21.5)
26
39.4
32
32.7
53
(48.2)
18
(34.0)
23
(35.4)
15
(22.7)
35
(35.7)
16
(14.5)
12
(22.6)
5
(7.7)
13
(20.0)
8
(12.3)
3
(4.5)
8
(12.1)
8
(12.1)
5
(5.1)
7
(7.1)
13
(13.3)
12
(10.9)
6
(5.5)
13
(11.8)
5
(9.4)
6
(11.3)
9
(17.0)
65
(100.0)
66
(100.0)
98
(100.0)
110
(100.0)
53
(100.0)
8.3.7 Social activities of the respondents
Social activities are one part of the measurement of social interactions and communication
behaviour factors. We expected that the adopter groups were more likely to be involved
with social activities than the non-adopter groups. Therefore, in this section we compared
the numbers of both groups who participated in monthly social activities.
The majority of the people in the sample had taken part in some social activities at least
once or twice a month, whilst a minority had done so more than four times per month.
However, Pearson Chi-square results show that there was no significant association at the
206
5% level, indicating no relationship existed between social activities and the type of bank
customer (adopter and non-adopter groups) who used telephone banking and debit cards.
Table 8.9 Social activities and the types of electronic banking customer
Telephone banking
Debit card
Social Adopter Non-adopter Adopter Non-adopter
activities Frequency Frequency Frequency Frequency
(Percent) (Percent) (Percent) (Percent)
None
1-2
3-4
More
than 4
Total
8
(14.8)
27
17
(26.6)
32
11
(16.9)
35
19
(19.4)
52
(50)
14
(25.9)
5
(9.3)
54
(100.0)
(50)
8
(12.5)
7
(10.9)
64
(100.0)
(53.8)
10
(15.4)
9
(13.8)
65
(100.0)
(53.1)
22
(22.4)
5
(5.1)
98
(100.0)
Sophisticated ATM
Adopter
NonFrequency
adopter
(Percent)
Frequency
(Percent)
27
16
(25.0)
(30.2)
59
22
(54.6)
18
(16.7)
4
(3.7)
108
(100.0)
(41.5)
8
(15.1)
7
(13.2)
53
(100.0)
Chi-square Tests
Pearson
Chi-square
8.3.7.1
Teleph one banking

Value
df Asymp.
Sig.
(2-sided)
4.821
3
0.185
De bit card
Value
df
Asymp.
Sig.
(2-sided)
4.606
3
0.203
Frequency of moving house
The frequency of moving house is one part of the socio-economic characteristics. We

examined whether there was a relationship between the frequency of moving home and
financial activities. Previous studies have shown that people who move house frequently
are more likely to be part of the group of adopters (Lockett and Littler, 1997). The results
show that the majority of the people in the sample were from the group of people who
have never left home or have moved only once. However this is not surprising because
207
Thai culture is traditionally built upon the extended family. The new generations would
normally stay at home until they married or until sometime soon after they married.
However, there are still a high proportion of newly married couples that would stay
permanently with their parents as an extended family. The Chi-square Pearson results show
that there was no significant association at the 5% level, indicating no relationship exists
between the type of bank customer and the number of times the person has moved home.
Table 8.10 Frequency of moving house and the type of electronic banking
customers.
Number
of times
moved
house:
None
One
Two
Three or
more
Total
Telephone
adopter
14
(25.9)
21
(38.9)
14
(25.9)
5
(9.3)
54
(100.0)
banking
Debit card
non-adopter adopter
nonadopter
23
(35.9)
23
(35.9)
7
(10.9)
11
(17.2)
64
(100.0)
26
(39.4)
15
(22.7)
17
(25.8)
8
(12.1)
66
(100.0)
44
(45.4)
27
(27.8)
11
(11.3)
15
(15.5)
97
(100.0)
Sophisticated ATM
adopter
non-adopter
28
(25.9)
36
(33.3)
24
(22.2)
20
(18.5)
108
(100)
15
(28.8)
16
(30.8)
10
(19.2)
11
(21.2)
52
(100)
Chi-square Tests
Telephon e banking Deb it card
Sophisticate d ATM
Value df Asymp. Value df Asymp.
Value
df Asymp.
Sig.
Sig.
Sig.
(2-sided)
(2-sided)
(2-sided)
Pearson 6.059
3 0.109 5.787 3 0.122
0.456
3
0.928
Chisquare
8.3.7.2
Working hours of the respondents
208
The groups of bank customers who work longer hours are likely to be members of the
adopter group (Lockett and Littler, 1997). The explanation for this could be that
electronic banking is replacing their conventional methods of banking that would normally
be done with the bank through their branch. Therefore, the number of working hours is
considered as one of the demographic characteristic factors that influence bank customers
to adopt new technology. In this section we examined the number of working hours
compared between the adopter and non-adopter groups. The results show that the
majority of the people in the sample work around 21 to 40 hours per week. These are
normal working hours in most government offices and companies. However many
companies also operate on Saturdays or out of normal working hours during the
weekdays. Therefore, we have also found a significant number of people who work more
than 40 hours per week and are also the users of debit cards. The majority of the nonadopter groups work more than 40 hours per week. However, there was no significant
association at the 5% level for the Pearson Chi-square for debit card and sophisticated
ATM. This suggests that there was no relationship between the adopter or non-adopter
and their number of working hours.
209
Table 8.11 Number of working hours and the type of electronic banking customer
Working
hours
0-20
hours/week
21-40
hours/week
More than
40
hours/week
Total
Telephone banking Debit Card

Adopter
Non- Adopter Nonadopter
adopter
4
8
5
16
(7.4)
(12.5)
(8.1)
(16.3)
29
37
30
38
(53.7)
(57.8) (48.4)
(38.8)
21
19
27
44
(38.9)
(29.7) (43.5)
(44.9)
54
(100.0)
64
62
(100.0) (100.0)
98
(100.0)
Sophisticated ATM
Adopter
Nonadopter
10
7
(9.4)
(13.2)
63
25
(59.4)
(47.2)
33
21
(31.1)
(39.6)
62
(100.0)
98
(100.0)
Chi-square Tests
Deb it card
Value df Asymp.
Sig.
(2-sided)
2.816 2 0.245
8.3.7.3
Sophisticate d ATM
Value
df Asymp.
Sig.
(2-sided)
4.121
2 0.127
Number of hours spent reading
Reading printed media is one part of the measurement of communication behaviour

factors. Previous studies (Rogers, 1995) suggested that the adopter groups were more
involved with mass media distribution than non-adopters, whilst Lockett and Littler (1997)
demonstrated that telephone banking customers who read more printed media are more
likely to be from the group of adopters. The results show that the majority of the sample
reads printed media between 5 and 6 times per month. However there was no significant
association at the 5% level by Pearson Chi-square, indicating no relationship exists
between the type of bank customer (adopter and non-adopter groups) and the number of
times that they read per month.
210
Table 8.12 Number of people reading and the type of electronic banking customer
Number of
times
reading
0-2
Telephone banking
Debit card
Sophisticated ATM
Adopter
Non- Adopter
NonAdopter
Nonadopter
adopter
adopter
3-4
5-6
Total
9
(17.0)
9
(17.0)
5
(9.4)
53
(100.0)
15
(24.2)
14
(22.6)
5
(8.1)
62
(100.0)
8
(12.1)
19
(28.8)
7
(10.6)
66
(100.0)
23
(23.5)
21
(21.4)
13
(13.3)
98
(100.0)
29
(27.1)
25
(23.4)
9
(8.4)
107
(100.0)
14
(26.4)
9
(17.0)
5
(9.4)
53
(100.0)
Chi-square Tests
Telephone banking
Value df Asymp.
Sig.
(2-sided)
Pearson 1.964
3 0.580
Chisquare
8.3.8
Deb it card
Sophisticate d ATM
Value df Asymp.
Value
df Asymp.
Sig.
Sig.
(2-sided)
(2-sided)
4.183
3 0.242
1.029
3 0.794
There are two types of consumption pattern that we examined in this study i.e. Technology
products and financial products usage.
8.3.8.1
Technology products.
211
In this section, we examined the effects of higher usage of financial and technology
products on the adoption of electronic banking. Lockett and Littler (1997) have found
evidence that the usage of technology products was affecting telephone banking adoption.
Therefore, in this study we investigated the consumption patterns of technology products
for three types of electronic banking. Chi-square analysis was used to test the significant
differences between the adopter and non-adopter groups. The results show that there were
significant differences associated with usage of technology products for telephone banking
i.e. mobile phone, fax machine, computer and Internet at the 5% level, whilst the wireless
telephone was significantly different at the 10% level. However, no evidence was found
for the answering machine. For debit cards, no evidence was found for any type of
technology product. For sophisticated ATM, there was a significant difference at the 5%
level for the Fax machine.
Table 8.13 Comparison between the adopter and non-adopter for answering machine usage.
Telephone banking
Debit card
Sophisticated ATM
Answering Not own Own or Total Not own or Own or Total Not own or use Own or Total
machine
or not use use
not use use often
often
use often
often
often
often
non-adopter
57
8
65
53
13
66
47
6
53
(57.6)
(40.0) (54.6)
(39.0)
(46.4) (40.2)
(32.4)
(35.3)
(32.7)
adopter
42
12
54
83
15
98
11
109
(42.4)
(6.0) (45.4)
(61.0)
(53.6) (59.8)
(67.6)
(64.7)
(67.3)
99
20
119
136
28
164
145
17
162
(100.0) (100.0) (100.0) (100.0)
(100.0) (100.0)
(100.0)
(100.0) (100.0)
Chi-square
value 2.074
Value 0.537
Value
0.0
value
df
1
df
1
df
1
Sig. (2tailed) 0.150
Sig.
(2tailed) 0.811
212
Table 8.14 Comparison between the adopter and non-adopter for wireless telephone
Telephone banking
Wireless Not own or Own or Total
telephone not use use often
often
non46
19
65
adopter
(61.3)
(43.2) (54.6)
adopter
29
25
54
(38.7)
(56.8) (45.4)
Total
75
44
119
(100.0)
(100.0) (100.0)
Chi-square
value 3.686
value
df
1
Debit card
Sophisticated ATM
Not own Own and Total Not own and Own
Total
and use use often
use often and use
often
often
45
21
66
39
14
53
(40.9)
(38.9)
(40.2)
(36.1)
(25.9)
(32.7)
65
33
98
69
40
109
(59.1)
(61.1)
(59.8)
(63.9)
74.1)
(67.3)
110
54
164
108
54
162
(100.0)
(100.0) (100.0)
(100.0)
(100.0) (100.0)
value 0.61
value 1.697
df
1
df
1
Sig. (2tailed)
0.804
Sig.
(2tailed) 0.193
Table 8.15 Comparison between the adopter and non-adopter for mobile phone
Telephone banking
Debit card
Sophisticated ATM
Mobile Not own Own and Total Not own Own and Total Not own and Own and Total
phone and not use use often
and use use often
use often use often
often
often
Non47
18
65
29
37
66
33
20
53
adopter
(77.0)
(31.0) (54.6) (36.7)
(43.5) (40.2)
(38.4)
(26.3)
(32.7)
Adopter
14
40
54
50
48
98
53
56
109
(23.0)
(69.0) (45.4) (63.3)
(56.5) (59.8)
(61.6)
(73.7)
(67.3)
Total
61
58
119
79
85
164
86
76
162
(100.0)
(100.0)
(100.0) (100.0) (100.0)
(100.0)
(100.0) (100.0)
Chivalue .397
value 0.792
value 2.664
square
df
1
df
1
df
1
value
Sig. (2 tailed) 0.00
213
Table 8.16 Comparison between the adopter and non-adopter for fax machine
Telephone banking
Debit
card
Fax
not own own and Total not own own and Total
Machine and not use use
and use use often
often
often
often
Non60
5
65
55
11
66
adopter
(61.9)
(22.7) (54.6) (40.4)
(40.7)
(40.5)
Adopter
37
17
54
81
16
97
(38.1)
(77.3) (45.4) (59.6)
(59.3)
(59.5)
Total
97
22
119
136
27
163
(100.0) (100.0) (100.0 (100.0)
(100.0) (100.0)
)
Chi-square
value 3.686
value 0.001
value
df 1
df
1
Sig (1tailed) 0.055
Sig (1 tailed) 0.977
Sophisticated
ATM
not own own and Total
and use use often
often
48
5
53
(37.2)
(15.2)
(32.7)
81
28
109
(62.8)
(84.8)
(67.3)
129
33
162
(100.0)
(100.0) (100.0)
value 5.808
df
1
Sig (1 tailed) 0.016
Table 8.17 Comparison between the adopter and non-adopter for computers
Telephone banking
Computer Not own Own and Total
and use use often
often
Non45
20
65
adopter
(62.5)
(42.6) (54.6)
Adopter
27
27
54
(37.5)
(57.4) (45.4)
Total
72
47
119
(100.0)
(100.0) (100.0)
Chi-square
value 4.565
value
df
1
Sig.
(2 tailed) 0.033
Debit card
Not own Own and
and use use often
often
43
23
(41.3)
(38.3)
61
37
(58.7)
(61.7)
104
60
(100.0)
(100.0)
value 0.144
df
1
Sig.
(2 tailed)
Sophisticated ATM
Total Not own Own and Total
and use use often
often
66
35
18
53
(40.2)
(36.5) (27.3) (32.7)
98
61
48
109
(59.8)
(63.5) (72.7) (67.3)
164
96
66
162
(100.0) (100.0) (100.0) (100.0)
value 1.499
df 1
0.705
214
Table 8.18 Comparison between the adopter and non-adopter for Internet
Telephone banking
Internet not own or own or
not use use often
often
Non56
9
adopter
(62.9)
(30.0)
Adopter
33
21
(37.1)
(70.0)
Total
89
30
(100.0)
(100.0)
Chi-square
value 9.811
value
df
1
Sig.
(2 tailed)
Debit card
Sophisticated ATM
Total not own or own or Total not own or own or Total
use often use often
use often
use
often
65
52
14
66
44
9
53
(54.6)
(40.3)
(40.0) (40.2)
(34.9)
(25.7) (32.9)
54
77
21
98
82
26
108
(45.4)
(59.7)
(60.0) (59.8)
(65.1)
(74.3) (67.1)
119
129
35
164
126
35
161
(100.0) (100.0) (100.0) (100.0)
(100.0)
(100.0) (100.0)
value 0.001
value 1.051
df
1
df
1
Sig.
(2 tailed) 0.974
Sig. (2 tailed)0.305
0.002
8.4
The perceived attributes of electronic banking
In this section, independent T-tests were used to compare the mean and significant values
between the adopter and non-adopter groups. The results were useful to illustrate the
variables for each perceived attribute to determine whether or not they were influencing
the adoption of electronic banking by comparing the differences between both groups. It is
also useful to use as an exploratory analysis for further analysis.
The following types of bank services are now examined:
-Telephone banking
-Debit card
-Sophisticated ATM
8.4.1 The perceived attributes of telephone banking
The questionnaire related to the perceived attributes of telephone banking services and
employed a five-point Likert scale with 1 representing strongly agree, 2 agree, 3
neutral, 4 disagree and 5 strongly disagree. The results of the groups mean and
significance values tested the differences between both the adopter and non-adopter
groups for perceived attributes. These are shown in the Table 8.19 as follows:
215
Table 8.19 Perceived attributes of telephone banking
Factors
Relative
Advantages
Questions
Nonadopter
Mean
(SD) / N
Sig.
1tailed
By using telephone banking,

transactions can be done at any
time outside of banking hours.
1.59(.63) 2.11(.76)
54
64
0.000
Time is saved when using

telephone banking compared to
using services at the branch.
1.56(.54) 1.85(.64)
54
65
0.004
There would be less use of the

services at the branches if all
banking business could be done
over the telephone banking.
1.94(.86) 2.26(.76)
54
65
0.017
Telephone banking is not useful

to me.
3.65(.97) 3.32(1.43) 0.000

54
65
If we can do all our bank

transactions via telephone
banking, it means there is no
need to use the services at the
branch
Compatibility I would be quite happy to
conduct the majority of my
banking business by telephone
Factors
Adopter
Mean
(SD) / N
2.09(.92) 2.40(.7)
54
65
0.025
1.50(.54) 1.94(.70)
54
65
0.000
Some financial transactions are

too important to be arranged
over the telephone (e.g.
mortgage)
2.02(.86) 2.03(1.19) 0.335

54
65
I find bank branch opening hours

to be very inconvenient.
2.26(.90) 2.49(1.00) 0.100

53
65
Questions
Complexity Telephone banking services are

(Ease of use) too complicated to operate.
Adopter
Mean
(SD) / N
Nonadopter
Mean
(SD) / N
3.43(.96) 2.91(.72)
54
65
Sig.
1tailed
0.000
216
It is easy to remember the

2.44(.98) 2.56(.69)
passwords and security questions 54
64
involved in telephone banking
Trialability It would be better to try
1.91(.87) 1.85(.62)
telephone banking before
54
65
committing oneself
Observability It is a good idea to observe
2.31(.64) 2.25(.85)
someone using Telephone
54
65
banking before I use it
Cost
Perceived
risk
Control
0.194
0.370
0.402
Bank staff give enough

information about Telephone
banking so new customer use
them
It is better to pay the price of the
phone call to conduct my
banking business over the
telephone than to have to make
the time and effort to visit a bank
branch
1.59(.53) 3.26(1.06) 0.000

54
65
2.09(1.01) 2.62(.82)
54
65
0.001
I am prepared to purchase/rent
any equipment purely for the
purpose of telephone banking
I feel apprehensive about
conducting banking business
over the telephone because
anybody could be listening in.
2.91(1.1) 3.09(.88)
54
65
0.144
3.06(1.0) 2.46(.81)
53
65
0.000
There is a greater risk of error

when conducting banking
business over the telephone than
dealing with a person in the bank
branch
3.00(1.6) 2.43(.69)
54
65
0.000
Using telephone banking gives

control over financial business
2.57(1.6) 2.92(1.15) 0.068

54
65
(Scale value is ranking from 1-strongly agree, 2-agree, 3-neutral, 4-disagree, 5-strongly disagree)
The table 8.19 above refers to the respondents perception of innovative attributes. The
results show the differences in the mean, which for some values was significant as revealed
by the independent sample T-tests.
With respect to the statement measuring relative advantage, there were significant
differences in mean at the 1% and the 5% levels for the benefits of using telephone
217
banking. Adopter groups perceived greater benefits than the non-adopter groups in terms
of the convenience of doing their transactions at anytime outside banking hours saving
them time when compared to using the services at their branch. In addition, the adopter
groups had a higher level of agreement than the non-adopter groups that they do not need
to use the services at their bank branch if they can do all their financial transactions via
telephone banking. The final variable is the usefulness of telephone banking. Adopter
groups disagreed to a greater extent that telephone banking had no use for them than the
non-adopter groups.
With respect to the statement measuring compatibility, there was a significant difference in
the mean at the 1% level for willingness to conduct major financial transactions by
telephone banking. Adopter groups were more willing to do the majority of their banking
transactions via telephone banking than the non-adopter groups. However, there were no
significant differences in mean at the 5% level for the practicalities of doing all transactions
via the telephone and the inconvenience of bank opening hours. This means that both the
adopter and non-adopter groups agreed that some transactions were too high risk to do by
telephone and both groups also found bank opening hours to be very inconvenient.
With respect to the statement measuring complexity, there was a significant difference in
mean at the 5% level for operating difficulty. This means the adopter groups did not agree
that telephone banking was too complicated to operate whilst the non-adopter groups did.
However, there were no significant differences in mean at the 5% level for the ease of use
of telephone banking. Both the adopter and non-adopter groups agreed that they had no
problems remembering the passwords and security questions when they wanted to use
telephone banking services.
With respect to the statement measuring trialability, there was no significant difference at
the 5% level for the process of trying out services, which means that both groups agreed
that it was beneficial to try to use telephone banking before they committed themselves.
With respect to the statement measuring observability, there was a significant difference in
the mean at the 5% level for knowledge required to use the service. Adopters perceived
that banks did give enough information on how to use telephone-banking services whilst
218
the group of non-adopter were not satisfied with the levels of information received.
However there was no significant difference at the 5% level for service observation
meaning that both groups did agree that it was a good idea to observe someone using the
services first.
With respect to the statement measuring cost, there was a significant difference in the
mean at the 5% level for willingness to pay for services. Adopters are willing to pay a fee
or charge to conduct telephone banking rather than make the time and effort to visit a
branch. However, there was no significant difference at the 5% level for purchasing of
services. When asked about the purchase or rent of any equipment, there were no
differences between adopters and non-adopters. Both groups indicated that they are not
willing to accept the cost of purchasing additional equipment.
With respect to the statement measuring perceived risk, there was a significant difference
in the mean at the 5% level for the perceived risk of a criminal act and the perceived risk
of transaction errors. Adopters of telephone banking perceived less risk of a criminal act
and errors whilst conducting their banking transactions via telephone than the non-adopter
groups.
With respect to the statement measuring perceived control, there was a significant
difference at the 10% level in the mean between adopter and non-adopter groups.
Adopters perceived confidence in the bank guarantees for all transactions via telephone
banking and the control of financial services to a far greater extent than the non-adopter
group.
The proposed measures of perceived service quality i.e. reliability, trust/confidence and
control should be addressed as the important perceived attributes of innovations that may
affect the rate of adoption. These are shown in detail as follows:
Table 8.20 Perceived service quality of telephone banking
Perceived
service
Question
Adopter
Mean
Nonadopter
Sig.
(1tailed)
219
quality
Reliability
Trust and
confidence
(SD)/ N
Mean
(SD)/ N
I feel that telephone

banking is able to
conduct transactions as
accurately as the bank
branch
2.07(.80) 2.55(.69)
54
65
0.000
Routine banking
services are better
conducted by telephone
banking through an
impersonal voice
response system than
with a human operator
2.31(.91) 2.69(.86)
54
65
0.011
Telephone banking can

be guaranteed by the
bank that all the
transactions have taken
place.
2.22(.90) 2.45(.77)
54
65
0.077
Scale value is ranking from 1-strongly agree, 2-agree, 3-neutral, 4-disagree, 5-strongly disagree.
With respect to the statement measuring perceived service quality, there were two factors
that measured the service quality for telephone banking i.e. reliability and trust/confidence.
The results show that there was a significant difference at the 5% level in the mean for
reliability. Adopter groups perceived that using services via telephone banking were as
accurate as completing the same transactions at their branch far more than the non-adopter
groups. In addition, the adopter groups also perceived a higher service quality when doing
transactions via a voice response system than with a human at the branch than the nonadopter groups. For perceived trust/confidence, there were significant differences at the
10% level in the mean for both variables. Adopters perceived confidence in the bank
guarantees for all transactions via telephone banking and the control of financial services
to a far greater extent than the non-adopter group.
8.4.2 The perceived attributes of the debit card
The results of comparing the means between the adopter and non-adopter of debit cards
are shown in the table as follows:
220
Table 8.21 Perceived attributes of the debit card
Factors
Adopter
Mean
(SD) N
Non-adopter
Mean
(SD) N
Sig.
1tailed
Using debit cards means there is

no need to carry cash
2.23(1.11)
66
2.32(1.01)
98
0.297
Paying by debit card saves time
1.86(.57)
66
2.38(.93)
97
0.000
Debit cards are similar to mobile

phones. At first we wondered why
we needed it but in time we come
to wonder how we would do
without them
2.47(.86)
66
2.39(.73)
98
0.256
Debit card is not useful to me
3.82(.77)
66
2.97(.98)
95
0.000
2.56(.95)
66
2.35(.85)
98
0.067
Adopter
Mean
(SD) N
Non-adopter
Mean
(SD) N
Sig.
1tailed
Compatibility The debit card is familiar because

it is a combination of traditional
ATM and the credit card.
1.85(.59)
65
2.22(.71)
97
0.000
I find bank branch opening hours

to be very inconvenient.
2.41(1.1)
66
2.20(.93)
98
0.109
Complexity It is very easy and convenient to

