Factors Influencing the User Acceptance of E-Banking in

Bangladesh: An Empirical Study

By

Syeda Rifat Ara

Institution of Business Administration
Jahangirnagar University

ABSTRACT

The primary objective of this research is to find out the influence of perceived usefulness (PU) and
perceived ease of use (PEOU) on the user acceptance of e-banking in Bangladesh. E-banking has a
huge expansion opportunity in Bangladesh. So, it is important to know what factors influence the
user acceptance of e-banking in Bangladesh. Theoretical framework is based on the widely used
Technology Adoption Model (TAM), which was proposed by Davis in 1989 in his doctoral thesis. A
structured online questionnaire is developed to collect data using Google doc. Random sampling
method was used with a final sample of 120 respondents. Cronbach's Alpha values of independent
variables (0.857 and 0.867) show the reliability of the data. In the KMO test, value of 0.874 indicates
the validity. Correlation matrix of PU shows strong correlation among the items of PU, while in the
correlation matrix of PEOU, correlations are moderate. In the regression analysis, it was found that
perceived usefulness influences the user acceptance by 31%. It is also found that perceived ease of
use has no influence. It means that 27 years old TAM model is partially relevant in Bangladesh.
Implications are drawn for future research on user acceptance of e-banking in Bangladesh.

Keywords: Technology Acceptance Model (TAM), Perceived Usefulness, Perceived Ease of Use, E-
Banking, Bangladesh

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Introduction

E-banking is becoming more widespread and popular in Bangladesh. As on October 31, 2015,
number of internet banking customers was 1.5 million. In addition, the number of daily online
transaction stood at more than 19,000 amounting to Tk. 590 million. Now, the total number of
internet users in Bangladesh stands at around 40 million (Thedailystar.net, 2016). As the number of
internet users is quite high and the number of e-banking user is relatively low and as Bangladesh
government is encouraging people to use internet more, e-banking has a huge expansion opportunity
in Bangladesh. E-banking is important for the commercial banks because by combining technology
with banking, they can generate more profit and can give tough competitions to the competitors.
Among the 64 banks, currently 22 banks offer e-banking facilities (Bankerbd.com, 2015). In the
recent future, other banks will start providing e-banking facilities to retain existing customers and
grab new customers. To stay in the competition; to reduce cost and to meet global standard,
commercial banks need to know what are the reasons for which people accept e-banking, so that
they can offer better service than their competitors.

Many researches showed that there are several factors that influence a customer to accept e-
banking. For example - perceived usefulness, perceived ease of use, perceived risk, customer attitude
etc. It is very important for the commercial banks to identify what are the influential factors, so that
they stay in competition and provide better service to the customers as well as attract prospects.
Many research works were conducted throughout the world but no research was conducted in
Bangladesh to find out which factors influence Bangladeshi consumers.

The objective of this research is to find out whether the selected factors have influence on the user
acceptance of e-banking in Bangladesh or not. Specifically, the research takes two factors as
independent variables and performs tests to find out if these factors have impact on the user
acceptance, which is the dependent variable. The independent variables are - perceived usefulness
and perceived ease of use. Perceived usefulness and perceived ease of use were identified by Davis
in 1989, which is popularly known as Technology Adoption Model (TAM). To find out the impact of
independent variables on dependant variable, two hypotheses are developed and test.

In the 'Technology Adoption Model' section, theoretical background of this research is briefly
discussed. This section also contains the reasons of choosing this model and its importance in
Bangladeshi context. The following section, titled as Methodology, covers the methods of selecting
the sampling unit and sample size; structuring the questionnaire, collection of data and describes the
reasons of selecting specific data analysis techniques. 'Findings' section contains result of tests and
interpretation. Detail result is discussed in the 'Discussion' section. Conclusion is drawn providing a

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brief summary of the paper, the only limitation of the research and suggesting scopes of future
researches.

Technology Adoption Model

Technology Adoption Model is a famous model by Fred D. Davis (Davis, 1989). It is a widely accepted
and widely used model that suggests that whenever a new technology is presented before the users,
two factors determine how and when they will use that technology. TAM shows that the determinants
are perceived usefulness (PU) and perceived ease of use (PEOU). According to Davis, perceived
usefulness is "the degree to which a person believes that using a particular system would enhance
his or her job performance". The definition of Davis can be modified in the context of e-banking. A
person will use e-banking when he/she will find it more useful than traditional banking system. Again,
perceived ease of use is defined as the "degree to which a person believes that using a particular
system would be free of effort". In e-banking context, that can be described as how easily a
customer can use e-banking service of a bank, whether he/she is a tech savvy or novice. This model
was used by many researchers from many countries. Researches were conducted in Pakistan,
Malaysia and Turkey to apply this model to describe the user acceptance of e-banking. Two of the
three researches show that user acceptance has positive relationship with perceived usefulness and
perceived ease of use (Poon, 2008; Polatoglu et al., 2001). However, In Pakistan, it was found that
perceived ease of use has no significant impact on the user acceptance (Kazi, 2013). In another
study, it was found that along with these two variables, self-efficacy also a variable that matters to
the consumers to adopt e-banking (Wang et al., 2003). Till now, some more studies have found that
there are some other factors that influence the user acceptance, but PU and PEOU still play a 2 most
important roles (Ying et al., 2010; Tan and Teo, 2000).

No such research to find out the factors was conducted in Bangladesh. However, a research was
conducted in the year when e-banking started its journey in Bangladesh. Purpose of that research
was to find out the satisfaction level of the customer who use e-banking. It was found that they were
somewhat satisfied with the newly introduced system (Nupur, 2010). At that time, a very few
commercial banks offered e-banking service. Switching options to other banks were limited. Now
customers are being provided with lots of options. Competition is increasing as well as complications.
Customers are being provided with customized service. Satisfaction level does not show that he/she
will not switch from a particular bank. If he/she is provided with better option with less hassle,
he/she might switch. For this reason, now it is important to know what are the factors that influence
the acceptance of e-banking. This research paper aims to find out if the factors that were proposed
about 27 years back by Davis have influence in Bangladeshi customers or not.

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Methodology

As this research paper is aimed at determining whether the