(Ease of use) use debit cards because they can
be used like cash.
1.92(.81)
66
2.06(.84)
98
0.149
Observing others using debit card,

before first use, is a good idea.
2.62(.89)
66
2.53(.88)
98
0.260
Before using a debit card you

should find out as much
information about how to use it as
possible
1.76(.63)
66
1.75(.60)
97
0.479
Relative
Advantages
Question
Using a debit card means doing

less transactions at the branch
Factors
Observability
Question
221
Trialability
It would be good to try debit

cards before committing oneself.
2.05(.87)
66
1.99(.65)
98
0.329
Perceived
Risk
There is a greater risk of criminal

acts when using debit cards rather
than cash
3.02(1.17)
66
3.14(1.03)
98
0.208
There is concern about using debit

cards because they could be stolen
and used.
2.82(.99)
66
2.76(1.07)
98
0.351
Paying the annual fee for a debit

Card to give more convenience is
acceptable
2.08(.85)
66
2.43(.93)
98
0.006
Debit cards control the use of

money more than credit cards
2.23(1.1)
66
2.58(1.07)
97
0.022
Cost
Control
Scale value is ranking from 1-strongly agree, 2-agree, 3-neutral, 4-disagree, 5-strongly disagree
With respect to the statement measuring relative advantage, there was a significant
difference at the 5% level for saving personal time used for financial transactions and the
usefulness of a debit card. Adopters perceived that they were saving their time when using
debit cards far more than the non-adopter. In addition, non-adopters perceived that debit
cards were not useful for them more than the adopters groups. However, the results show
that there was no significant difference at the 5% level for need to use cash and the need to
use a debit card. Both groups agreed that they did not need to carry cash if they used a
debit card as well as they both groups agreed that the debit card was necessary to them.
the mean at the 5% level for the user familiarity of a service. Adopters perceived that debit
cards were more familiar to them than the non-adopter groups. However, there was no
significant difference in the mean at the 5% level for inconvenient bank opening hours.
Both groups agreed that branch-opening hours were not compatible with their
requirements.
222
With respect to the statement measuring complexity, there was no significant difference in
the mean at the 5% level for ease of use of debit cards. Both groups agreed that it was
very convenient and easy to use debit cards.
With respect to the statement measuring observability, there was no significant difference
in the mean at the 5% level for service observation and knowledge requirement. Both
groups agreed that they should find out more information by observing other bank
customers using debit cards before they committed themselves.
With respect to the statement measuring trialability, there was no significant difference at
the 5% level for the process of try out a service, which means that there was no significant
difference between the adopter groups and non-adopter groups. Both groups agreed that it
was good to try using debit cards before they committed themselves.
With respect to the statement measuring perceived risk, there was no significant difference
in the mean at the 5% level for the perceived risk of a criminal act and the perceived risk
of theft. Both groups were concerned about their bank cards being stolen.
With respect to the statement measuring cost, there was a significant difference in the
mean at the 5% level for charges for services. Adopters are willing to pay fees far more
than the non-adopter groups on condition that they received more convenience. With
respect to the statement measuring perceived control, there was a significant difference at
the 5% level in the mean for the control of financial services. Adopters perceived higher
control over the use of their money if compared with using credit cards than non-adopters.
Regarding the proposed model of perceived service quality i.e. reliability, and
trust/confidence, these should be addressed as one of the important perceived attributes of
innovations that may affect the rate of adoption. These are shown in detail as follows:
Table 8.22 Perceived service quality of debit card
Perceived
Question
Adopter
Non-adopter
Sig.
223
service
quality
factors
Mean
(SD) N
Mean
(SD) N
1 tailed
Reliability
Debit cards are good because

they give a slip to prove that all
the transactions have taken
place.
1.86(.58)
66
2.20(.66)
97
0.000
Trust and
confidence
Debit cards give confidence

because they dont have any
problems using them
2.52(1.00)
66
2.70(.86)
98
0.099
that measured the service quality for telephone banking i.e. reliability, trust/confidence and
control. The results show that there was a significant difference at the 5% level in the
mean for reliability. Adopter groups perceived a higher reliability of the debit card
transactions because the customer received a transaction slip to prove the transaction
actually happened. For perceived trust and confidence, there was a significant difference at
the 10% level for the users confidence of the service. Adopter groups perceived more
confidence when using a debit card than non-adopters.
8.4.3 The perceived attributes of sophisticated ATM
The results comparing means between the adopter and non-adopter of debit cards are
shown in the table as follows:
Table 8.23 Perceived attributes of sophisticated ATM
Factors
Questions
Adopter
Mean
(SD)/N
Nonadopter
Mean
(SD)/N
Sig.
1
tailed
224
Relative
Advantages
Using a sophisticated ATM rather 1.41(.63)

than standing in a queue waiting
107
for service at a counter would
save time.
1.57(.6)
53
0.076
It would not be necessary to enter 2.21(.96)

a bank branch if banking business 106
could be done by sophisticated
ATM
2.23(.95)
53
0.449
Sophisticated ATMs are not

useful to me
3.23(1.7)
53
0.024
3.6(1.02)
109
225
Factors
Questions
Adopter
Mean
(SD)N
Compatibility I would be quite happy to conduct 1.97(.72)

the majority of my banking
108
business by sophisticated ATMs
Complexity
(Ease of use)
Observability
Trialability
Perceived
Risk
Cost
Control
Nonadopter
Mean(SD
)N
2.28(.93)
53
Sig.
1
tailed
0.010
I find bank branch opening hours 2.25(1.02) 2.09(.95)

to be very inconvenient
108
53
It is easier to remember the
1.81(.81) 2.06(.92)
password for using a sophisticated 107
52
ATM.
0.175
Sophisticated ATMs are less

complicated to use if compare
with depositing money with the
traditional ATM
It is a good idea to observe
someone use sophisticated ATM
before I use it.
2.06(.85)
108
2.60(2.76)
52
0.09
2.31(.88)
110
2.32(.98)
53
0.453
Bank staff gives enough

information about sophisticated
ATM before new customers use
them.
It would be good if we have a
chance to try the service before
we use it
2.46(1.09) 2.38(1.13)
110
53
0.329
1.82(.67)
108
1.68(.67)
53
0.096
2.44(.92)
110
2.37(.89)
52
0.355
There is a great risk of error

when doing transaction with
sophisticated ATM.
0.045
Security is a concern when doing 2.49(1.05) 2.13(.82)

transactions with sophisticated
108
52
ATM
Sophisticated ATM is worth
.52(1.06) 2.68(1.19)
paying a fee for
110
53
0.032
Sophisticated ATMs give control

over my financial business.
0.160
2.86(1.06) 2.70(.99)
110
53
0.200
With respect to the statement measuring relative advantage, there was a significant
difference at the 5% level for saving personal time used for financial transaction and the
226
usefulness of sophisticated ATM. The adopters perceived that they were saving their time
when using sophisticated ATM more than non-adopters. In addition adopters did not agree
that sophisticated ATM was not useful for them far more than the non-adopters. However,
there was no significant difference at the 5% level for necessity of using the bank branch.
Both adopters and non-adopters did agree that they would have no need to use the
services at their branch if they could do their banking transactions via sophisticated ATM.
the mean at the 1% level for a willingness to conduct major financial transactions by
sophisticated ATM. Adopter groups were happier to do the majority of their banking
transactions via sophisticated ATM compared to non-adopter groups. However, there
were no significant differences in mean at the 5% level for the inconvenience of bank
opening hours, which means that both the adopter and non-adopter groups agreed that
bank opening hours were inconvenience to them.
With respect to the statement measuring complexity, there were significant differences in
the mean at the 5% and 10% levels for the ease of use of services and operating difficulty.
Adopter groups found they had fewer problems remembering the passwords needed to use
sophisticated ATM compared to non-adopters. In addition adopters also more perceived
the operation of sophisticated ATM to be much less complicated than the non-adopters
when compared to the traditional ATM machine.
With respect to the statement measuring observability, there was no significant difference
in the mean at the 5% level for service observation and knowledge requirements. Both
groups agreed that they should find out more information by observing other bank
customers using debit cards before they committed themselves.
With respect to the statement measuring trialability, there was a significant difference in the
mean at the 10% level for the process of trying out services. Adopter groups have
perceived greater benefits than non-adopters about the trying out of debit cards.
With respect to the statement measuring perceived risk, there was a significant difference
in the mean at the 10% level for security concerns. Adopters perceived greater concern
227
about security issues during transactions using sophisticated ATM than non-adopters.
However, there was no significant difference in the mean at the 5% level for perceived risk
of transaction errors.
With respect to the statement measuring cost, there was no significant difference in the
mean at the 5% level regarding charges for services. Adopters are willing to pay a fee or
charge to use services far more than the non-adopter groups.
With respect to the statement measuring perceived control, there was no significant
difference at the 5% level in the mean for the control of financial services. The adopter and
non-adopter groups perceived that they have more control over their financial business
when using sophisticated ATM.
Table 8.24 The perceived service quality of sophisticated ATM
Factors
Reliability
Factors
Questions
Adopter
Mean
(SD) N
Non-adopter
Mean(SD)
N
Sig.
1
tailed
It is less risk and more reliable

to deposit money and cheques
with sophisticated ATM
because it gives a record slip.
1.83(.80)
110
1.98(.80)
52
.138
Sophisticated ATM is able to

conduct transactions accurately
as well as if the transactions
were done at the counter.
2.22(.92)
110
2.46(1.02)
52
.075
Questions
Adopter
Mean
(SD) N
Non-adopter
Mean(SD)
N
Sig.
1
tailed
2.27(.98)
110
2.29(1.03)
51
.452
2.74(.91)
110
2.81(1.12)
52
.348
Trust and Sophisticated ATM can

Confidence guarantee that all transactions
have taken place.
Sophisticated ATMs give
confidence because they do not
228
have any problems using them

to measure the service quality for sophisticated ATM i.e. reliability and trust/confidence.
For perceived reliability of service the results show that there was a significant difference
in the mean at the 10% level for the accuracy of the transactions. Adopter groups
perceived accuracy to be as good as they received when doing transactions at their branch.
However, there was no significant difference in the mean at the 5% level for the proof of
transactions. Both adopters and non-adopters perceived that the sophisticated ATM could
give a record to prove the transaction actually happened.
For perceived trust and confidence, there was no significant difference in the mean at the
5% level for a guarantee and confidence of transaction. Both the adopter and non-adopter
groups perceived that the sophisticated ATM transaction would be guaranteed by the bank
and were confident of using the services.
8.5
The personal characteristics
Many studies have considered the effects of perceptual attitudes and the social interaction
of electronic banking as one of the factors that may affect the adoption of electronic
banking (see Chapter Three). However, most studies have found that if perceptual
attitudes and the social interactions are compared with perceived attributes, they are less
influential on adoption. However, in this thesis, there are some variables of perceptual
attitude and new emerging factors of social interaction of electronic banking, namely
friends and family influences that have been added to the study. Therefore, the T-test
independent statistics was used for the preliminary analysis and determine the influences
on the adoption rate.
8.5.1
The attitudinal and perceptual behaviour of telephone banking
229
The results of comparing the means between the adopters and non-adopters of telephone
banking are shown in the table as follows:
Table 8.25 Attitudes toward change and willingness to take risks
Attitude
Questions
Sig.
(1
tailed)
1.72(.63)
53
Nonadopter
Mean(SD)
N
1.98(.57)
65
I like to buy new and

different things
2.17(.80)
53
2.37(.82)
65
0.093
I am usually one of the first

to try new product or
service
2.32(.83)
53
2.60(.79)
65
0.037
2.08(.70)
53
2.51(.95)
65
0.003
Willingness I am willing to try new ideas

to take risks
I generally see my self as a

risk taker rather than being
conservative on decisions I
make
Adopter
Mean
(SD) N
0.009
230
Attitude
Questions
Adopter
Mean
(SD) N
Attitude
toward
change
I am up to date on most
things
1.72(.57)
53
NonSig.
adopter (1 tailed)
Mean(SD)
N
2.06(.61) 0.001
65
I am interested to hear about

new technological
developments
1.68(.58)
53
1.73(.62)
64
0.032
I believe that technological

developments have affected
our lives
1.83(.87)
53
2.0(1.26)
65
0.358
I like to pay by cash as much 2.13(.98)

as possible
53
2.11(.99)
65
0.447
I like to visit my local bank

branch
2.49(.97)
65
0.056
2.23(.80)
53
With respect to the statement measuring venturesomeness, there were significant

differences in the mean at the 5% level for trying new ideas, being an innovator and
risktaker. The buying new and different things variable had significant differences in the
mean at the 10% level, indicating adopter groups are more willing to try new ideas, are
usually one of the first to try a new product or service, and generally see themselves as
risk takers compared to non-adopters. In addition, adopters are likely to be the group of
people who like to buy new products and services to a greater extent than the nonadopters.
With respect to the statement measuring an attitude toward change, there was a significant
difference in the mean at the 1% level for being up to date on new technologies and
services. The results also show the significant differences in the mean at 5% for being
interested in new developing technologies. In conclusion adopters have a more favourable
attitude toward change than non-adopters. However, there was no significant difference at
the 5% level between both groups in terms of attitude toward technology influencing their
daily living and preference to use cash as much as possible.
231
8.5.1.1
Social interaction and communication behaviour of telephone banking
There are many factors that we included for communication behaviour i.e. social activities
and the number of hours spent reading, which we have already examined by using Pearson
Chi-square analysis in the previous sections. Therefore, in this section we will examine the
remaining variable, which we refer to as friends and family. This variable has emerged from
the focus group interviews. Therefore, we did exploratory analysis to determine if this
factor influenced the rate of adoption before looking into further analysis. The results of
comparing means between the adopter and non-adopter of telephone banking are shown in
the following table.
Table 8.26 Social interaction and communication behaviour
Social
Questions
Interaction and
Communication
behaviour
Friend and
When purchasing new
family
technology products I trust
influences
my own instincts more than
advice from others.
Adopter
Mean
(SD)N
Non-adopter
Mean(SD) N
Sig.
(1 tailed)
2.26(.79)
53
2.31(.88)
65
0.390
Friends and family have

influenced me when buying
new products/services
2.55(.87)
53
2.26(.98)
65
0.054
I would only consider using

other financial service if
someone personally
recommended it to me
2.3(.93)
53
2.43(.83)
65
0.188
I am often asked for my

advice on financial matters
2.66(1.0)
53
2.69(1.06)
65
0.434
With respect to the statement measuring communication behaviour, there was no

significant difference at the 5% level for most of the variables except for friends and family
232
influence. The results show that the adopter groups were more likely to be influenced from
friends and family when buying new services or products than the non-adopter groups.
8.5.2 The Attitudinal and perceptual behaviour for debit card
The results of comparing means between adopters and non-adopters of debit card are
Table 8.27 Attitude toward change and willingness to take risk
Attitude and
consumption
patterns
Question
Adopter
Mean
(SD)
N
1.94(.63)
66
Non-adopter
Mean(SD)
N
Sig.
1 tailed
2.02(.76)
98
0.237
2.33(.87)
66
2.36(.82)
98
0.418
I am usually one of the first 2.47(.88)

to try new product or
66
service
2.75(.95)
96
0.029
I generally see my self as a

risk taker rather than being
conservative on decisions
I make
2.26(.83)
97
0.285
Willingness to I am willing to try new

take risks
ideas
I like to buy new and
different things
2.18(.84)
66
233
Attitude and
consumption
patterns
Attitude
toward
change
Question
Adopter
Mean
(SD)
N
1.94(.74)
66
Non-adopter
Mean(SD)
N
Sig.
1 tailed
2.13(.64)
98
0.038
1.61(.65)
66
1.79(.66)
98
0.044
I believe that technological 1.64(.89)

developments have affected 66
our lives
2.09(1.02)
98
0.002
I like to pay by cash as

much as possible
2.39(1.69)
66
2.04(.96)
98
0.045
I like to visit my local bank 2.47(1.04)

branch
66
2.19(.82)
98
0.030
I am up to date on most
things
I am interested to hear
about new technological
Developments
With respect to the statement measuring venturesomeness, there was no significant

difference in mean for the variable at the 5% level except for being an innovator variable.
The results have shown that adopters are usually the first to try new products or services
far more than the non-adopters.
With respect to the statement measuring attitudes toward change, there was a significant
difference in means at the 5% level for attitude toward change, which means adopters have
a more positive attitude toward change i.e. updating knowledge, interest in new
developments and believed that technology affected their lives more than non-adopters,
whilst the non-adopter groups liked to pay by cash and visit their branch more than the
adopter groups.
234
8.5.3
Social interaction and communication behaviour of debit card
The results of comparing means between adopters and non-adopters of debit card are
Table 8.28 Social interaction and communication behaviour
Social
Question
interaction and
communication
behaviour
Friend and
When purchasing new
family
technology products I
influences
trust my own instincts
more than advice from
others.
Adopter
Mean
(SD)
N
2.15(.86)
66
Non-adopter
Mean(SD)
2.22(.88)
98
0.300
2.33(.87)
66
2.38(.88)
98
0.375
I would only consider

2.32(.86)
using a financial service if 66
someone personally
recommended it to me
2.41(.93)
98
0.266
I am often asked for my

2.40(1.01)
advice on financial matters 65
2.60(1.12)
97
0.127
Friend and family has

influenced me when
buying new products/
services
Sig.
(1 tailed)

significant difference in means at the 5% level for friends and family influence.
8.5.4 The Attitudinal and perceptual behaviour of sophisticated ATM
235
The results of comparing means between adopters and non-adopters of sophisticated ATM
are shown in the table as follows:
Table 8.29 Attitudes toward change and willingness to take risks
Attitude
Venturesome
Attitude
toward
change
Question
Adopter
Non-adopter
Mean(SD)N Mean(SD)/N
Sig.
1.83(.64)
53
1.92(.73)
53
0.344
I like to buy new and different

things
1.79(.64)
109
2.17(.78)
109
I am usually one of the first to

try new products or services
2.54(.86)
108
2.49(.87)
53
0.361
I generally see my self as a risk

taken rather than being
conservative on decisions I make
2.19(.86)
109
2.17(.73)
53
0.440
1.89(.65)
109
I am interested to hear about new 1.73(.59)
technological developments
109
1.89(.70)
53
1.70(.57)
53
0.492
I believe that technological

developments have affected our
lives
1.78(.86)
109
1.72(.77)
53
0.333
I like to pay by cash as much as

possible
1.91(.79)
109
1.74(.687)
53
0.109
I like to visit my local bank

branch
2.52(1.05)
109
2.19(.90)
53
0.025
I am willing to try new ideas
I am updated on most things
1 tailed
0.030
0.367
With respect to the statement measuring venturesomeness, there was no significant

difference in mean on most variables at the 5% level except buying new and different
things. The results show that the adopter groups like to buy more new and different things
than the non-adopters.
236
With respect to the statement measuring the attitude toward change, there was no
significant difference in mean at the 5% level for attitude toward change, except visiting
the branch. The results show that non-adopters like to visit the bank branch more than
adopters.
8.5.5
Social interaction and communication behaviour for sophisticated ATM
The results of comparing means between adopters and non-adopters of sophisticated

ATM are shown in table as follows:
Table 8.30 Social Interaction and Communication Behaviour
Social
interaction and
communication
behaviour
Friends and
family
influences
Question
Adopter
Mean
(SD)
N
Non-adopter
Mean(SD)
N
Sig.
(1
tailed)
When purchasing new

2.11(.95)
technology products I trust my 108
own instincts more than advice
from others.
2.21(.86)
0.271
Friends and family has

influenced me when buying
new products/services
2.51(1.19)
109
2.64(1.56)
53
0.348
I would only consider using a

financial service if someone
personally recommended it to
me
2.39(.39)
108
2.25(.73)
53
0.149
2.42(.89)
53
0.017
I am often asked for my advice 2.78(1.01)

on financial matters
109
53

significant difference in mean at the 5% level for the variables for friends and family
influence except likely to ask advice. The results show that non-adopters were far more
likely to ask for advice regarding financial matters than adopters.
237
8.6 he Validity and reliability

8.6.1 Validity analysis
Validity analysis was discussed in Chapter Seven. In the next section we will discuss the
construct validity.
8.6.1.1
Construct validity
Construct validity is the assessment of how measurements refer to the theoretical

framework. The assessment of validity can be analysed by using statistical methods and
observing whether the results are consistent with the concepts in the hypothesis.
In this section factor analysis was used as the research instrument. The validity of the
scales can be measured by construct and concurrent validity. Construct validity in this
study can be assessed by the convergent and discriminant conception of validity. According
to Frankfort-Nachmias and Nachmias (1996), these methods should normally be used
together. Discriminant validity was addressed by examining whether the factor constructs
were distinct between each underlying structure. When examining the discriminant validity
a different factor should not correlate highly with other factors. To measure the convergent
validity we examined whether the variables in each factor would correlate highly with each
other.
As previously discussed in Chapter Seven, factor analysis was used to analyse the
measurement instrument in this research. These were composed of the measurements of
three different types of electronic banking services. The validity was dependent on the
results of the factor analysis and acceptable statistics. Therefore, the first stage was to
measure the suitability of using factor analysis. The principal component of this analysis
was undertaken with a VARIMAX orthogonal rotation procedure. The principal
component of VARIMAX is the most common extraction and rotation technique used and
recommended when the research aims to reduce the data for smaller sets of variables for
subsequent analysis (Hair et al, 1995). The number of significant factors to be extracted by
238
principal component analysis is commonly based on the Eigenvalues that are greater than
1.
The data was tested in the following conditions:
Firstly, the data was separated into three different types of products/services i.e. telephone
banking, debit card and sophisticated ATM. The items refer to the same concept and
theoretical framework of adoption. However, according to the different characteristics of
products/services, the items will not follow exactly the same principle. Therefore, the
factor analysis was tested separately.
Secondly, the items were divided into two sections i.e. perceived attributes of innovation
and respondents characteristics. Some items were excluded i.e. personal data and
technology product usage because they were non-metric items. The remaining items were
classified into two groups as follows.
Group one contains the perceived attributes of innovation as discussed in Chapter Seven.
These were composed of nine perceived attributes i.e. relative advantage, compatibility,
complexity, observability, trialability, perceive risk, cost, control and perceived service
quality. For the three different types of electronic banking services were composed of
twenty-one items for telephone banking, seventeen items (see table 8.19 and 8.20) for
debit card (see table 8.21 and 8.22) and eighteen items for sophisticated ATM (see table
8.23 and 8.24).
Group two consists of adopters and non-adopters personal characteristics. Although all
three electronic banking service characteristics have the same items in this section the
factor analysis were divided by types of product because the results needed to use this for
further analysis in Chapter Nine. There were 13 items in this group.
In section 8.4.2 factor analysis was used to identify the perceived attributes of factors that
influence the adoption of electronic banking. In section 8.4.3 factor analysis was used to
identify the personal characteristics and consumption patterns.
239
8.7
Factor analysis
The purpose of applying factor analysis was to examine the relationships between variables
and to reduce the number of variables by producing factor solutions. In section 8.7.1
factor analysis was used to identify the perceived attributes of factors that influence the
adoption of electronic banking, whilst in section 8.7.2 factor analysis was used to identify
the perceptual attitudes and social interaction factors. Factor loading can be used
to determine new composite scores from the original variables (Hair et al, 1995). This was
helpful to use with the factor analysis as the basis for further analysis. To consider whether
the data was appropriate for factor analysis, we examined the Kaiser-Meyer-Olkin (KMO)
values, which should be more than 0.5 to be at an acceptable level. To determine how
many factors to be retained we consider if the Eigenvalues are greater than 1. In addition,
we also examined if the Bartlett test of Sphericity value was significant.
8.7.1 Factor analysis of the perceived attributes of electronic banking
8.7.1.1
Telephone banking
There were twenty items that measured the perceived attributes of telephone banking. To
test the validity of these variables, factor analysis was undertaken using Varimax rotation.
The minimum acceptable loading is 0.45 as suggested by Hair et al (1995). The Table 8.31
shows the final factor structure. The results show that the five factors together explained
60.48% of the variation in the data. The Kaiser-Meyer-Olkin value (0.744) along with a
significant value of 612.528 for the Bartlett test of Sphericity suggests that factor analysis
was adequate for the data. We excluded 3 items i.e. try, useful and observe. During
the first stage, we excluded try because it had a negative value with the rest of the group
and the Cronbach Alphas value was also negative. In the second stage, we excluded
control because it did not appear for any factor. The last factor we excluded was useful
because it appeared for two factors.
Table 8.31 Perceived attributes factor solutions of telephone banking

Scale item
cost
Factor 1 Factor 2 Factor 3 Factor 4

.794
Factor 5
240
fee
accurately
guarantee
observe
savetime
anytime
majoruse
brchness
crimerisk
errorisk
complicate
notpractical
easyuse
informat
openhour
lessbranch
voicesys
Cumulative
% of
variance
Cronbachs
Alpha
.742
.697
.639
.531
.793
.731
.700
.549
.751
.707
.574
.461
.837
.779
15.61
30.87
41.92
51.31
.755
.600
.546
60.48
.7576
.7596
.5615
.6405
.5787
Factor 1, Willingness to pay for reliability, includes four items. Two items relate to cost
(fee and cost) i.e. whether bank customers were willing to pay for costs (cost) and
prepared to purchase or rent equipment for the use of telephone banking. The other two
items relate to perceived service quality (accuracy and guarantee). Bank customers
perceived the accuracy of doing financial transaction via telephone banking, and also that
the transactions were also guaranteed by the bank. Although two attributes, cost and
perceived service quality, were associated together these may be because questions were
raised to ask about whether bank customers were willing to pay more if they can save time
and effort by using telephone banking. However, based on the highest communalities value
that loads onto the factor, these items reflected the factors focus on cost.
Factor 2, Benefit, included four items. Three items (anytime, savetime and brchness)
relate to the relative advantages whilst one item that was left out was related to the
compatibility (majoruse). This means that when bank customers perceive benefits from
using telephone banking they would use the service as a major channel when dealing with
the bank. These items reflect the factors focus on the relative advantage.
241
Factor 3, Less operational risk includes four items. Two items relate to perceived risk
(crimerisk and errorisk) the other two items related to complexity (complicate) and
compatibility (notpractical). These four perceived attributes have a linked relationship
because if the customer feels the telephone banking service was too complicated to use
and not compatible with their experiences and perceived the service as high risk, they
would not adopt the service. These items reflect the factors focus on the perceived risk.
Factor 4, Ease of use, includes two items. Each one relates to two perceived attributes
i.e. complexity (easyuse) and observability (informat). This means that if the bank
customer received enough information about the service, they would have no problems
when trying to use the service. These items reflect the factors focus on the ease of use.
Factor 5, Availability included three items. Each one relates to three perceived attributes
i.e. relative advantage (lessbranch), perceived service quality (voicesys) and compatibility
(openhour). These three attributes also have a linked relationship. Bank customers
perceived that branch-opening hours are inconvenience for them. They would like to use
services with telephone banking because bank customers perceived that they received a
better service meaning they did not need to go to their branch. These items reflect the
factors focus on the compatibility.
8.7.1.2
Debit card
There are seventeen items to measure perceived attributes of telephone banking. To test
the validity of these variables, factor analysis was undertaken using Varimax rotation. The
minimum acceptable loading is 0.5 as suggested by Hair et al (1995). The table 8.32 shows
the final factor structure. The five factors together explained 62.124% of the variation in
the data. The Kaiser-Meyer-Olkin value (.693) along with a significant value of 546.294
for the Bartlett test of Sphericity suggests that factor analysis was adequate for the data.
We excluded one item, lessbranch, because it had a very low communalities value
(0.369).
Table 8.32 Perceived attributes factor solutions of debit card
242
Scale items Factor 1 Factor 2 Factor 3 Factor 4 Factor 5

useful
.757
familiar
.743
prove
.610
try
.773
information
.689
observe
.524
confidence
.745
fee
.636
savetime
.586
need
.514
bestolen
.839
criminalrisk
.814
nocash
.819
convenient
.551
openhour
control
Cumulative 13.386
25.488
37.422
47.364
56.380
% of variance
Cronbachs
Alpha
.6263
.5712
.6185
.6412
.3772
Factor 6
.742
.514
65.124
.2831
The solution of five factors:

Factor 1, Trustworthy, included three items, relative advantage (useful) with the other
two relates to different perceived attributes, compatibility (familiar) and perceived service
quality (prove). The solution combined these two perceived attributes together because
there were close links between them. Bank customers perceived debit card as being useful
for them, and was reliable and compatible with their experiences. These items reflect the
factors focus on the relative advantage.
Factor 2, Operational knowledge requirement included three items, observability
(observe and information) whilst the other one relates to the trialability (try). This factor
can be interpreted as being when the bank customer had an opportunity to observe and
receive enough information or by trialling services before committing themselves, which
will help their decision to adopt the service. These items reflect the factors focus on the
observability.
243
Factor 3, Willingness to pay for better service includes three items. Each one relates to
three perceived attributes i.e. cost (fee) and complexity (convenient) and relative
advantage (savetime). This factor can be interpreted as when the bank customer perceived
the benefits of saving time and the product was not too complicated to use. They would
then be willing to pay a fee to receive the service. These items reflect the factors focus on
the perceived service quality.
Factor 4, Perceived Risk includes two items. Both relate to perceived risk attributes
(criminalrisk and bestolen). These support the results from previous studies that perceived
risk is an influence for customers adoption of electronic banking. These items reflect the
factors focus on the perceived risk.
Factor 5, Benefit included two items. One each relates to relative advantage (nocash)
and compatiblity (convenient). This factor refers to no need for cash and ease of use.
These items reflect the factors focus on the relative advantage.
Factor 6, Availability includes two items. One each relates to compatibility (openhour)
and control. This refers to availability of service, and feeling in control of the financial
service. These items reflect the factors focus on the compatibility.
8.7.1.3
Sophisticated ATM
There were 18 items to measure the perceived attributes of telephone banking. To test the
validity of these variables, factor analysis was undertaken using Varimax rotation. The
minimum acceptable variable is 0.45 as suggested by Hair et al (1995). The table (8.33)
shows the final factor structure. The five factors together explained 61.96% of the
variation in the data. The Kaiser-Meyer-Olkin value (0.648) along with a significant value
of 417.77 for the Bartlett test of Sphericity suggests that factor analysis was adequate for
the data. We excluded 2 items that were cut at 0.04 i.e. complicate and try. During the
first stage, we excluded complicate because it had a negative relationship. During the last
trial stage we excluded try because it appeared for both factors.
Table 8.33 Perceived attributes factor solutions of sophisticated ATM
Scales items Perceive 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6
fee
.782
244
confidence
.773
control
.616
notusebk
.436
guarantee
information
accurately
useful
savetime
majoruse
easier
prove
observe
errorrisk
security
openhour
Cumulative % 13.288
of variance
Cronbachs
.6312
Alpha
The solution of five factors:
.832
.709
.541
.767
.759
.471
.706
.687
.671
.789
.770
24.833
35.111
45.349
55.034
.6171
.4553
.5174
.4957
.802
61.906
Factor 1, Willingness to pay for trust and confidence includes three items. Two items
relate to perceived service quality (confidence) and control. Bank customers feel confident
of using sophisticated ATM. In addition they feel they have more control when using
sophisticated ATM, whilst the other item was related to cost (fee). The customer is willing
to accept the cost of using sophisticated ATM for better service quality. Therefore, these
three items can be grouped together. These items reflect the factors focus on the
perceived service quality.
Factor 2, Reliability includes three items. Two items relate to perceive service quality
(accurately and guarantee), whilst the other is related to observability (information).
Information is associated with these two items because the bank should give enough
information before customers use their services. Therefore, customers perceived a positive
attitude towards service in terms of accuracy and if the service can be guaranteed. These
items also reflect the perceived service quality.
Factor 3, Benefit includes three items. Two items relate to relative advantage (savetime
and useful), whilst the other item was related to compatibility (majoruse). This factor was
245
involved because customers perceived relative advantage, namely saving their time and
perceived that sophisticated ATM was very useful to them. These items reflect the factors
focus on the relative advantage attributes.
Factor 4, Ease of use includes three items. Each one relates to three perceived attributes
i.e. complexity (easier), observability (observe) and perceived service quality (reliable).
These three factors are connected because bank customers think that if they can observe
other people using the services they would have no problems when they use them. Also
the customer feels convinced of the security and trust of the service because it gives a
record slip to prove the transaction had been completed. Therefore, these items reflect the
factors focus on the complexity attributes.
Factor 5, Perceive risk included two items. These items relate to perceived risk
(errorrisk and security). This factor is the customers perceived risk when doing
transactions with sophisticated ATM and the fear for personal security when using
sophisticated ATM. These items reflect the factors focus on perceived risk attributes.
Factor 6, Availability (openhour) has only one item. The item reflects the compatibility
perceived attributes. Customers felt that bank opening hours are not convenient for them.
This factor structure does not exactly match the proposed dimensions of the perceived
attributes of electronic banking as hypothesised in a previous chapter. This is explained as
follows:
Firstly, this may be because the questions were highly involved between the factors that
had been grouped together. For example, the results show that perceived service quality
was related to cost. The questions asked were highly related to examining whether the
customer was willing to pay money for getting better service.
Secondly, some perceived attributes have only one item for a question. Therefore, the
process of factor analysis meant that different groups of items from different perceived
attributes were grouped together.
However, the current factor structure is the best option available for the following two
reasons:
246
Firstly, the structured solutions provide generic dimensions of perceived attributes that
related to all eight attributes from the proposed modes i.e. relative advantages,
compatibility, complexity, observability, trialability, perceived risk, cost and perceived
service quality. Although not every perceived attributed appeared in every electronic
banking service.
Secondly, all measurements of statistics i.e. KMO, Bartlett test of Sphericity, Determinant
value and Variance explained that the value had been at an acceptable level. However,
some of Cronbachs alpha values for the factor solutions are low but it was necessary to
retain them because they are related to the conceptual structure.
247
8.7.1.4
A comparison between factor solutions for three electronic banking

services and other studies
The three types of electronic banking do not have the same items according to their
different type of services. However, after factor loading we have found some patterns
among them. These are illustrated in the following table:
Table 8.34 The comparison of the factor structures between the three types of service
Type of service/
Telephone banking
Perceived Attributes
Relative Advantages
Debit card
Sophisticated ATM
Benefit
-anytime
-savetime
-majoruse
-branchness
Trustworthy
-useful
-familiar
-prove
Benefit
-nocash
-convenient
Benefit
-useful
-savetime
-majoruse
Availability
-openhour
-lessbranch
-voicesys
Ease of use
-easyuse
-informat
Availability
-openhour
-control
Availability
-openhour
Observability
N/A
N/A
N/A
Trialability
N/A
Operational
knowledge required
-try
-informat
-observe
N/A
Compatibility
Complexity
Ease of use
-easier
-reliable
-observe
N/A
Type of service/
Telephone banking
Debit card
Sophisticated ATM
248
Perceived Attributes
Cost
Willingness to pay
for reliability
-cost
-fee
-accurately
-guarantee
-observe
N/A
Willingness to pay
for Trust and
confidence.
-fee
-confidence
-control
-notusebk
Perceived Risk
Less operational
risk
-crimerisk
-errorisk
-complicate
-notpractical
Perceived Risk
-bestolen
-errorisk
Perceived risk
-errorisk
-sercurity
Control
N/A
control
control
Service quality
N/A
Willing to pay for

better service
-fee
-savetime
-need
Reliability
-guarantee
-informat
-accurate
The results show that relative advantage, compatibility and perceived risk were found to
be factors that appeared for all three types of products, although it is difficult to identify
precisely the items for these factors because of the differences in the characteristics of the
products/services. The combinations between perceived service quality and cost also
appeared for three factor solutions, although in debit card we classified them as perceived
service quality rather than cost according to Hair et al (1995) who suggested that
variables with higher loadings are considered more important and have greater
influence on the name or label selected to represent a factor. The perceived attributes
ease of use also appeared for both telephone banking and sophisticated ATM.
The results of the factor structure also supported the findings in other electronic banking
studies. Polatoglu and Ekin (2001) concluded that the three dimensions for the acceptance
of Internet banking services in Turkey are namely, reliability, access and saving. The
access factors are composed of instant feedback, quick transactions and being able to use
the service anywhere, whilst reliability is composed of reliable, secure and privacy.
The results are similar to the findings in this research. The relative advantage of this study
249
referred to can use the service anytime, saving time and less use of services at the
branch or do not need to use the services at the branch, whilst compatibility referred to
the bank opening hours as being inconvenient. Therefore, electronic banking is an option
for dealing with transactions with the bank. Jun and Cai (2001) summarised that
responsiveness, reliability, access, ease of use and accuracy were five dimensions that
explained satisfaction and dissatisfaction for Internet only banking services and the
traditional bank which also offers Internet banking in the US. This supports the findings in
this study. The reliability factor appeared for the sophisticated ATM factor solutions. This
factor referred to service guarantee, information about the service and the accuracy of the
service.
The factor ease of use has been found to be an important factor for adopting electronic
banking (Dabholkar, 1996; Sathye, 1999; Anandarajan et al, 2000; Barczak et al, 1997;
Rugimbana, 1995).
For the factor perceived risk, which appears for three types of electronic banking, the
findings are consistent with the studies in the adoption of electronic banking (Ostlund,
1974; LaBay and Kinnear, 1981; Murdock and Franz, 1983; Barczak et al, 1997).
For the factor cost, which appears for both telephone and sophisticated ATM, the
findings are consistent with the work of Gatingnon and Robertson (1989); Lockett and
Littler (1997).
For the factor control, which appears for debit card and sophisticated ATMs, the findings
support the work of Dabholkar(1996).
8.7.2 Factor analysis of personal characteristics and communication patterns.
In this section we will examine the personal characteristics and communication patterns
that influences the adoption rate. It is also useful to examine new factors such as social
interaction and its effects on the adoption of electronic banking. In addition, factor analysis
produced a new factor structure as a statistical base for further study in the next chapter.
We could merge all the samples from the three types of electronic banking together for all
250
the items because they have the same variables. However, factor scores for each type of
electronic banking is needed for further analysis in Chapter Nine. Therefore, we will apply
factor analysis for all three types of electronic banking services. In this section, factor
analysis was used to identify the new structures, which influence the adoption of electronic
banking. These include examining the new emerging factors from the study. There were
nine items to measure, including attitude toward change and venturesomeness (willingness
to take risk). Moreover, there were four items from friends and family influences that have
been included in the factor methods. To test the validity of these variables, factor analysis
was undertaken using Varimax rotation. The minimum acceptable variable is 0.45 as
suggested by Hair et al (1995). The Table 8.25 shows the final factor structure. The four
factors together explained 55.47% of the variation in the data. The Kaiser-Meyer-Olkin
value (.716) along with a significant (.000) Bartlett test of Sphericity 309.935, suggests
that factor analysis is adequate and suitable for the data. We excluded only one item,
owninstrict, because it appeared for two factors.
8.7.2.1
Telephone banking
The solution of four factors:

Factor 1, Venturesomeness includes five items. Four items relate to willingness to take
risks namely buying new goods and services (buynew), trying new ideas (newidea), trying
new products and services (newidea) and taking risks with new services and products
(risktaker), whilst the remaining item related to being up to date on new technologies and
services (update). These items reflect the factors focus on venturesomeness.
Factor 2, Friends and Family influences include three items. All of the items relate to
friend and family influences (friend/family), requiring personal recommendations for
financial service (personal), and frequently asked for financial advice (needadvice). These
items reflect the factors focus as family and friends.
Factor 3, Modern attitudes toward change includes two items. Both items relate to the
preferable use of cash as much as possible and a preference for frequently visiting the local
branch (visitbranch). These items reflect the factors focus on the attitude toward change.
251
Factor 4, Traditional attitude toward change includes two items. Both items relate to
interests in technology influences for daily living (techno/live) and new developing
technologies (interestnew). These items reflect the factors focus on attitude toward
change.
Table 8.35 Personal characteristics of telephone banking
Scale items Factor1 Factor2 Factor3

buynew
.804
innovator
.789
newidea
.749
update
.719
risktaker
.650
needadvice
.761
friends/family
.740
personal
.725
visitbranch
.838
paycash
.691
techno&live
interestnew
Cumulative% 25.244 40.951 51.771
of variance
Cronbachs
.7978
.6413
.4569
Alpha
8.7.2.2
Factor4
.763
.668
61.704
.2015
Debit card
To test the construct validity of these variables, factor analysis was undertaken using
Varimax rotation.
The minimum acceptable variable is 0.5 as suggested by Hair et al (1995). The Table 8.36
shows the final factor structure. The four factors together explained 57.145% of the
variation in the data. The Kaiser-Meyer-Olkin value (0.698) along with a significant value
(.000) for Bartlett test of Sphericity 310.850 and suggests that factor analysis is adequate
and suitable for the data. We excluded only one item, owninstrict, because it is not
compatible with the rest of the items i.e. techno/live and interestnew in the factor.
252
Table 8.36 Personal characteristic of debit card
Scale items Factor1 Factor2 Factor3 Factor4

innovator
.830
buynew
.785
newidea
.711
update
.658
risktaker
.557
personal
.773
friends/family
.729
needadvice
.727
techno&live
.786
interestnew
.772
visitbranch
.789
paycash
.755
Cumulative
22.289 36.817 48.990 59.766
% of variance
Cronbachs
.7623
.6055
.5113
.3904
Alpha
Factor 1, Venturesomeness includes five items. Four items relate to attitude toward buying
new goods and services (buynew), trying new ideas (newidea), trying new products and
services (newidea) and taking risks with new services and products (risktaker). The
remaining items related to being up to date with new technologies and services (update).
These items reflected the factors focus on the venturesomeness.
Factor 2, Friend and family influences include three items. All of the items relate to friends
and family influences (friend/family), requiring personal recommendations for financial
services (personal) and frequently asking for financial advice (needadvice). These items
reflect the factors focus on the friend and family influences.
Factor 3, Modern attitudes toward change includes three items. Three items relate to
being interested in technology influences in daily living (techno/live) and new developing
technologies (interestnew). These items reflect the factors focus on traditional attitude
toward change.
Factor 4, Traditional attitudes toward change includes two items. Both items relate to
being interested in technology influences for daily living (techno/live) and new developing
253
technologies (interestnew). These items reflect the factors focus on attitudes toward
change.
8.7.2.3
Sophisticated ATM
To test the construct validity of these variables, factor analysis was undertaken using
Varimax rotation. The minimum acceptable variable is 0.5 as suggested by Hair et al
(1995). The Table 8.37 shows the final factor structure. The four factors together
explained 55.468% of the variation in the data. The Kaiser-Meyer-Olkin value (0.776)
along with a significant value for its Bartlett test of Sphericity of 301.769 suggests that
factor analysis is adequate and suitable for the data. We excluded only three items, namely
visit branch because it appeared for two factors and paycash because it had a negative
relationship with needadvice and Cronbachs Alpha values also show a negative value.
Finally, during the last trial, we excluded ownstrinct because it had a negative
relationship with the rest of the group i.e. techno/live and interestnew and Cronbachs
Alpha value also showed a negative value.
254
Table 8.37 Personal characteristics and communication patterns of sophisticated

ATM
Scale items
innovator
newidea
update
buynew
risktaker
techno&live
interestnew
personal
needadvice
friends/family
Cumulative
% of variance
Cronbachs
Alpha
Factor 1 Factor 2 Factor 3

.797
.772
.720
.719
.667
.813
.754
.690
.646
.588
27.695 41.460 54.651
.7979
.4632
.2660

For Factor 1 (Venturesomeness), the same items are present in debit card and factor
2(modern attitude toward change) represents the same items as are present in debit card
and factor 3. While factor 3 (friend and family influence) are the same factors as are
present in debit card as factor 2.
This factor structure matches the proposed dimension of personal characteristics and
communication behaviour although some factors such as update are part of attitude
toward change instead of venturesomeness. However, the factor structure selected was
found to be the best option available after many trials. The solution provides factor
dimensions which matched with the hypotheses and also the overall measurement in
statistics i.e. KMO, Bartlett test of Sphericity, and Determinant value and the percentage
of Variance explained had been at an acceptable level. However, some of Cronbachs alpha
values for the factor solution are low but are necessary to be retained because they are
representing the conceptual structure. The research also found that the factor of friends
and family had appeared during factor loading. This supports the data that had emerged
255
from the focus group interviews. Although the value is quite low, the factor does appear in
all three types of electronic banking.
8.7.3 Validity conclusions
The results from the factor analysis show that factor constructs have convergent and
discriminant validity. In the factor constructs, each item is positively related to other items
of the same structure, whilst the different factor structures were not found to be
crossloading each other, which indicates that the factors did not highly correlate with other
factors. Therefore, the factor structures were distinct for each underlying structure. The
concurrent validity showed that there were similar patterns between each type of
electronic banking. The statistic results are also at the acceptable level.
8.8
Reliability
Reliability is evaluated by using Cronbachs Alpha, a measure of internal consistency that

attempts to calculate the correlation between scale items. The scale is designed to identify
the factor construction. This method relies on the expectation that scale items should have
a strong relationship. Therefore, a scale in which the individual items appear to be highly
correlation with each other can be described as an internal consistency. According to
Oppenheim (1992), Cronbachs Alpha gives an estimate of the proportion of total variance
not due to error and thus provides a representation of the reliability of the scale. The value
of Crobranchs Alpha varies between zero and one. In addition Carmines and Zeller (1991)
explained that The value of Crobranchs alpha depends on the average inter-item
correlation and the number of items in the scale, therefore the average correlation
among items increases and as the number of items increases, the value of alpha
increases. For these reasons if the factor had only two variables sometimes there may be
a problem because the value of alpha will be low. In this thesis we have some factors with
a very low value of reliability i.e. Modern (.4180) and Traditional attitude (.3583).
However, in this research we have decided to keep these factors because they represent
the conceptual hypothesis, which is already widely accepted. The following Tables 8.38
256
and 8.39 shows the individual alphas for the two dimensions for all three electronic
banking services.
Table 8.38 Cronbachs Alpha of perceived attributes dimensions
Perceived attributes dimension

Telephone banking
Number of
factor
dimensions
5
-Willing to pay for reliability

-Benefit
-Operational risk
-Ease of use
-Availability
Debit card
-Willingness to pay for trust and

confidence
-Reliability
-Benefit *
-Ease of use
-Perceive Risk*
Number of
items
.7576
.7596
.5615
.6405
.5787
4
4
4
2
3
.6263
.5712
.6185
.6412
.3772
.2831
3
3
3
2
2
2
.6312
.6171
.4553
.5174
.4957
3
3
3
2
-Trustworthy
-Operational knowledge requirement
-Willing to pay for better service
-Perceive risk
-Benefit*
-Available*
Sophisticated ATM
Cronbachs
Alpha
*The value for both factors is very low. However, we kept the Benefit factor because it
represents the pattern of the factor as well as it appears in telephone banking, whilst
Perceived risk is compatible with the theoretical framework. There were other items
appearing for this factor but they did not improve the Cronbach alphas value so we
excluded it.
Table 8.39 Cronbachs Alpha of personal characteristic dimensions
257
Attitude perceptual and social

interaction behaviour dimension
Telephone banking
Number of factor
dimensions
-Venturesome
-Friends and Family
Influences
-Modern Attitude
.7978
.6413
5
3
.4569
.2015
2
2
.7623
.6055
5
3
.5113
.3904
2
2
.7979
.4362
3
3
.2660
-Venturesome
-Friend and Family
Influences
-Modern Attitude
-Traditional Attitude
Sophisticated ATM
Number of
items
-Venturesome
-Friends and Family
Influences
-Modern Attitude
-Traditional Attitude
Debit card
Cronbachs
Alpha
258
8.9
Chapter summary
This chapter has described the preliminary analysis of the data through three sections. The
first section provides a general description of the respondents. The second section
identifies the differences in mean between the adopter and non-adopter groups by using Ttest. The procedure is divided into perceived attributes and attitude perceptual/social
interaction of electronic banking i.e. debit card, telephone banking and sophisticated ATM.
In the final section we empirically discussed the validity and reliability. The reliability
analysis shows that the perceived attributes of three electronic banking services identified
by factor analysis namely telephone banking 5 factor solutions, debit card 6 factor
solutions and sophisticated ATM 6 factor solutions, whilst attitude, perceptual and social
interaction behaviour can be identified by factor analysis, namely telephone banking 4
factor solutions, debit card 4 factor solutions and sophisticated ATM 3 factor solutions.
The results supported the previous study from the focus group interviews. Perceived
service quality had been observed as a perceived attribute of electronic banking, whilst
friends and family influence were found to be part of attitude perceptual and social
interaction of electronic banking.
The reliability analysis illustrated a reasonable level of consistency using Cronbachs Alpha.
Therefore, the data was now ready for further analyses. The research hypotheses as
proposed in Chapter Four will be discussed in the next chapter (Chapter Nine). This
chapters objectives are to make the identification of the underlying dimensions or factors,
which we will rely on for the factor loadings as well as use them as the basis for identifying
variables for subsequent analysis with logistic regression, which is described in the next
chapter.
259
Chapter 1
9.
Data analysis II
(Logistic Regression)
9.1
Introduction
This chapter reports the findings of the research by using further multivariate analyses.
Logistic regression was chosen because it is suitable for the type of dependent variables in
this research. For the model to be accepted as reliable and valid many steps of
interpretation will be discussed. The results are used as the basis for testing the hypothesis.
The findings were compared to the previous results from the focus group interviews.
Logistic regression was used to examine how well each of the factors predicted the
adoption. This process was conducted to add to previous research indicating that there
were other perceived attributes that may influence the adoption of electronic banking.
Phase one of the analysis involved using logistic regression to ascertain if, independent of
other perceptions, the groupings of the attributes identified through factor analysis, related
to the adoption of electronic banking. Phase two of the analysis involved the hypotheses
testing. However, the results that emerged from the factor analysis did not match what
was expected. Therefore, imposed structure factors were introduced for the purposes of
hypothesis testing. The imposed factor model was analysed by using logistic regression.
The findings show that the problems that occurred were caused by multicolinearity
between the variables. Therefore, aggregated independent T-tests were also conducted
together with the imposed structure model for the purpose of hypothesis testing. Finally
the results were then used to explain the findings of the research questions.
260
9.2 Logistic regression

The results of exploring the data in Chapter Eight were examined by descriptive statistics
comparing the differences in socio-economic, personal characteristics and the consumption
behaviour variables for the adopter and non-adopter. In order to test the hypotheses and
get the results to answer the research questions, it was necessary to look further with
more sophisticated multivariate tests. In this research we examined the influencing factors
affecting the adoption rate of electronic banking. In this thesis, adopter and non-adopter
are dependent variables. Logistic regression is a type of regression, which is used when the
dependent is a dichotomy variable whilst the independent variables are continuous
variables, categorical variables, or both. This was a very useful statistical tool for our
research. Logistic regression analysis examines the odds ratio (probability of an event
occurring) of the dependent variable. Logistic regression does not predict just whether an
event occurred or not (0 equals event not occurring or 1 equals event occurring), but
instead predicts the probability of an event (Hair et al, 1995), which we refer to in this
study as the probability of being an adopter. The main benefits of logistic regression are
that it does not require a linear relationship between the independent and the dependent
variables. The data does not need to be a normal distribution, and there were also fewer
restrictions on the requirements if it is compared with other methods.
9.3 Model building

There were two common methods for using factor analysis results in the logistic
regression model, namely factor score and factor summated scales. The factor score
represents the factor of all values from each observation including those with small
loadings in the data set. Therefore, factor scores could be substituted for the original
variables and can be used for further multivariate analysis, whilst summated scales
included the variables loading highly on the factor and excludes small impact variables on
the factor. Hence the summated scale will not represent the same weighting used in
calculating the factor scores but represents the value between samples. Moreover, the
261
summated scale sometimes is not orthogonal or uncorrelated (Hair et al, 1995). They
suggested that if the researcher requires orthogonality, the suitable instrument is to use
factor scores. Therefore, using the factor-score method could help to classify the
relationships between variables. According to Hair et al (1995) they suggested that if we
employed an orthogonal rotation, the correlation between factor score is .000 This will
confirm that the results support the proposed new perceived attributes which have been
described in the framework (see Chapter Three) as new variables which is a necessary
requirement in this study.
The first part of the model specified contained the following explanatory variables. Firstly,
the factor scores from the factor analysis. This included the factor dimension from the
perceived attributes of innovation and attitude perceptual/social interactions. The scores
resulting from the principal components analysis will be used as input variables for further
analysis of the data.
Secondly, descriptive analysis suggested the differences of the demographic data between
the adopter and non-adopter groups. However, logistic regression analyses were used to
allow hypotheses testing. The generally accepted rule for the number of independents we
can have suggests that there should be no more than one independent for each ten cases in
the sample. This is because the more independents, the more likelihood there is of
multicollinearity. However, the sample size limiting the exploratory variables in this
research does not exactly comply with this rule but the number of these independents
variables comes very close to the number of requirements because the researcher decided
to have a few more variables than the general rule suggested. The reason for this is
because they correspond with the proposed framework in Chapter Three. Therefore, in
this study, approximately 13-16 independent variables were considered for the comparison
of the similarities of the three types of products.
Thus, the model that was to be tested can be illustrated as follows:
The adoption of electronic banking customer (ADVSNP)
= f (Perceived attribute, Customer characteristics, Demographic characteristics)
262
Telephone banking
Model-1 (TELEBK 1) = f (PERCEIVED ATTRIBUTES)
Model-2 (TELEBK 2) = f (PERCEIVED ATTRIBUTES, CHARACTERISTIC)
Model-3 (TELEBK 3) = f (PERCEIVED ATTRIBUTES, CHARACTERISTIC,
DEMOGRAPHIC)
Debit card
Model-1 (DEBIT 1) = f (PERCEIVED ATTRIBUTES)
Model-2 (DEBIT 2) = f (PERCEIVED ATTRIBUTES, CHARACTERISTIC)
Model-3 (DEBIT 3) = f (PERCEIVED ATTRIBUTES, CHARACTERISTIC,
DEMOGRAPHIC)
Sophisticated ATM
Model-1 (ATM 1) = f (PERCEIVED ATTRIBUTES)
Model-2 (ATM 2) = f (PERCEIVED ATTRIBUTES, CHARACTERISTIC)
Model-3 (ATM 3) = f (PERCEIVED ATTRIBUTES, CHARACTERISTIC,
DEMOGRAPHIC)
9.4
Interpreting and reporting of logistic regression results
Three logistic regression tests were performed for the three different types of electronic
banking services. The independent variables were received from factor analysis scores
from the previous chapter. The types of bank customer (adopter and non-adopter) were
employed as dependent variables. The dependent variable (ADVSNP) was coded as 1 for
the adopter respondents and 0 for non-adopter respondents. Looking at the classification
table, the Wald statistic and the other tests of the models significance can be used to
assess the efficiency of the logistic regression.
There were three steps that were used to produce the results of logistic regression that are
Firstly, assessing the goodness-of-fit of the models.
Secondly, testing the predictive validity; assessing the accuracy percentages.
Thirdly, testing the predictive efficiency of the model; assessing the significance of the
coefficients.
263
9.4.1
Assessing the goodness-of-fit of the models
The overall goodness of the fit of the models can be assessed as follows with two tests:
Hosmer and Lemeshows test, and R2L
9.4.1.1
Hosmer and Lemeshows Goodness of Fit test
This test is used to assess the overall fit of the model to the data (Sharma, 1996).
Therefore, the assumption is to test the null hypothesis for the model to see if it fits the
data. We reject the null hypothesis when the Hosmer and Lemeshow Goodness-of-fit test
statistic is 0.05 or less, which indicates that the model does not fit the data. Therefore,
there were no significant differences between the observed and model-predicted values of
the dependent. However, if the goodness-of-fit test statistic is greater than 0.05, we fail to
reject the null hypothesis which means the model fits the data at an acceptable level.
The results show that there were no significant values at the 5% level for telephone
banking and sophisticated ATM. Therefore, we can conclude that all three models of
telephone banking and sophisticated ATM estimates fit the data. However, only two
models (DEBIT1 and DEBIT3) were found to be not significant at the 5% level. Whilst,
the model DEBIT2 is significance at the 5% level, which means the model does not fit the
data.
Table 9.1 Hosmer and Lemeshow test

Telephone banking
Model
TELEBK 1
TELEBK 2
TELEBK 3
Chi-square
8.839
6.610
6.805
Df
8
8
8
Sig.
.356
.579
.558
Chi-square
7.261
15.794
14.009
Df
8
8
8
Sig.
.509
.045
.082
Debit card
Model
DEBIT 1
DEBIT 2
DEBIT 3
264
Sophisticated ATM
9.4.1.2
Model
Chi-square
Df
Sig.
ATM 1
ATM 2
ATM 3
5.990
6.645
7.059
8
8
8
.648
.575
.530
R-square (R2L)
R2L is a measure of the usefulness of the model when adding the independent variables or
predictor to the model. R2L varies between zero, which indicates that the independent
variables are not useful for predicting the dependent variable, and 1 when the model
predicts the independent variable with perfect accuracy.
The analogy between the -2LL statistics (R2L) for logistic regression and the sum of
squares (R2) for linear regression analysis, which are SSR/SST, is the likelihood ratio
(Menard, 2001), R2L :
R2L = GM/(D0)
or = GM/ (GM + DM)
DO = The initial -2LL before adding the independent variables which is similar to the sum
of squares in linear regression.
DM = -2 log likelihood for the final model which similar to the error sum of squares (SSE).
GM or model x2 is the difference between D0 and DM.
R2L represents the SPSS output present for the Cox and Snell (R N2) and Nagelkerke
adjustment (RM2). However, Menard (2001) suggested that R2L is the most appropriate for
logistic regression. Some of the reasons for this view is that R2L is a conceptual analogy to
the OLS which reflects a proportional reduction in the quantity actually being minimised
while -2LL; equivalently, the log likelihood is being maximised), in contrast to R2L which is
produced from the SPSS output, R 2M.
265
R2M = 1-(L0/LM)
2/N
(Lo is the likelihood function for the model that contains only the
intercept, LM is the likelihood function that contains all the predictors and N is the total
number of cases). Therefore R2M value is affected by the sample size, whilst R 2 L depends
only on the quantity being maximised or minimised.
For these reason the R2L were computed manually in table 9.2
Table 9.2 R2L of electronic banking
Model
TELEBK 1
TELEBK 2
TELEBK 3
R2 L
0.318
0.348
0.430
Model
R2L
DEBIT 1 0.174
DEBIT 2 0.256
DEBIT 3 0.262
Model
ATM 1
ATM 2
ATM 3
R2L
0.075
0.102
0.120
The results show that for TELEBK3, DEBIT 3 and ATM3 there is a greater value for the
R2L value than the other models. For telephone banking, R2L is 0.430. For debit card, R2L is
0.262 and R2L is 0.120 from which it can concluded that the model represents 43.0% of
variance, 26.2% for debit card and 12.0% for sophisticated ATM.
9.4.2 Testing the predictive accuracy
The percentage of cases predicted correctly is be taken into account.

The accuracy percentage is obtained from classification tables, which are composed of
dichotomous dependants outputs, illustrating correct and incorrect estimates. The two
predicted values for the dependants are displayed in the columns, whilst the two observed
values of the dependants are shown in the rows. The output indicates how well the model
predicts the group of samples from the overall accuracy percentage. However, Menard
(1995) suggested that the assessment of goodness-of-fit is more important than the
accuracy of the classification for theory testing. Therefore, we chose to examine the model
that shows the best fit of the model, which was found from the results in the previous
section to be model-3. The details will be displayed as follows:
266
Table 9.3 Classification accuracy for the adopter and non-adopter of telephone
banking
Predicted (TELEBK1)
Observed
Nonadopter
Adopter
Overall
percentage
Predicted (TELEBK2)
NonAdopter Percentage Nonadopter

Correct adopter
53
9
87.1
51
14
38
71.2
79.8
13
Adopter
9
39
Predicted (TELEBK3)
Percentage
Correct
85.0
Nonadopter
51
Adopter
75.0
80.4
13
39
Percentage
Correct
85.0
75.0
80.4
The result illustrated in table 9.3 can be explained as follows:

Model-1 (Perceived Attributes) is a better predictor of the non-adopter but is less good for
the adopter when compared with model-2 (Perceived Attributes and Personal
Characteristic) and model-3 (Perceived Attributes, Personal Characteristic and
Demographic Characteristic). The accuracy of the classification between model-2 and
model-3 are not different. However, the value of the modes from the assessment of the
goodness-of-fit shows the overall model-3 (TELEBK3) from the previous section is the
best model fit to the data. Therefore we examined only the classification accuracy using
model-3 (TELEBK3).
The overall accuracy of the classification is 53.6% when only constants are included
(model-3). However, the accuracy percentage was improved after adding the predictors
(independent variables) to the model. The table shows the model correctly classifies 51
non-adopters and misclassified 9, which is 85.0% accuracy. For the adopter group the
model correctly classified 39 non-adopters and misclassified 13, which is 75.0% accuracy.
The overall accuracy of the classification is 80.4% (which is the weighting from both
percentages), showing a higher accuracy.
Table 9.4 Classification of accuracy for the adopter and non-adopter of debit card
267
Predicted (DEBIT1)
Observed
Nonadopter
Adopter
Overall
Percentage
NonAdopter
adopter
71
21
28
36
Predicted (DEBIT2)
Percentage
Correct
77.2
Nonadopter
72
56.3
68.6
19
Predicted (DEBIT3)
Adopter Percentage
NonCorrect
adopter
17
80.9
73
44
69.8
76.3
21
Adopter
16
Percentage
Correct
82.0
41
66.1
75.5
Model-1 (Perceived Attributes) is a less good predictor than model-2, whilst model-2
(Perceived Attributes and Personal Characteristic) is the best predictor for the adopter
groups when comparing all three models. Finally, model-3 (Perceived Attributes, Personal
Characteristic and Demographic Characteristic) is the best for predicting the non-adopter
when comparing all three models but it is less good at predicting the adopter than model2. The value of modes from the assessment of the goodness-of-fit that shows the overall
model-3 (DEBIT3) from the previous section is the best model fit to the data. Therefore,
we examined only the classification accuracy only for model-3 (DEBIT 3). The overall
accuracy of the classification is 58.9% when only the constants are included. However, the
accuracy percentage improved after we added the predictors (independent variables) to the
model. The table shows the model correctly classifies 73 non-adopters and misclassified
16, which is 82.0% correct. For the adopter group the model correctly classified 41 nonadopters and misclassified 21, which is 66.1% correct. The overall accuracy of the
classification is 75.5%, which is the weighting from both percentages. The results show
that the model is better at predicting the group of non-adopters than the adopter group.
Table 9.5 Classification accuracy for the adopter and non-adopter of sophisticated
ATM
Predicted (ATM1)
Observed
Non-adopter
Adopter
Overall
percentage
Nonadopter
12
6
Predicted (ATM2)
Adopter Percentage
Noncorrect
adopter
38
24.0
14
95
94.1
9
70.9
Predicted (ATM3)
Adopter Percentage Non-adopter Adopter Percentage

correct
correct
35
28.6
19
30
38.8
91
91.0
6
94
94.0
70.5
75.8
268
Model-1 (Perceived Attributes) is the best predictor of the adopter but it is the least well at
predicting the non-adopter, whilst model-2 (Perceived Attributes and Personal
Characteristic) is weakest as a predictor for the adopter groups when comparing all three
models but is a better predictor for the non-adopter than model-2. Finally model-3
(Perceived Attributes, Personal Characteristic and Demographic Characteristic) is better to
predict the adopter and non-adopter than model-2. In addition the overall percentage
showed that model-3 (ATM3) is the best model for predicting the overall accuracy of the
adopter and non-adopter than model-1 and model-2. Therefore we examined only the
classification accuracy for ATM3.
The classification table indicates how well the model predicts group membership. The
overall accuracy of the classification is 67.1% when only the constants are included.
However, the accuracy percentage was improved after we added the predictors
(independent variables) to the model. The table shows for the non-adopter groups, the
model correctly classifies 19 non-adopters and misclassified 30, which is 38.8% correct.
For the adopter groups the model correctly classified 94 non-adopters and misclassified 6,
which is 94.0% correct. The overall accuracy of the classification is 75.8%, which is the
weighting from both percentages. The results show that the model is only 46.9% accurate
when trying to predict a group of non-adopter. However, the model was better at
predicting the adopter group.
The poor prediction accuracy of the model for the non-adopter groups may be because the
characteristics of the non-adopter groups is that they have very little interest in becoming
an adopter according to their demographic data and personal characteristics (attitudinal
perceptual and social interaction behaviour). Non-adopter groups have a very low
percentage of income (see table 8.7) and the majority of the group are made up from
students, unemployed people and housewives (see table 8.8).
In summary, considering all three types of electronic banking products, there were
similarities between telephone banking and debit cards in terms of whether the model is
better at predicting the non-adopter group than the adopter group. However, when we
looked at the sophisticated ATM, we saw an opposite result indicating that the model can
predict adopters with more accuracy than non-adopters.
269
Overall, the accuracy percentage is high, which means that for all three types of product,
the models can be used for prediction successfully.
Finally, the above measures which were used to evaluated the goodness of fit and the
percentages of accuracy show that model-3 = f (perceived attributes, characteristic and
demographic) is the best fit for the data and has a high correct percentage of prediction.
Therefore, for the next section, testing the predictive efficiency is presented only for
model-3 for all products.
9.4.3 Testing the predictive efficiency of the model
Testing for the significance of the independent variables in the models is one of the
methods used to assess the fit of the model. This test also provides information about the
contribution of each independent variable or predictors effect on the dependent variable.
These statistics are the coefficient, Wald statistics and the Odds Ratio (or Exp. ).
9.4.3.1
Coefficient
This is the regression coefficient that corresponds to the variable
Xn.
It is equivalent to the
beta weight in linear regression but it cannot be interpreted in the same way with linear
regression. In Logistic regression, (indicates the direction of the relationship between each
variable in the logistic regression) this coefficient is used in conjunction with the Wald
statistics.
9.4.3.2
Wald statistic
The Wald statistic is the test of the coefficient to determine whether the predictor or
independent variable was significantly different from zero. If the coefficient is significantly
different from zero then we can assume that the predictor is making a significant
contribution to the prediction of the outcome (Y). However, it is probably more accurate
270
to examine the likelihood ratio statistics as well in terms of whether the regression
coefficient () is large, which produces a problem standard error value, causing the Wald
statistic to be underestimated (Menard, 2001).
Odds ratio (or Exp )
9.4.3.3
This is the value of exp , which is an indicator of the change in odds resulting from a unit
change in the predictor (the independent variable). When Exp is greater than 1 this
indicates that as the predictor increases, the odds of the outcome occurring increases.
However, a value less than 1 indicates that as the predictor increases the odds of the
outcome occurring decreases.
SPSS also produces a confidence interval for exp B that is useful to examine the actual
value of exp B in the population of 95% of the events. The confidence interval value for
exp B is from less than 1 to 1. Therefore, the value of Exp B in the population must lie
between these two values. If the confidence interval value was from less than 1 to more
than 1, then we could not completely generalise our findings because the value exp B in
the population could indicate either a positive (exp(B) > 1) or negative (exp(B) < 1)
relationship.
9.5
The empirical logistic regression model of telephone
banking
The results have shown that model-3 (TELEBK3) (Perceived attribute, Personal
Characteristic and Demographic characteristic) were a best fit when compared with the
other models as illustrated in previous sections. Therefore, in this section we will only
discuss the results from model-3.
271
Table 9.6 The empirical logistic regression model of telephone banking
Variables
Wald
Sig.
Exp(B)
95.0%
C.I. for
F1: Benefit
-.467
F2: Wiling to pay
-1.612
F3:LessOperational -1.848
risk
F4: Ease of use
-1.119
F5: Availaiblity
-.188
C1: Venturesome
-.012
C2: Friends/family
-.453
C3: Traditional
-.596
attitude
C4: Modern attitude
-.359
D1: Income
.454
D2: Gender (Male)
1.233
D3: Age
-.310
Constant
.008
1.909
12.548
15.780
.167
.000
.000
.627
.199
.158
EXP(B)
Lower
.323
.082
.063
11.441
.481
.001
1.846
2.985
.001
.488
.975
.174
.084
.327
.828
.988
.636
.551
.171
.487
.463
.331
.280
.625
1.410
2.109
1.222
1.083
1.246
2.686
3.921
.239
.000
.264
.101
.048
.625
.995
.699
1.575
3.431
.734
1.008
.372
.915
1.013
.212
1.311
2.711
11.624
2.543
Upper
1.216
.487
.392
The scale starts from 1 to 5 (strongly agree to strongly disagree).
The results in table 9.6 (TELEBK3) show all of the twelve variables. Three were found to
be significant at the 1% level, one was found to be significant at the 5% level and one to
be significant at the 10% level. Four were from the perceived attributes variable and one
was from the demographic characteristic.
For the factor Willing to pay for better service, the Wald value is 12.548 at P=0.000, the
odds of telephone banking adoption are increased by 0.199 times for a unit increase in the
willing to pay for better service scores. This factor refers to the cost of using the service,
the perceived service quality namely reliability (the accuracy of service), trust (service can
be guarantee by bank) and the chance to observe the service.
For the factor Less operational risk, the Wald value is 15.780 at P=0.000 and the odds
of bank customers adoption are increased by 0.158 times for a unit increase in the Less
operational risk score. This factor refers to customers perceiving less complication from
the telephone banking service operation. Customers were also less concerned about a high
crime and errors risk when they were dealing with telephone banking.
272
For the factor Ease of use, the Wald value is 11.447 at P=0.001 and the partial effects of
ease of use on the odds of bank customers adoption are increased by 0.327 times for a
unit increase in the ease of use score. This factor refers to ease of use, and the supplied
information about services.
For the personal characteristic, Traditional attitudes, the Wald value is 2.985 at P=0.084
the odds of bank customers adoption are increased by 0.551 times for a unit increase in
traditional attitude scores. However, the findings for this factor cannot be generalised
regarding the confidence intervals that come across the line between less than 1 and more
than 1, which indicates that the direction of this relationship may be not be stable in the
population.
For the demographic data (Gender), the Wald value is 3.921 at P=0.048, indicating that
gender (Male) increase the odds of telephone banking adoption occurring by 3.431 times.
In summary, the results showed that the perceived attributes model makes a greater
significant contribution to the prediction of the adopter and non-adopter than just using
the personal characteristics and demographic characteristics. Moreover, the mean
perceived innovation attributes are better prediction variables than personal characteristics
and demographic characteristics variables. However, the results do not support the finding
in the exploratory analysis by using Crosstab Chi-square that the monthly income was
significantly different at the 5% level between the adopter and non-adopter. Instead, the
logistic regression results showed that there was a significant difference between males
and females for the adoption of electronic banking.
The other value that we used to examine the contribution of the independent variables for
the predictions is the value. The results show a high value of for perceived attributes
variables. In the generalisation of the finding results, the confidence intervals for some
variable factors (traditional attitude) come across the line between less than 1 to more
than 1, which indicates that the direction of this relationship may not be stable in the
population. However, other factors are in line within their ranges.
273
9.6
The empirical logistic regression model of debit card
The results have shown that model-3 (DEBIT3) (Perceived attribute, Personal
Characteristic and Demographic characteristic) is the best fit when compared with the
other models as discussed in the previous sections. Therefore in this section we will only
discuss the result from the model-3.
Table 9.7 The empirical logistic regression model of debit Card
Variables
Wald
Sig.
Exp(B)
95.0%
C.I.for
P1: Trustworthy
P2:Operational
knowledge
P3: Willing to pay
P4: Perceived risk
P5: Benefit
P6: Availability
C1: Venturesome
C2: Friends/family
C3: Modern
attitude
C4: Traditional
attitude
D1: Gender
(Male)
D2: Age
D3: Income
Constant
-1.157
.492
18.634
4.203
.000
.040
.314
1.636
EXP(B)
Lower
.186
1.022
-.353
.282
.123
.190
-.020
-.306
-.538
2.222
1.612
.389
.689
.007
1.460
5.194
.136
.204
.533
.406
.932
.227
.023
.703
1.326
1.131
1.209
.980
.736
.584
.442
.858
.769
.772
.613
.448
.367
1.117
2.051
1.662
1.892
1.567
1.210
.927
.508
3.854
.050
1.663
1.001
2.762
.378
.702
.402
1.460
.602
3.538
.166
-.239
-.129
.175
1.509
.024
.676
.219
.877
1.180
.788
.879
.543
.538
2.567
1.153
Upper
.532
2.620
The results in table 9.7 show that out of all twelve variables two was found to be
significant at the 1% level and two to be significant at the 5% level. Of these five results,
two were from the perceived attributes variable and two were from the personal
characteristics attributes. We found no evidence of significant values from the
demographic characteristics.
For the factor Trustworthy, the Wald value is 18.634 at P=0.000, therefore, the odds of
bank customers adoption are increased by 0.314 times for a unit increase in the
trustworthy scores. The factor is referred to as useful, reliable and compatible with
customers experience.
274
For the factor Operational knowledge required, the Wald value is 4.203 at P=0.040,
therefore, the odds of bank customers adoption are increased by 1.636 times for a unit
decrease in the operational knowledge required scores. This factor refers to the
opportunity to try and obtain enough information and observe the service about the
service.
For the personal characteristic factor, Modern attitude towards change, the Wald value is
5.194 at P=0.023, therefore, the odds of bank customers adoption are increased by 0.584
times for a unit increase in modern attitude toward change scores. The factor refers to
the results showing that the customer is interested to hear about new technological
developments and believed that technological developments affected their lives.
For the factor Traditional attitude towards change, the Wald value is 3.854 at P=0.050,
therefore, the odds of bank customers adoption are increased by 1.663 times for a unit
decrease in traditional attitude toward change scores. This factor referred to the
willingness of customers to use cash and visit the branch.
The results also support the findings in telephone banking, which illustrates that the
perceived attributes models are a better predictor of variables than personal characteristic
variables. The major contribution comes from the factor trustworthy, which represents
the perceived attributes variable.
9.7 The empirical logistic regression model of sophisticated ATM

The results have shown that model-3 (ATM3) (Perceived attribute, Personal Characteristic
and Demographic characteristic) is the best fit when compared with the other models as
discuss on previous sections. Therefore in this section we will only discuss the result from
the model-3.
Table 9.8 The empirical logistic regression model of sophisticated ATM
275
Variables
F1: Willing to pay
F2: Reliability
F3: Benefit
F4: Accessibility
F5: Perceived risk
F6: Availability
C1: Venturesome
C2: Modern
attitude
C3: Friends and
family
D1: Income
D2: Gender (Male)
D3: Age
Constant
95.0%
C.I.for
EXP(B)
Lower
.629
.623
.424
.455
.974
.925
.794
.668
Wald
Sig.
Exp(B)
-.039
-.094
-.444
-.397
.390
.311
.197
.001
.032
.237
4.397
3.987
3.374
2.456
.815
.000
.859
.626
.036
.046
.066
.117
.367
.998
.962
.910
.642
.672
1.477
1.365
1.218
1.001
.431
3.620
.057
1.539
.987
2.400
.300
-.468
-.501
2.066
1.918
1.419
1.416
4.650
.166
.234
.234
.031
1.350
.626
.606
7.896
.883
.290
.266
2.065
1.353
1.383
Upper
1.472
1.330
.971
.993
2.241
2.014
1.870
1.498
The results in table 9.8 show that out of all of the twelve variables two were found to be
significant at the 5% level and two to be significant at the 10% level. Of these four
variables, three were from the perceived attributes variable and one was from the personal
characteristics.
For the factor Benefit, the Wald value is 4.397 at P=0.036, therefore, the odds of bank
customers adoption are increased by 0.642 times for a unit increase in the benefit scores.
The factor refers to saving time and the usefulness and willingness to do the majority of
financial transactions via sophisticated ATM.
For the factor Ease of use, the Wald value is 7.299 at P=0.046, therefore, the odds of
bank customers adoption are increased by 0.672 times for a unit increase in the ease of
use scores. This factor refers to ease of use, opportunity to observe and the confidence of
using the service.
For the factor Perceived risk, the Wald value is 3.374 at P=0.066, therefore, the odds of
bank customers adoption are increased by 1.477 times for a unit decrease in the
perceived risk scores. The factor refers to error risks and security concerns.
For the factor Friends/family influences, the Wald value is 3.620 at P=0.057, therefore,
the odds of bank customers adoption are increased by 1.539 times for a unit decrease in
276
the friends/family influences. This factor is regarding the friends and family influence,
personal recommendations and needing advice for financial services. However, the
findings for this factor cannot be generalised regarding the confidence intervals that come
across the line between less than 1 and more than 1, which indicates that the direction of
this relationship may be not be stable in the population.
The results also support the findings in telephone banking and debit card, which illustrates
that the perceived attributes models are a better predictor of variables than personal
characteristic variables and demographic characteristics. The major contribution comes
from the factor trustworthy, which represents the perceived attributes variable.
In a generalisation of the finding results, the confidence intervals for benefit and
accessibility,
EXP(B)
values is within the line less than 1 or more than 1 which indicates
that the direction of this relationship is stable in the population.
9.8 A proposed structure model

As can be seen from the results in Chapter Eight, the factor analysis results did not match
the five-dimension structure by Rogers framework. However, this is not completely
unexpected. There were two reasons that explain this result. Firstly, this is a commonly
observed situation in adoption of innovation studies. In some studies five factors were not
always proposed (Lockett and Littler, 1997). When they were factor loading, the results
also did not match those of Rogers framework. This has also been observed in this study.
One possible reason that the study failed to find the five factor items loading together is
because the study has introduced new variables in addition to Rogers framework, which
we have discussed earlier in the literature review. There were also some variables such as
trialability and cost where some services have only one variable for their attribute. The
results produced mixed relationships between perceived attributes. The process of factor
analysis was generating groupings with other variables even though they did not match
with the hypotheses. The study has found consistency between the three types of services
such as the combination of cost and service quality or complexity and perceived risk etc.
277
However, the results of the different proposed factor structures have caused problems
when the research study aims are compared with the previous research.
There were several options open to the researcher to resolve the observed problems when
testing the hypotheses. Firstly, to create new variables, which reflected the constructs that
were based on the original factor structure that was developed in literature reviews and
imposed on the data i.e. accepting the structure of Rogers framework originally proposed
in the literature. However this option has limited use in measuring the reliability of the
factor structure because they are not consistent with the dimensions that emerged from the
factor analysis. Secondly, the exploratory factor structures extracted from the data could
be studied to see whether there were any consistent patterns of items loading together
between three types of electronic banking. If this is the case these structures could be used
in the analysis but will not be used for hypotheses testing. Finally, to eliminate the
remaining problems, we used two types of analysis together to test the research
hypotheses.
In keeping with the testing hypotheses of the adoption research, which has been
established earlier, the data was tested again using logistic regression to impose the data
on the proposed perceived attributes based on the literature reviews.
9.8.1 The imposed logistic regression model of telephone banking
The results show that R2L (model-3) is shown at the highest value. Therefore, the results
from model-3 are discussed as follows:
The overall goodness of fit of the model was assessed by comparing the empirical factor
model and the imposed factor model. The results showed that the classification accuracy
for the adopter and non-adopter of telephone banking are 79.2% and 87.5% and the
overall percentage is 83.8% which we compared with the value 80.4% from the empirical
factor model. However, R2L value is 0.430 when compared with 0.460 from imposed
structure model. The results in table 9.9 show that out of all ten variables, two variables
(observability and perceived risk) were found to be significant at the 1% level, two
278
variables (relative advantage and friends/family influence) were found to be significant at

10%.
279
Table 9.9 The imposed logistic regression model of telephone banking
Variables
RA
COMPAT
COMPX
TRIAL
OBSERV
COST
RISK
CONTRL
RELIA
TRUST
WILLRK
FRIEND
ATTI
INCOME
-1.779
-.808
-.078
-.172
-3.527
.486
2.360
.178
-.537
-.031
.170
1.346
.475
.482
.543
Wald
3.734
.936
.013
.106
16.642
.971
12.347
.228
.724
.005
.059
3.216
.263
1.628
.642
Sig.
.053
.333
.911
.744
.000
.324
.000
.633
.395
.945
.808
.073
.608
.202
.423
Exp(B)
.169
.446
.925
.842
.029
1.626
10.592
1.195
.585
.969
1.185
3.842
1.607
1.620
.581
95.0%
C.I.for
EXP(B)
Lower
Upper
.028
1.026
.087
2.290
.238
3.593
.300
2.365
.005
.160
.618
4.279
2.840
39.507
.575
2.482
.170
2.013
.401
2.343
.300
4.678
.882
16.727
.262
9.858
.772
3.396
.154
2.192
GENDR(1)
AGE
.863
.867
.171
-.142
.030
Constant
1.439
4.657
.095
.757
4.216
4.388
For the factor Relative advantage, the Wald value is 3.734 at P=0.053 and the odds of
bank customers adoption are increased by 0.169 times for a unit increase in the relative
advantage score. However, the findings for this factor cannot be generalised regarding the
confidence intervals that come across the line between less than 1 and more than 1, which
indicates that the direction of this relationship may be not be stable in the population.
For the factor Observability, the Wald value is 16.642 at P=0.000 and the odds of bank
customers adoption are increased by 0.029 times for a unit increase in observability
scores.
For the factor Perceived risk, the Wald value is 12.347 at P=0.000 and the odds of bank
customers adoption are increase by 10.592 times for a unit decrease in perceived risk
scores.
280
For the factor Friend and Family Influences, the Wald value is 3.216 at P=0.073 and the
odds of bank customers adoption are increase by 3.842 times for a unit decrease in friend
and family influences scores. However, the findings for this factor cannot be generalised
regarding the confidence intervals that come across the line between less than 1 and more
than 1, which indicates that the direction of this relationship may be not be stable in the
population.
Comparing the findings from both models supports the results that emerged from the
empirical study, where perceived risk(crime risk and errorisk) and observability were
found to be significant. However, there were two major different findings seen from the
results. Firstly, friends/family influences, relative advantage appear to be significantly
different on the imposed factor model, but this did not appear in the empirical factor
model. Secondly, the findings found a significant difference for willing to pay(cost and
reliability), traditional attitudes toward change and gender (male) in the empirical factor
model but this did not appear on the imposed factor model.
9.8.2 The imposed logistic regression model of debit card
The results show that the R2L (model 3) is shown at the highest value. Therefore, the result
from model 3 is discussed as follows:
Assessing the overall goodness of fit of the model by comparing the empirical factor
model and imposed factor model showed that the classification accuracy for the adopter
and non-adopter of debit cards are 49.2% and 85.4% respectively and the overall
percentage is 70.8% which compare with the value of 75.5% for the empirical factor
model. R2L is 0.262 from empirical model when compared with 0.139 from imposed
structure model.
281
Table 9.10 The imposed logistic regression of debit card

Variables
RA
COMPA
COMPX
OBSERV
NRISK
TRY
COST
CONTRL
RELIA
TRUST
WILLRK
ATTI
FRIEND
INCOME
-.451
.157
.229
1.006
-.152
.117
-.408
-.354
-1.063
.025
-.300
-.105
-.412
-.056
.463
Wald
.872
.205
.647
5.442
.532
.156
2.386
3.464
7.506
.013
.800
.069
1.172
.123
1.321
Sig.
.350
.651
.421
.020
.466
.693
.122
.063
.006
.909
.371
.793
.279
.726
.250
Exp(B)
.637
1.169
1.258
2.733
.859
1.124
.665
.702
.345
1.025
.740
.901
.663
.946
1.588
95.0%
C.I.for
EXP(B)
Lower
.247
.594
.719
1.174
.572
.630
.396
.484
.161
.672
.383
.411
.314
.692
.721
GENDR(1)
AGE
-.085
.065
.799
.918
.476
Constant
4.205
5.943
.015
67.009
Upper
1.641
2.304
2.200
6.362
1.292
2.005
1.116
1.019
.739
1.564
1.430
1.972
1.396
1.292
3.497
1.773
The results in table 9.10 shows that out of all ten variables, two (observability and
reliability) was found to be significantly different at the 5% level and the other one
(control) was found to be significantly different at the 10% level. We have found no
evidence of significant values from the demographic data and personal characteristic.
For the factor Observability, the Wald value is 5.442 at P=0.020 and the odds of bank
customers adoption are increased by 2.733 times for a unit decrease observability scores.
For the factor Control, the Wald value is 3.464 at P=0.063 and the odds of bank
customers adoption are increase by 0.702 times for a unit increase in the control scores.
However, the findings for this factor cannot be generalised regarding the confidence
intervals that come across the line between less than 1 and more than 1, which indicates
that the direction of this relationship may be not stable in the population.
For the factor Reliability, the Wald value is 7.506 at P=0.006 and the odds of bank
customers adoption are increase by .345 times for a unit increase in the reliability scores.
282
When we compared the two models, the results from the empirical logistic regression
model supported some of the results that emerged from the empirical study, which found
that perceived service quality (prove) as a sub factor in trustworthy and observability
(observe) as a sub factor in operational required learning in the empirical model were
statistically significant. However, there were some differences between the two models.
Personal characteristics (modern and traditional attitude) did not appear in the imposed
regression model. The other difference is control, which also did not appear in the
empirical regression model but did appear in the imposed structure model.
The results were different from both models, showing that relative advantage and
observability was found to be significantly different for the imposed factor model but these
findings were not found in the empirical factor model. The results in the empirical factor
model found a significant difference for perceived service quality, trialability, modern and
traditional attitudes toward change. However, these were not found for the imposed
structure model.
9.8.3 The imposed logistic regression model of sophisticated ATM
The results show that R2L (model-3) are shown at the highest value. Therefore, the results
from model-3 is discussed as follows:
Assessing the overall goodness of fit of the model by comparing the empirical factor
model and imposed factor model showed that the classification accuracy for adopter and
non-adopter of telephone banking are 93.6% and 40.4% and the overall percentage is
74.0% which we compare with the value of 76.4% of the empirical factor model. R 2L also
represented value 0.158 from imposed structure model when compared with 0.120 from
empirical factor model.
Table 9.11 The imposed logistic regression model of sophisticated ATM
Variables
RA
-.665
Wald
3.475
Sig.
.062
Exp(B)
.514
95.0%
C.I.for
EXP(B)
Lower
.256
Upper
1.035
283
COMPA
COMPX
OBSERV
TRIAL
RISK
COST
CONTRL
RELIA
TRUST
WILLRK
ATTI
FRIEND
INCOME
.076
-.636
.030
.517
.391
-.093
.315
-.420
-.055
.468
-.735
.169
.481
-.715
.054
4.079
.009
2.289
1.616
.216
1.974
1.470
.028
1.559
1.214
.355
4.317
3.107
.816
.043
.923
.130
.204
.642
.160
.225
.866
.212
.271
.551
.038
.078
1.079
.529
1.030
1.676
1.479
.911
1.370
.657
.946
1.597
.479
1.185
1.618
.489
.569
.285
.564
.858
.809
.614
.883
.334
.497
.766
.130
.679
1.028
.221
GENDR(1)
AGE
-.719
2.555
.110
.487
.202
Constant
2.593
1.386
.239
13.375
2.048
.981
1.883
3.273
2.705
1.351
2.127
1.295
1.801
3.331
1.773
2.068
2.546
1.083
1.177
The results in table 9.11 show that out of all ten variables two (complexity and income)
were found to be significant at the 5% level, and two (relative advantage and gender) was
found to be significant at the 10% level. Of these four variables, two came from the
perceived attributes and one each from the demographic data and personal characteristics.
For the factor Relative advantage, the Wald value is 3.475 at P=0.062 and the odds of
bank customers adoption are increased by 0.460 times for a unit increase in relative
advantage scores. However, the findings for relative advantage cannot be generalised
regarding to the confidence intervals that have come across the line between less than 1
and more than 1, which indicates that the direction of this relationship may be not stable in
the population.
For the factor Complexity or Ease of use, the Wald value is 4.709 at P=0.043 and the
odds of bank customers adoption are increase by 0.529 times for a unit increase in ease
of use scores.
For the factor Income, the Wald value is 4.317 at P=0.038 and the odds of bank
customers adoption are increased by 1.618 times for a unit increase in level of income
scores.
For the factor Gender, the Wald value is 3.107 at P=0.78, indicating that gender (Male)
284
decrease the odds of bank customers adoption occurring by .489 times. However, the
findings for gender cannot be generalised regarding to the confidence intervals that have
come across the line between less than 1 and more than 1, which indicates that the
direction of this relationship may be not stable in the population.
Comparison between both logistic model, the imposed factor logistic model supports the
results that emerged from the empirical study, which found that relative advantage
(benefit) and complexity (ease of use) were found to be significant statistical evidence.
However, there were also differences between the two models. Friends/family influences
did not appear in the imposed structure factor model while it appeared for the empirical
model. The other difference is the level of income per month and the gender of the
respondents appeared to be significantly different for the imposed factor model but did not
appear in the empirical factor model.
285
Table 9.12 Comparing imposed structure model of three type of service
Type of service
Perceived
Attributes
Relative Advantages
Telephone
banking
-anytime
-lessbranch
-savetime
-useful
-branchness
Debit
card
Compatibility
N/A
N/A
N/A
Complexity
N/A
N/A
Observability
observe
informat
observe
informat
Ease of Use
-easier
-reliable
-observe
N/A
Trialability
N/A
N/A
N/A
Cost
N/A
N/A
N/A
Perceived Risk
Operational
risk
-crimerisk
-errorisk
-complicate
-notpractical
N/A
N/A
Control
N/A
control
N/A
Reliability (including
accuracy)
Trust (including
confidence)
N/A
reliable
N/A
N/A
N/A
N/A
N/A
Sophisticated
ATM
-useful
-savetime
-notusebk
Table 9.13 Personal characteristic of electronic banking

286
Type of service
Telephone
banking
Debit card
Sophisticated
ATM
N/A
N/A
N/A
Personal
Needadvice
Friend/family
N//A
N/A
Traditional Attitude
toward Change
N/A
N/A
N/A
Modern Attitude
toward Change
N/A
N/A
N/A
Attitude and
Social Interaction
Venturesomeness
Friend and Family
Influence
9.8.4 Multi-colinearity
The significant differences from the empirical factor model and the imposed model lead us
to consider that there may be some problems with the imposed model. Therefore, using
partial correlation we checked the multi-colinearity values, because multi-colinearity is not
provided by the logistic regression output. The results show that all three models have a
strong correlation between two or more predictors in the regression model. Multicolinearity can cause problems of the validity of a regression model. It limits the size of R
and R2. If there is multi-colinearity between predictors when one predictor variable
contributes variance into the model, it is difficult for the second predictor to contribute a
more unique variance into the model. This can cause problems when we want to select
which individual predictor is a better contributor of the prediction power of the model,
because the variables have a similar variance account for the model. Hence, the results
were different from the empirical factor model, which has prevented the multi-colinearity
problem by using factor scores when inputting factors into the logistic regression model.
9.9
Testing the hypotheses
According to the results described in the previous section and the colinearity problem, we
287
decided to use the aggregate T-test independent together with the imposed factor structure
model for testing the hypotheses. The hypotheses concerned investigating the significant
differences between the adopter and non-adopter groups. The primary tests were
presented in Chapter Eight by using T-test dependent for each variable of perceived
attributes. However, in this section we aggregate all the variables in each perceived
attributes and personal characteristic then tested the T-test independent. The results are
given in table 9.14 Chi-square was also used as a statistic test for demographic data.
Table 9.14 Aggregated Independent Samples T-Test
Telephone banking
Variables
Mean(SD)/N
Adopter
Debit card
Mean(SD)/N
Sig.
Mean(SD)/N Mean(SD)/N
(2-tailed)
Non Adopter
Adopter
Non Adopter
Sophisticated ATM
Sig.
(2-tailed)
Adopter
Non Adopter
Sig.
(2-tailed)
RA
1.90(.51)
54
2.30(.45)
65
.000
2.26(.50)
66
2.49(.49)
98
.005
2.22(.58)
2.22(.58)
.021
COMPAT
2.58(.43)
54
2.81(.48)
65
.008
2.70(.64)
65
3.00(.57)
97
.003
109
2.85(.66)
53
3.09(.67)
.037
COMPX
2.50(.61)
54
2.84(.50)
65
.002
1.92(80)
66
2.06(.83)
98
.299
109
1.93(.62)
53
2.32(1.41)
.063
OBSERVE
2.13(.64)
54
2.92(.63)
65
.000
2.04(.86)
66
1.98(.65)
98
.658
109
2.38(.67)
53
2.34(.77)
.761
109
53
TRIAL
1.90(.87)
54
1.86(.63)
65
.741
2.18(.58)
66
2.13(.60)
97
.598
1.82(.66)
1.67(.67)
COST
2.50(.90)
54
2.85(.73)
65
.000
2.07(.84)
66
2.42(.93)
98
.013
109
2.52(1.06)
53
2.67(1.18)
RISK
3.01(.88)
54
2.40(.63)
65
.000
3.08(.93)
3.05(.89)
.824
109
2.46(.78)
53
2.25(.74)
CONTROL
2.57(1.06) 2.92(1.15)
54
65
.136
2.23(1.1) 2.58(1.07)
66
97
.045
2.86(1.06)
110
RELIABI
2.19(.75)
54
.001
1.86(.56)
66
.001
2.63(.62)
65
109
Telephone banking
2.20(.66)
97
Debit card
.192
.401
.095
53
2.70(.99)
53
.321
2.26(.63)
2.40(.64)
.103
109
53
Sophisticated ATM
Adopter
Sig. Mean(SD)/N Mean(SD)/N Sig.

Sig.
(2-tailed)
(2-tailed)
(2-tailed)
Non
Adopter
Non
Adopter
Non
Adopter
Adopter
Adopter
TRUST
2.22(.90)
54
2.44(.77)
65
.147
2.52(1.00)
66
2.7(.86)
98
.199
2.03(.70)
2.22(.63)
.662
WILLRK
2.07(.59)
54
2.36(.58)
65
.008
2.23(.57)
66
2.35(.63)
94
.202
109
2.17(.60)
52
2.10(.58)
.472
109
53
288
ATTITUDE
2.57(.39)
54
2.62(.42)
65
.505
1.72(.56)
66
2.00(.55)
98
.002
2.59(.33)
2.67(.29)
.138
FRIEND
2.81(.59)
54
2.77(.63)
65
.764
2.29(.60)
66
2.40(.56)
98
.282
109
2.89(.77)
53
2.77(.56)
.321
109
53
In order to test the propositions for answering the research questions, a series of related
hypotheses were identified and grouped into three main hypotheses as follow.
P1: The attributes of an innovation that affect the adoption decision for electronic banking
are different in a developed country when compared with a developing country, in a
Thailand context
To illustrate this proposition regarding the attributes of an innovation, this attribute refers
to the five perceived attributes by Rogers in addition to perceived risk and cost.
Therefore the details are shown as follows:
H1: There is no difference in the perceived attributes of innovations between a
developed country and a developing country in a Thailand context.
This section tests seven hypotheses concerning perceived attributes that influence the
adoption of electronic banking. These hypothesised factors are illustrated as follows:
H1.1 Adopters perceived more relative advantage of electronic banking than nonadopters.
This hypothesis was tested by investigating whether there were significant differences for
the perceived relative advantage between the adopter and non-adopter groups. The results
from aggregated independent T-Tests show that for all three types of electronic banking,
relative advantage was found to be significant at the 1% level. The hypothesis was
supported by the findings of aggregated independent T-Tests that adopters perceived more
289
relative advantage than non-adopters. In addition the findings have shown that there was
a big difference in means between the adopter and non-adopter groups for the perception
of the benefits from using electronic banking. This also confirms the findings from the
focus group interviews that adopters perceived relative advantage to a greater extent than
the non-adopter groups. The mean value for adopter and non-adopter groups also
supported the positive direction of compatibility influencing the adoption of electronic
banking. The details of the relative advantage attribute, for each type of electronic
banking, is discussed in Chapter Eight.
For the logistic regression model, the results show that there were significance
differences for telephone banking and sophisticated ATM at the 10% level. However, we
have found no significant difference for debit card.
H 1.2: Adopters perceived less complexity of electronic banking than non-adopters
perceived complexity between the adopter and non-adopter groups. The aggregated
independent T-Test results for telephone banking and sophisticated ATM were found to be
significant at the 1% and 10% level. However, we have found no significant difference at
the 5% level for debit card. The results show that adopters perceived less complexity of
using telephone banking and sophisticated ATM than the non-adopters. This confirms the
findings from the focus group interviews that the adopter groups, for these types of
electronic banking, perceived less complexity of using the services than the non-adopter
groups. Moreover, for debit card, the results of the mean value tend to support the
hypothesis that the adopter perceived less complexity than the non-adopter. However, the
differences in means are not significant.
For the logistic regression model, the results show that there was no significant difference
for telephone banking and debit card at the 5% level, whilst the sophisticated ATM was
found to be significantly different at the 5% level.
H1.3: Adopters perceived more compatibility of electronic banking than nonadopters.
290
This hypothesis was tested by investigating whether there was a significant difference in
the mean for perceived compatibility between the adopter and non-adopter groups. The
results show that in telephone banking and debit card, compatibility was found to be
significant at the 1% level, whilst sophisticated ATM was found to be significantly different
at the 5% level. The hypothesis was supported by the findings of the results that the
adopter groups perceived more compatibility than the non-adopter groups. The mean
value for adopter and non-adopter groups also supported the positive direction of
compatibility influencing the adoption of electronic banking.
The results also confirm the findings from the focus group interviews that non-adopter
groups perceived less compatibility than the adopter groups. The findings in the focus
group interviews showed that compatibility is one of the most important factors
influencing the non-adopter groups for the adoption of the electronic banking. This was
supported by the mean value for the three types of electronic banking showing that the
non-adopter group have the highest mean value towards a negative direction when the
factor was compared with other factors. This confirms the major concern of the nonadopter groups when they were thinking about the adoption of electronic banking.
For the logistic regression model, the results show that there were no significant
differences at 5% for all three types of electronic banking services.
H1.4: Adopters highly perceived the observability of electronic banking more than
non-adopters.
perceived observability between the adopter and non-adopter groups. For the aggregated
independent T-Test, the results show that for telephone banking, observability was found
to be significantly different at the 1% level. However, debit card and sophisticated ATM
were found to have no significant difference at the 5% level. For telephone banking, the
findings support the hypothesis. The results show a very high significant difference in
means between the adopter and non-adopter. The results also confirm the findings from
the focus group interviews that the non-adopter group did not know enough information
291
about the services available. The mean value of the adopter groups for debit card and
sophisticated ATM is higher than for the non-adopter groups, which tends to support the
hypothesis. However, the differences in means are not significant at the statistically
acceptable level. One of possible explanation for this is that both the adopter and nonadopter have received enough information from the bank. However, the non-adopter
groups had other reasons why they do not want to adopt the service. These may be
explained when the other factors are examined.
For the logistic regression models, the results show that telephone banking and debit card
were significantly different at 1% whilst the sophisticated ATM was not found to be
statistically significant at 5%.
H1.5: Adopters perceived less trialability of electronic banking than non-adopters
perceived trialability between the adopter and non-adopter groups. The results show that
there was no significant difference at the 5% level for the three types of electronic
banking. The mean value shows that both groups agreed that trialability is beneficial to
them before adopting the services. However, the results are opposite to the findings from
the focus group interviews, which found that trialability is not as important to the nonadopter groups as much as was perceived by the adopter group. The results show that the
non-adopter group were not convinced about the benefits of trying out a service before
committing themselves. One possible explanation for this is that during the time of the
interviews, bank customers had no opportunity to try the services before paying the fees
for using telephone banking or debit card. However, the situation had changed during the
period after the interviews until the data collection by questionnaires. Some banks such as
the Bangkok bank now offer a free service for new debit card users, which means
customers can try the service without worrying immediately about the cost.
For the logistic regression model, the results show that trialability was not found to be
significantly different at the 5% level for all three type of electronic banking service.
292
H1.6: Adopters perceive the cost of electronic banking, in terms of purchase costs
and usage costs, to be less important than the non-adopters.
This hypothesis was tested by investigating whether there was a significant difference for
perceived cost between the adopter and non-adopter groups. The results show that for
telephone banking and debit card, the cost of purchase and usage charges was found to be
a significant difference in means at the 1% level, whilst sophisticated ATM found no
significant differences in means at the 5% level. The hypothesis was supported by the
findings of the results, which show that adopters perceived less importance of cost than
the non-adopter. The findings of the results of the mean value indicated the non-adopter
groups were more concerned about the cost of purchasing using telephone banking and
debit card than the adopter group. However, we have found no significant difference in
means for sophisticated ATM. This may be because for this type of service the banks do
not charge bank customers for their use. The results of the empirical study also supported
the findings of the focus group interviews, which showed that the non-adopter groups
were more concerned with cost than the adopter groups.
For the logistic regression models, the results show that for all three types of electronic
banking services, there were no significant differences at the 5% level.
H1.7: Adopters perceived less risk of electronic banking than non-adopters
perceived risk between the adopter and non-adopter groups. The results show that for
telephone banking, perceived risk was found to be significant at the 1%, whilst we have
found no significant difference at the 5% level for debit card and sophisticated ATM.
The hypothesis supported the findings of results that adopter groups perceived less risk
than the non-adopters for telephone banking and sophisticated ATM. The results also
confirm the findings from the focus group interviews.
For debit card and sophisticated ATM, the results did not support the hypothesis. One
possible explanation for this may be that Thai bank customers have perceived a high risk
293
from ATMs card and machine, therefore this has had an effect on debit card use because
debit cards are understood by Thai bank customers are a type of ATM card.
For the logistic regression model, perceived risk was found to be significantly different
only for telephone banking at 1% level whilst there were no significant differences at the
5% level for debit card and sophisticated ATM.
H1.8 Adopters perceived more control over electronic banking services than nonadopters
perceived control between the adopter and non-adopter groups. The aggregated
independent T-test results show that for debit card, perceived control was found to be
significant at the 5% level, whilst we have found no significant difference at the 5% level
for telephone banking and sophisticated ATM. The hypothesis supported the findings of
the results that adopter groups perceived more control over their financial business than
the non-adopters.
For the logistic regression models, only debit card was found to be significantly different at the
10% level. Whilst for telephone banking and sophisticated ATM, the results show that there
were no significant differences at the 5% level. The result was supported the finding in the
aggregated independent T-test.
P2: Possible Perceived Service Quality should be addressed as one of the important
perceived attributes of innovations that may affect the rate of adoption.
According to this proposition, we examined the perceived attributes of innovations that
may affect the rate of adoption of electronic banking. These are shown in detail as follows:
H2: Adopters perceived service quality as more important to them than the nonadopters.
294
perceived service quality, regarding reliability and trust, between the adopter and nonadopter groups.
This section tests two hypotheses, which are illustrated as follows:
H2.1
Adopters perceived
greater reliability, including accuracy, of electronic
banking than the non-adopters.

perceived reliability between the adopter and non-adopter groups. The aggregated
independent T-test results show that for telephone banking and debit card, perceived
reliability was found to be significantly difference at the 1% level. The findings of the
results show a very high significance, which indicates that this factor was very useful to
classify the adopter and non-adopter groups for telephone banking and debit card, whilst
we have found no significant difference at the 5% level for sophisticated ATM.
The results partly supported the hypothesis and findings from the focus group interviews
that adopter groups perceived more reliability of electronic banking than the non-adopters.
For the logistic regression models, the results show that only debit card was significantly
different at the 1% level whilst telephone banking and sophisticated ATM were not found
to be significantly difference at the 5% level.
H2.2 Adopters perceived greater trust, including confidence, of using electronic
banking than non-adopters.
perceived trust between the adopter and non-adopter groups. The aggregated independent
T-test results show that for all three type of electronic banking, perceived trust was not
found to be significant at the 5% level. However, the direction of the mean value points to
a positive effect on the adoption of electronic banking and the mean value tends to support
the hypothesis but was not found to be significantly difference at the 5% level.
For the logistic regression models, for all three types of electronic banking services, the
results show that there were no significant differences at the 5% level.
295
P3. Adopters of electronic banking can be distinguished by demographic characteristics,

attitudinal and perceptual factors, consumption patterns, social interaction and
communication behaviour.
Two statistical methods for testing this hypothesis were used. Firstly, Chi-square tests
were used to test H3.1 and H3.3, with the results detailed in Chapter Eight. Secondly, Ttest independent, was used to test H3.2.
H3.1: Adopters of electronic banking will be more likely to be male, more
academically qualified, have a higher status in occupation, will earn higher incomes,
work longer hours and move house more frequently than the non-adopter.
This hypothesis was tested by investigating whether there was a significant association
with the demographic characteristics and the adoption of electronic banking. The results of
the Chi-square test shows that there was no significant association of the majority of the
demographic characteristics and adoption at the 1% level. However, for telephone
banking, there were significant associations with income and adoption at the 5% level.
The hypothesis was supported by the findings of the results that there was a relationship
between adoption and income, which means adopter groups were more likely to have a
higher income than the non-adopter groups. These results also partly support the findings
from the focus group interviews. One possible explanation for this may be that the adopter
of telephone banking has to pay considerable amounts of charges and fees for using the
service. Therefore, one group of customer who would be able to accept the charge and
have a need to use this service were the group of people who have a higher income. These
may be involved with high usage of financial products. These are examined in Ho 3.3.
For the logistic regression model, the results show that income and gender were found
to be significantly different at 5% and 10% for sophisticated ATM whilst we have found no
statistically significant differences for the other factors and also for the other types of
electronic banking services.
296
H3.2 : Adopters of electronic banking will be characterised by a more favourable

attitude towards change, and will be more venturesome than the non-adopter.
There were two parts to the testing of this hypothesis.
Firstly, attitude toward change was tested by investigating whether there were significant
differences for attitudes toward change between the adopter and non-adopter groups. The
results show that for telephone banking, the attitude toward change was found to be
significant at the 1% level. The hypothesis was supported by the findings of results that the
adopter groups had a more favourable attitude toward change than the non-adopters for
telephone banking. In addition, the results also partly confirm the findings from the focus
group interviews. However, we have found no significant difference at the 5% level for
debit card and sophisticated ATM, although the mean value tends to support the
hypothesis.
Secondly, venturesomeness was tested by investigating whether there were any significant
differences for venturesomeness between the adopter and non-adopter groups. The results
show that for telephone banking, there was a significant difference between the adopter
and non-adopter for venturesomeness at the 1% level. The findings of the results
supported the hypothesis that the adopter groups were more venturesomeness than the
non-adopters for telephone banking. The results also partly confirm the findings from the
focus group interviews. However, for debit card and sophisticated ATM customers, we
have found no significant difference for the mean at the 5% level, although the mean value
of debit card tended to support the hypothesis.
For logistic regression models, we have found no significantly differences at 5% level.
Whilst there were no statistically difference for all three type of electronic banking for
attitudinal and perceptual factors.
H3.3 : Adopters of electronic banking will be more involved with social activities,
read more printed media and perceive more influence from friends and family than
non-adopters.
297
The results from the Chi-square test in Chapter Eight shows that there was no significant
association at the 5% level, which means social activities, numbers of house moves and
reading printed media have no relationship with the adoption of electronic banking. The
findings of the results did not support the hypothesis. However, this is not an unexpected
result because this is a typical characteristic of the Thai people in terms of social
participation and reading printed media. Therefore, these types of characteristics could not
be used to classify the groups of adopters and non-adopters.
The results from the Independent T-test for the three types of electronic banking services
also show that there were not significant associations for friends and family influences and
the adoption of electronic banking at the 5% level. The findings of the results did not
support the hypothesis, although the results from the focus group interviews tended to
support the findings that adopters tended to get friends and family influences for adoption
of electronic banking. In addition, the mean value of debit card tended to support the
hypothesis, however no significance was found.
For the logistic regression models, the results show that only friends and family influences
was found to be significantly different at the 10% level for telephone banking.
H3.4 : Adopters of electronic banking will be more involved than the non-adopter in
related areas of financial and technology products.
Conducting a Chi-square test can test this hypothesis. The results are shown in table 9.5
and 9.6. The result of Chi-square test for debit card and sophisticated ATM show that
there was no significant association of technology ownership and usage and adoption at
the 5% level, which means there was no relationship between the adoption of both
electronic banking services and financial usage and technology product ownership/usage.
However, for telephone banking, Chi-square tests show that there was a significant
association at the 1% level. Which means there was a relationship between technology
product ownership, usage and adoption.
This partly confirms the findings from the focus group interviews. The results also support
the findings from the studies of Lockett and Littler (1997); Black et al (2001); and Walker
298
et al (2000), which found that the adopter of telephone banking is more involved with
financial usage and technology ownership/usage.
299
Table 9.15 Technology ownerships and usages
Telephone Banking
Techno
use or
Own
None
Own or
use one
type of
techno
Own or
use two
type of
techno
Own or
use three
type of
techno
Own or
use four
type of
techno
Own or
use five
type of
techno
Own or
use six
type of
techno
Total
Chisquare
Debit Card
Sophisticated ATM
Non-adopter
Adopter
Total
Non-adopter
Adopter
Total
Non-adopter
Adopter
27
(41.5)
13
(20.0)
4
(7.4)
12
(22.2)
31
(26.1)
25
(21.0)
28
(28.6)
21
(21.4)
18
(27.3)
20
(30.3)
46
(28.0)
41
(25.0)
22
(41.5)
10
(18.9)
26
(23.9)
25
(22.9)
48
(29.6)
35
(21.6)
14
(21.5)
13
(24.1)
27
(22.7)
18
(18.4)
9
(13.6)
27
(16.5)
10
(18.9)
19
(17.4)
29
(17.9)
6
(9.2)
8
(14.8)
14
(11.8)
16
(16.3)
7
(10.6)
23
(14.0)
6
(11.3)
17
(15.6)
23
(14.2)
5
(7.7)
9
(16.7)
14
(11.8)
9
(9.2)
4
(6.1)
13
(7.9)
2
(3.8)
16
(14.7)
18
(11.1)
0
(0)
4
(7.4)
4
(3.4)
4
(4.1)
4
(6.1)
8
(4.9)
2
(3.8)
5
(4.6)
7
(4.3)
0
(0)
4
(7.4)
4
(3.4)
2
(2.0)
4
(6.1)
6
(3.7)
1
(1.9)
1
(0.9)
2
(1.2)
54
(100.0)
25.774
6
(2- sided)
119
(100.0)
66
(100.0)
1.771
4
(2-sided)
164
(100.0)
53
(100.0)
Value
df
Sig.
65
(100.0)
Value
df
Sig.
0.000
98
(100.0)
Value
df
Sig.
0.778
Total
109
162
(100.0)
(100.0)
2.453
6
(2-sided) 0.484
Table 9.16 The number of financial usages
300

Telephone Banking
Non-adopter Adopter
One use of
41
25
financial
(63.1)
(46.3)
product
Two use of
20
17
financial
(30.8)
(31.5)
product
Three use
2
9
of financial
(3.1)
(16.7)
product
Four use of
2
0
financial
(3.1)
(0)
product
Five use of
0
3
financial
(0)
(5.6)
product
Total
65
54
(100.0)
(100.0)
Chi-square Value 12.668
df 4
Total
66
(55.5)
Debit Card
Non-adopter Adopter
56
40
(57.1)
(60.6)
96
(58.5)
Sophisticated ATM
Non-adopter Adopter
35
61
(66.0)
(56.0)
96
(59.3)
37
(31.1)
27
(27.6)
20
(30.3)
47
(28.7)
13
(24.5)
29
(26.6)
42
(25.9)
11
(9.2)
10
(10.2)
4
(6.1)
14
(8.5)
4
(7.5)
17
(15.6)
21
(13.0)
2
(1.7)
4
(4.1)
2
(3.0)
6
(3.7)
1
(1.9)
2
(1.8)
3
(1.9)
3
(2.5)
1
(1.0)
0
(0)
1
(.6)
0
(0)
0
(0)
0
(0)
164
(100.0)
Sig.
(2-sided)
.260
53
(100.0)
Value 8.668
109
(100.0)
df 6
162
(100.0)
Sig.
(2-sided)
.193.
119
(100.0)
Sig.
(2-sided)
.013
98
66
(100.0)
(100.0)
Value 5.266
df 6
P4. The hypothesis examined whether or not the perceived attributes of innovation are
better predictors than using the adopters personal characteristics.
H4 The perceived attributes of innovation are better predictors than personal
characteristics.
For both aggregated independent T-tests and logistic regression models, the results
support the hypothesis (see table 9.12, 9.13 and 9.14).
301
9.10 Summary of findings

For the logistic regression models, observability and relative advantage were found to be
significant for telephone banking and debit card, whilst complexity, reliability, control and
perceived risk were found to be significant for each different type of electronic banking.
For demographic characteristics, income and age was found to be significant for
sophisticated ATM. For attitudinal and perceptual factors, only friends and family influence
was found to be significant only for telephone banking.
For the aggregated independent T-Test, there were two perceived attributes, namely
relative advantage and compatibility that were found to be significant for the three types of
electronic banking. These findings support the work of Rugimbana (1995) who also found
that convenience, ease of use and compatibility determined customer usage of ATMs. Cost
and reliability were found to be significantly important to the adoption of telephone
banking and debit card. These findings supports the work of Lockett and Littler (1997)
and Howcroft et al (2002) who found that lower fees and improved levels of service are
the most important factors for encouraging the use of a telephone banking. Moreover,
perceived risk and complexity was also found to be significant for telephone banking and
sophisticated ATM. Observability, control, venturesome and attitude toward change were
also found to be significant for at least one type of electronic banking. Therefore, the
results may draw us to conclude that not all perceived attributes would necessarily affect
the adoption of the different types of electronic banking services.
For demographic data, the level of income and gender were significantly associated to the
adoption of sophisticated ATM. This finding was supported by the studies of Lockett and
Littler (1997) and Al-Ashban and Burney (2001).
The attitudinal factor, venturesomeness, was found to be significant for the adoption of
telephone banking, which supports the previous studies (Lockett and Littler, 1997).
302
9.11 Chapter summary

The factor solutions from Chapter Eight were tested using logistic regression to examine
the effects of the factors when they appeared in the model. However, the empirical work
could not be used to test the hypotheses that were based on the literature reviews because
the factors are a combination between the groups of perceived attributes. Therefore the
imposed factor model was used to test the hypotheses. However, we found that there were
differences between the empirical work and the imposed data. Therefore partial
correlations were used to test the colinearity between variables. Problems occurred in the
imposed model therefore aggregate T-tests were used to test the hypotheses. The results
show that there were differences from the previous studies which has shown that not all
five perceived attributes by Rogers were found to be significant while some other factors
i.e. cost, perceived risk and new developed factors from the study i.e. service quality, were
found to be significant factors affecting the adoption of electronic banking.
Chapter 1
303
10.
Conclusion
10.1 Introduction
This thesis presents a study of the factors influencing the adoption of electronic banking in
developing countries in the context of Thailand using the existing gaps from previous
studies such as a lack of research in developing countries particularly in Southeast Asia,
the explicit research of service quality and adoption and the important relevant factors of
adopter characteristic influencing the adoption. The study was conducted in the context of
the adopter versus the non-adopter groups. There were four main objectives of the study,
which can be described as follows.
Firstly, to study the adoption framework for explaining the perceived attributes of
electronic banking influencing the adoption of electronic banking in developing countries
in the context of Thailand.
The perceived attributes were identified based on the
established five perceived attributes by Rogers (1983). Others identified included two
perceived attributes of innovation added from recent studies namely, perceived risk
(Ostlund, 1974; Murdock and Franz, 1983; Rugimbana and Iversen, 1994; Lockett and
Littler, 1997; Sathye, 1999), control (Dabholkar, 1996) and cost (Lockett and Littler,
1997; Sathye, 1999).
Secondly, to explore the relationship between the perceived service quality of electronic
banking and adoption. In addition, to study whether or not perceived service quality
should be considered as one of the perceived attribute of electronic banking. Perceived
service quality is composed of two sub factors, namely reliability including accuracy and
trust (including confidence).
Thirdly, to examine the characteristics of the adopter of electronic banking in developing
countries, in the context of Thailand. The study investigated the relevance of the existing
perspectives on adopter and non-adopter characteristics in a different cultural context.
There were four major areas that were investigated, namely demographic characteristics;
attitudinal factors; consumption patterns, social interaction and communication behaviour.
304
Demographic characteristics focused on gender, age and income; attitudinal factors

referred to venturesomeness and attitudes toward change; consumption patterns referred
to the usage of financial and technology products; social interaction and communication
behaviour refers to social activities, reading printed media and friends/family influences.
Finally, to examine whether or not perceived attributes of electronic banking in developing
countries are a better predictor of adoption than personal characteristics as found in
western countries. This involved examining the findings of the contribution of independent
variables (perceived attributes, demographic characteristic and attitudinal factors) for the
prediction model.
This chapter consists of six main sections. Section 10.2 is devoted to summarising the
findings, chapter conclusions and discussing briefly the empirical findings from the
hypotheses testing. Also, new refinements of the adoption model from previous proposed
conceptual frameworks are presented. This is followed by section 10.3, which discusses
the consistency of the research findings. Section 10.4 concludes the contribution of this
research and section 10.5 presents the implications of the findings. The final section, 10.6
describes the limitations and suggestions for further research.
10.2 Summary of the research

The structure of this research is composed of ten chapters as follows:
The thesis starts with the introduction chapter, which aims to provide a brief description of
the importance and objectives of conducting the study and the research design.
Chapter Two discussed the impact of IT in the financial services and the areas that are
concerned with the service delivery process. A description of the concepts and the models
of service delivery in financial services follow this, particularly in the banking industry and
also the way in which technology changes service delivery systems. The new channels of
technology based service delivery for electronic banking were detailed. The final section
presented the impact of IT on the quality of service in service delivery systems. This can be
305
explained by investigating a service quality model and its key determinants of service
quality, particularly in technology-based service delivery for electronic banking.
Chapter Three introduced the concept of adoption in financial services, particularly in the
banking industry. After investigating the impact of IT in financial services in Chapter Two,
this chapter examined the important factors influencing the bank customers decision
whether to adopt new technology-based service delivery in financial services. There were
two main, major areas that we have been interested with, namely perceived attributes of
innovation and the characteristics of adopters and non-adopters. There were eight
perceived attributes that were identified in the research, namely relative advantage,
complexity, compatibility, trialability, observability (or communicability), perceived risk,
cost and perceived service quality. Research propositions are presented which aim to
clarify the gaps, which are raised in this chapter regarding the perceived attributes of
electronic banking and the characteristics of the adopter and non-adopter.
Chapter Four and Seven discussed, in detail, the methodology for conducting the research.
Mixed methodology approaches were employed in this research for the objective of theory
building. A series of focus group interviews has taken place with the view of providing
further information in addition to the literature reviews. The results provided the
information about the perspectives of the respondents and their attitudes toward financial
services. The results from the focus group interviews were also used to develop a
measurement scale that was used to modify the propose framework. Questionnaire surveys
were used to gather data for empirical study and for testing the hypotheses. Therefore,
theory building was by the application of both methods.
Chapter Five provided some general background information about banking in Thailand
and the Pacific Rim economic crisis. This crisis started in Thailand and spread widely
through many of the countries in Southeast Asia. A general description of how this crisis
affected the Thai bank industry is given. Deregulation has brought new entrants from the
international financial scene to Thailand, which is increasing the already highly competitive
Thai banking market. Reducing costs has forced the banks to re-engineer their
organisations structures, including merging small banks together for financial survival and
stability. New electronic banking systems are one way that banks are using IT as a strategy
306
to gain competitive advantage. The four big banks, which mainly dominate the Thai
banking industry, are discussed including a general presentation of their products and
services that are available in the market.
Chapter Six discussed the results of the focus group interviews, which were presented in
five sections. Firstly, the definition of electronic banking, which in this thesis is referred to
as telephone banking, debit card and sophisticated ATM. Secondly, the meaning of good
service quality and perceived service quality regarding electronic banking were identified.
A good quality of service of the bank branch referred to the responsiveness of staff,
tangible facilities such as the layout of the bank, the number of branches and the variety of
services provided. The perceived service quality of electronic banking was discussed as
being associated with reliability of services, accuracy of transactions and the security of
the system. Thirdly, the perceived attributes influencing the adoption of electronic banking
were identified as follows: relative advantage, compatibility, complexity, trialability,
observability, cost, perceived risk, control, reliability (composed of accuracy) and trust
(composed of confidence). Finally the adopter and non-adopter characteristics of
electronic banking were presented.
Chapter Eight and nine were devoted to analysing and interpreting the results obtained
from the application of the research methodology proposed in Chapter Seven. In chapter
eight, the aim was to present a descriptive analysis of the data by using frequencies,
independent T-tests and Chi-square numerical analyses. The results were also used to test
the differences of personal characteristics between the adopter and non-adopter groups. In
the final section, factor analysis was used to test the validity and reliability of the adopted
measurement scales.
In Chapter Nine, the logistic regression model was introduced to examine how well each
of the factors predicted the adoption and to test the hypotheses. However, the factor
analysis produced dimensions, which did not exactly match the framework, therefore an
imposed structure model was implementation. Aggregated T-tests were used to test the
hypothesis of each individual factor. These were formed by summating the sub-factor
values of the main perceived attributes and then performing a T-test on the resulting
summation value.
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The results of testing the hypotheses are illustrated as follows:

H1.1 to 1.8 was concerned with whether or not perceived attributes of innovation in
western countries also have the same affect and impact on developing countries, identified
as Thailand. Eight perceived attributes of electronic banking were individually tested using
aggregated independent T-test and logistic regression was used to test the significance of
the relationships between variables as a model. The aggregated independent T-test results
show that the influence of perceived attributes was not as initially hypothesised. Some of
perceived attributes did not appear to be significantly different between the adopter and
non-adopter groups for the three types of electronic banking services such as trialability.
Thus the results were not supporting the findings of Lockett and Littlers (1997) work.
However, two perceived attributes, namely relative advantage and compatibility, were
found to be significantly different for the three types of electronic banking. These
supported the findings of the previous studies (see section 10.3). Moreover, perceived
risk, complexity cost and reliability were also found to be significant for at least two types
of electronic banking, whilst only observability, control, venturesomeness and attitude
toward change were found to be significant for only one type of electronic banking.
Therefore, the results may allow us to conclude that the impact of perceived attributes of
innovation vary across the different types of electronic banking. The results of the logistic
regression model show that relative advantage and observability were found to be
important factors for at least two types of electronic banking. However, other perceived
attributes, such as perceived risk, complexity, reliability and control had different
influences on the adoption of each type of electronic banking service (see tables 10.110.3).
The problems of multicollinearity increased the probability that some variables, which have
a high correlation with each other, might be insignificant from the model because two
variables may have a similar variance account for the model (Field, 2000).
H2 was concerned whether or not the adopter perceived service quality namely reliability
and trust to be more important than the non-adopter. The results from aggregated
independent T-tests show that adopters perceived more reliability than the non-adopters
for both telephone banking and debit card. However, the results from the imposed logistic
308
regression model show that reliability was significantly different only for debit card. This
result may be caused by multicollinearity, as we have already discussed.
For H3.1-3.4 the hypothesis investigated the adopter and non-adopter characteristics that
can be classified by using demographic factors, attitudinal and perceptual factors,
technology ownership and financial usage.
For H3.1 the hypothesis examined whether the results show that only for telephone
banking demographic characteristics such as income classified the adopter and nonadopter groups. However, there is no statistical evidence for debit card and sophisticated
ATM. The hypothesis was supported by the findings of the results that adopter groups
were more likely to have a higher income than non-adopter groups. The results from the
logistic regression model show that demographic characteristics, namely gender and
income, were found to be significant for sophisticated ATM whilst there was no statistical
evidence to support the other types of service.
For H3.2 the hypothesis examined whether the results show that for telephone banking,
the results from the aggregated independent T-test supported the hypothesis that the
adopter groups were more venturesome than non-adopters for telephone banking, whilst
regarding an attitude towards change, the hypothesis was partly supported by the findings
of the results that the adopter groups had a more favourable attitude towards change than
the non-adopter group for debit card.
For H3.3 the hypothesis stated that adopters of electronic banking should be more
involved with social activities, read more printed media and perceive more influence from
friends and family than non-adopters. We found no statistical evidence to support the
hypotheses. However, the results from the logistic regression found friends and family
influence was significant which supported the hypothesis that adopters have perceived
more influence by friends/family than non-adopters of telephone banking.
For H3.4 the hypothesis examined whether the adopters of electronic banking will be more
involved than the non-adopter in related areas of financial and technology usage or
309
ownership. The results show that adopters of telephone banking were more involved with
high volume financial usage as well as technology usage or ownership.
For H4 the hypothesis examined whether or not the perceived attributes of innovation are
better predictors than the adopters characteristics. The results supported the hypothesis
by summarising the findings from H1-3.
The summary of the hypothesised testing, the results from imposed structure logistic
regression model are shown below.
310
Table 10.1 Summary of the hypothesised testing
Type of services/
Factors
Relative
advantage
Compatibility
Complexity
Trialability
Observability
Perceived risk
Cost
Control
Reliability
(Including
accuracy)
Trust (including
confidence)
Telephone
banking
LR model
Debit card
Sophisticated ATM
LR model
-
LR model
Table 10.2 Personal characteristics
Types of
services/Factors
Venturesomeness
Friends and family
Traditional
attitude towards
change
Modern attitude
towards change
Telephone banking
Debit card
Sophisticated ATM
LR model
LR model
LR model
Table 10.3 Demographic characteristics
311
Type of service/
Factors
Age
Gender
Income
Telephone banking
Debit card
Sophisticated ATM
LR model
-
LR model
-
LR model
10.3 The consistency and differences of the research findings in Thailand and
western countries
This section explores the consistencies and differences of the research outcomes in
developing countries like Thailand and the literature of adoption in financial services in
western countries.
Firstly, the results in general are consistent with the findings of previous studies (LaBay
and Kinnear 1981; Dickerson and Gentry, 1983; Rugimbana, 1995; Lockett and Littler,
1997; Black et al, 2001) who stated that the perceived attributes of innovation were found
to be better predictors for the adoption of electronic banking.
Secondly, they are consistent with the findings from previous studies about the effects of
the perceived attributes of innovation as follows: relative advantage and compatibility
(Leblanc, 1990; Rugimbana, 1995; Lockett and Littler, 1997; Black et al, 2001), perceived
risk (Robertson, 1971; Ostlund, 1974; Mitchell and Boustani, 1993; Ho and Ng, 1994;
Lockett and Littler, 1997; Black et al, 2001), observability or communicability (Rogers,
1983; Szmigin and Bourne, 1999), complexity or ease of use (Rogers, 1983; Rugimbana,
1995; Dabholkar, 1996; Lockett and Littler, 1997; Sathye, 1999; Walker et al, 2002).
The perceived service quality attribute, trust, is consistent with the study of Howcroft
(1999), Szmigin and Bourne (1999). Recent studies for the customer adoption of
telephone banking technology by Al-Ashban and Burney (2001), have also found a link to
trust increased the usage of telephone banking in Saudi Arabia. However, in this research,
these two factors were found to be important for the adoption of telephone banking and
debit cards. The findings by empirical study were insignificant for the adoption of
312
sophisticated ATM, even though we found some evidence from the focus group
interviews.
Thirdly, the findings of the adopter characteristics can be classified into four categories as
follows. First, for demographic characteristics, the results show that occupation and
income can be used to classify the personal characteristics of telephone banking adopters.
The findings of income are consistent with the work of Dickerson and Gentry (1983);
Adcock and Hirshman (1977); Prendergast (1993); Lockett and Littler (1997), Al-Ashban
and Burney (2001), and for occupation by the work of Prendergast (1993). Few studies
have found any significant differences between the adopter and non-adopter regarding
their occupation. However, this could be explained because there might not be a large
difference in western countries linking status of occupations and income. This result is
opposite to the situation in developing countries such as Thailand. The occupation reflects
directly with income. Therefore, it is not surprising to see from the findings that we have
found that income and status is effectively identifying the difference between the adopter
and non-adopter groups. Attitudinal factors, refers to adopters who have a more positive
attitude toward change and venturesomeness than non-adopters. This is consistent with
the work of Robertson (1971); Rogers (1983); Lockett and Littler (1997). Consumption
patterns refer to higher usage of financial products and technology product ownership and
were found to be significantly important to the adoption of telephone banking which
supports the work of Lockett and Littler (1997); Walker et al (2002) and Black et al
(2001). Social interaction and communication behaviour refers to friends and family
influence. This result is consistent with the work of Robertson (1971).
10.4 Contribution to theory

This thesis presents a further contribution towards the findings of factors influencing the
adoption of electronic banking, which can be identified as follows:
Firstly, the findings of the study contribute to a better theoretical understanding of the
factors that influence electronic banking adoption in a Thailand context. The proposed
framework provides a good explanation for the adoption analysis. In the opinion of the
313
researcher, this model is general enough to be widely applicable to other technology based
service delivery products. The majority of perceived attributes of innovation, which have
been found to have a significant impact on adoption in recent studies in financial services,
have been put forward to test different types of electronic banking services. These include
the personal characteristics of the study personnel. This covers a wider scope than the
majority of the previous adoption research, which has normally focused on just
demographic characteristics.
Secondly, this study proposed perceived service quality as one of the perceived attributes
in the adoption of electronic banking. Financial institutions have known the benefits of
Information Technology, in terms of increasing productivity, reducing costs and gaining
competitive advantage. Therefore, this research has studied the impact of IT from the
customers perspective. The findings also contribute to a better understanding about the
customers expectations of the service quality of electronic banking, which the study found
to be one of the important factors influencing adoption.
Specifically, perceived service quality has never been viewed as one of the perceived
attributes in previous studies but was seen as some part of relative advantage. However, in
this study the researcher views that service quality (SQ) should be seen as being separate
from relative advantage (RA). RA is an existing perception of previously introduced
products/services compared with the new introduced products/services, whilst SQ is the
evaluation process of customer expectations and their experiences after using the service.
The sub factors of perceived service quality such as the levels of service, reliability, trust
and accuracy, appeared from the adoption research to be one of possible factors
influencing the adoption of innovation. However, when researchers tested these factors
(reliability and accuracy) on their models, they never appeared as significant with other
factors (Rugimbana, 1995; Dabholkar, 1996). Therefore, a major contribution of this
research is the findings of the perceived service quality affects on the adoption of
electronic banking in Thailand. The results have been shown from both the findings from
the focus group interviews and the questionnaire survey (see table 10.1)
314
10.5 Implications of findings

The implications of this study can be summarised as follows:
Firstly, the implications of the findings are beneficial to service providers implementing a
marketing strategy. The findings suggest that not only perceived attributes should be used
to predict the adoption behaviour. The results also show that adopter characteristics are
also found to be an important factor. Thus, the findings in this thesis can also help financial
service providers to further understand the customers needs and target specific groups by
considering their attitudes, demographic characteristics, consumption patterns, social
interaction and communication behaviour.
Secondly, the application of the methodology. This thesis has employed two methods for
gathering the data, which would normally take significant amounts of time, effort and cost
if compared with using just one method to collect the data. The first methodology used for
stage-1 in this thesis used focus group interviews. This method had the benefits of helping
to develop the proposed framework and questionnaire design. The focus group interviews
were very effective for stimulating answers from people in developing countries,
particularly in Thailand, where people are not comfortable expressing their opinions
directly to strangers during individual interviews. The group interviews were an effective
method for obtaining information from informal discussions by recording the interactions
between group participants. The second stage was completed by the questionnaire survey,
which is very useful to get specific answers to specific questions. However, the difficulties
with this method are how to get a high response rate because mail distribution normally
produces a very low response rate. Therefore, in this thesis, the researcher obtained the
majority of the completed questionnaires by dropping them at distribution points and
waiting to pick them up. This method provided a very good response rate for the
questionnaire survey, compared with the method of dropping them off and asking the
respondent to return them by post (table 8.1). In addition, the method of distributing and
waiting to pick up the questionnaires at the point of distribution had the benefit of
delivering the right set of the questionnaires to the right sample group regarding the three
types of service of electronic banking investigated in the study. Therefore, the respondents
315
were classified by the type of their adoption and the services they were using. In addition
this method yields benefits over using other methods such as telephone and personal
interviews by allowing respondent to ask for further information if they did not understand
the questions before they filled in the questionnaires. The strategy chosen to approach the
sample group, which we wanted to represent from the population, was not an easy process
for conducting the research because the nature of adoption research is to examine the new
services and products. Therefore, it can be difficult to collect a sample group because most
of the services may have only been recently introduced to the market during the time that
the collecting of the data has been taking place. However, this can be made more efficient
by contacting organisations, institutions or service providers directly. In this thesis, the
researcher chose to contact big institutions, banks and companies to get the sample of
potential customers, which sufficiently represented the population. This strategy made
collecting data more time and cost effective. It is also a good way to get access to a
suitable sample group, which in this thesis was targeted at the group of higher income
earners, higher educated, younger ages and people who work longer hours, which the
researcher considered to be the potential group who might adopt electronic banking. The
research has not been conducted with a large sample size. However, the good sampling
units are not dependent only on how large the sample size is, but depends on how the
sample represents the population. Therefore, the success of using quota samples also gave
the benefits of ensuring that the different groups of the population were adequately
represented in the sample so as to increase the level of accuracy when estimating
parameters (Frankfort-Nachmias and Nachmias, 1996).
10.6 Limitations and suggestions for future research

As with the majority of the previous research, the researcher recognised some limitations
in the study that has been undertaken. Firstly, the findings are limited by the scope of the
study in terms of time and the sample group. In addition, the specific group of the
sampling unit section may limit the sample generalisability. The data was collected by
quota sampling, which means having similar proportions in similar groups. The researcher
has targeted organisations whose respondents had a high level of education, high levels of
income, high status of job and are a younger age. Therefore, further research for different
316
social groups should be undertaken. The study has examined the entire major electronic
services that were available at the time. However, new technology services such as
Internet banking have been recently introduced into the Thai banking market, which may
be affected by different factors. Therefore, further work is required.
Secondly, the findings of perceived service quality as one of the perceived attributes are
still at an early stage. More work is required to identify the sub factors of the perceived
attributes as well as the implementations of other electronic banking services other than
has been studied in this thesis. This means that it is too early to summarise the
generalisability of the findings as one of the important factors that will be established for
all types of technology-based service delivery in financial services. Each type of service
has different individual characteristics. However, the researcher found similarities of the
findings for telephone banking and debit card. In addition, when testing the logistic
regression model the results only show perceived service quality significance for debit
card. This may be because of the high correlation that indicates a strong relationship
between this variable and the others in the model. Therefore, a better measurement of
perceived service quality needs to be developed.
Thirdly, there was limited coverage of cultural differences. This research studied sub
factors of personal characteristics, which included attitudinal and perceptual behaviour and
social interaction/communication behaviour. The majority of the study was focused on
attitudinal and perceptual behaviour, however cultural differences may have some impact
on customer characteristics. Therefore, more work needs to be done to profile additional
cultural characteristics and their impact on adoption, which has only had limited coverage
in the study. Therefore more investigation of culture i.e. religious, social norm etc. is
needed to be done in the future so we may better understood some of the different factors
that affect the bank customers adoption in Thailand but may not affect the bank
customers in developed countries such as Europe or America.
Finally it should be taken into account that the instrument validation may be limited for
other studies in terms of influencing factors, although the researcher widened the scope of
the study in addition to previous literature by developing the instruments, which were
developed by gathering data from focus group interviews and a pre-test survey. However,
317
the majority of the questionnaires items were still based on previous research (e.g.
Telephone banking) and developed for other electronic banking services i.e. sophisticated
ATM and debit card. Therefore the instruments should be modified when further research
is conducted.
The findings raised several interesting research opportunities regarding some suggestions
for future research. Firstly, the identified perceived attributes need to be validated by
providing more sub factors in each of the perceived attributes. Regarding this study, many
factors are limited items that define the detail in each of the perceived attributes according
to the length of the questionnaire which we defined to examine other influencing factors
such as attitudinal and perceptual factors, social interaction and consumption behaviour.
Therefore, the perceived attributes of electronic banking alone will need to be validated by
the gathering of more information that examines many more factors at the same time.
Moreover, the researcher believes that not all five perceived attributes by Rogers are
affecting the adoption of electronic banking. This is also supported by Rogers himself who
stated that some factors are not important and new variables need to be added in (Rogers,
1995).
Secondly, the researcher believed that the model of adoption and its instrument of
measurement in this study would benefit from further investigation, especially in relation
to how we have conceptualised relative advantage and perceived service quality, which the
researcher aimed to define in this study. However, further investigations into other
technology-based service delivery in financial services needs to be done to generalise the
conceptual framework.
Thirdly, new electronic banking services such as Internet banking, which are focused on
the financial markets, has been ignored in this thesis because it had just started during the
period that the research had been conducted.
10.7 Conclusions
318
This research has developed the adoption model for electronic banking by the application
of Rogers framework (1983). This study focused on the factors influencing the adoption
of electronic banking. Three major factors, namely perceived attributes, customer
characteristics and demographic characteristics are considered to affect adoption. The
empirical studies were conducted by mixed methods i.e. focus group interviews and
questionnaire surveys.
The collecting of the data was classified by three types of electronic banking and their
adoption behaviour (adopters and non-adopters). The first stage, focus group interviews,
was used for data gathering. The implementation of group interviews gave a general
knowledge of electronic banking in Thailand. The results also helped to refine the
proposed framework and develop the instrument in the questionnaires design. The second
stage, a questionnaire survey, was used to test the hypotheses and the findings in the focus
group interviews.
The findings show that the perceived attributes of electronic banking are better at
prediction than just using personal characteristics. In addition, this research attempted to
identify the new perceived attribute, perceived service quality, as one of the perceived
attributes of innovation influencing the adoption of telephone banking and debit card. In
general, the findings show a similarity with research that has previously been done in
western countries.
319
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_____________________
Appendix
A. Focus Group Interview Guide
Group No.:
Adopter or non adopter
Recruit by
Date
Place
Introduction:
Introduce the purpose of the study and present the interview as group participation
Inform the interviewees that the tape recordings will only be used in this research
Explain the rule, that only one person talks at any time and before anyone will start to
participate, they should confirm their name each time.
The group sessions will start with general questions, which will introduce the general
topic of electronic banking and provide participants an opportunity to talk about their
connection with the overall topic.
Question 1: Electronic banking. Have you heard about this subject before? Describe
what you think it should provide.
We will define the meaning of important words that are to be used in the group interviews
such as Type of Technology -based service delivery or electronic banking in this focus
group interview- means telephone banking, ATMs, debit Card, Internet banking and Smart
Card.
Question 2: When we talk about good service quality in banking service, what do
you think about? How would you describe it? What do you think a good service
quality in banking should be?
346
(Service quality. We define the meaning of service quality by letting the participants
participate openly in the discussion about bank services. However probe for answers will
be five dimensions:- Tangibles, Reliability, Responsiveness, Assurance and Empathy )
-What is a good service quality of electronic banking?
Probe- fast, reliable and accuracy
Question 3: Have you ever used any kind of self-service banking before?
If the answer is No, question Number-4 will be asked which will provide for non
adopters?
Question 4: Why dont you use self-service banking?
Probe Trust/Confidence - How much trust do you have in self-service banking? If you
dont trust self service banking, why not?
Probe Perceived Risk - transaction errors, economic risks or security risks
Could you explain any risk that you might think may happen when you use self-service
banking?
Probe Complexity / Accessibility of using service Do you have any opinion about how difficult or complex the system for using self-service
banking is?
Probe observability- enough information, knowledge require about the service, seen
someone use the service
Probe Service charge (cost)
-What is the cost of using the service?
347
-How do you feel about the fees charged for using self-service banking such as ATMs,
sophisticated ATMs, telephone banking, debit card, smart card?
Probe Reliability/accuracy
Have you heard about any errors caused by using self-service banking before? How did
they happen?
What do you think about how accurate these self service banking systems are?
Question 5: if the answer in question 3 is yes. Following with What was the
electronic banking service that you used? Why did you use it?
Probe for the answer- Relative advantage e.g. convenience, save time, availability etc.
Compatiblity- compatible with customersneeds
Observability- get information from bank, seeing someone use.
Trialability- bank open opportunity to trial on service
Ease of use(complexity)- easy to use
Perceived service quality- reliablity,
Question 6: Do you have any friends or family members that have used self service
banking before?: How do they feel about using self service banking(electronic
banking)? Does they have an effect on your decisions to use the service?
Question 7: How do you compare using services at the bank counter and electronic
banking?
Question 8: What are the important factors that may affect your decision to use selfservice banking (electronic banking)?
Probe Relative advantage e.g. Speed of delivery - waiting time, Availability/ convenience
- 24 hours
Probe Trialaiblity- Trialling of service
Probe Observability- enough information, easily to observe
348
Probe Easy of use(complexity)

Probe Compatiblity- Service is compatible with their needs, experience, social value.
Probe Perceived risk -risk-less, safety,
Probe Cost - fees and charge from using service.
Probe Control- give control of bank account
Probe Perceived service quality- reliability/accuracy, trust/confidences.
Probe Brand and bank images- stability, trust and confidence
III. Summary and Conclusion This time will be around 15 minutes
1 Summary of question: we will conclude/summarise of the key questions and an idea that
emerged from the discussion. After that we will follow with two questions as follows:
2 Have we missed anything?
3 What advice do you have for us?
349
B. Questionnaire
350

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The adoption of technology based service delivery in

financial service; Electronic banking in Thailand

By Boontariga Lertsatwatana, BA, MBA

Thesis submitted to the University of Nottingham for the

Background to the study..................................................................................1

History of research in adoption of electronic banking......................................2

The definition of IT and Electronic banking.....................................................4

Development of a conceptual framework................................................6

The impact of Information Technology on service delivery systems in the banking

The impact of IT in the financial services.......................................................15

The impact of IT in service delivery systems..................................................18

Automated Teller Machines (ATMs)..................................................26

EFTPoS (Electronic Funds Transfer at Point of Sale)........................26

The impact on the quality of IT service delivery............................................28

Service quality models............................................................................29

A service quality model......................................................................32

The service quality determinants....................................................................36

Components of perceived service quality...............................................36

The adoption of electronic banking ................................................46

Innovation and diffusion.................................................................................47

Background of innovation and diffusion research..................................49

Factors influencing the rate of adoption.........................................................50

Perceived attribute of innovation and adoption......................................55

Observability (or Communicability)...................................................59

Other perceived attributes..................................................................59

Service quality as a perceived attribute of innovation............................63

The adopter characteristics of electronic banking..........................................68

Attitudinal and perceptual factors..........................................................75

Social interaction and communication behaviour...................................75

Gaps from the literature.................................................................................77

Direction for future research and research questions.............................83

The Methodology part I: Qualitative method ............................94

Positivist and phenomenology paradigms..............................................95

Qualitative and quantitative approaches.................................................96

Choices of research approach.................................................................98

The objectives of the exploratory research.....................................................99

Data collection method..................................................................................99

Designing the focus group interviews..........................................................100

Sampling group selection methods.......................................................102

The details of the group participants....................................................104

Sampling approach for the focus group interviews..............................107

The recruitment of the sampling group............................................108

The sample size....................................................................................108

The process of conducting the focus group interviews........................109

The structure of the focus group interviews........................................109

Summary and conclusions................................................................110

Thailand and the Thai banking industry.....................................112

Number of employed people by level of education..............................114

Income and expense.............................................................................115

Society and culture.......................................................................................118

Thai banking industry...................................................................................118

History and background.......................................................................118

Structure of the Thai banking system...................................................119

The Thai banking situation...................................................................122

The four big Thai banks........................................................................124

Siam Commercial Bank or Thai Panit..................................................126

Products and services.......................................................................126

Automatic Teller Machine (ATM)....................................................131

Sophisticated ATM machine.............................................................136

Focus Group Interviews......................................................................139

Analysis and results......................................................................................139

The definition of electronic banking.............................................................140

The meaning of good service quality of banks.............................................142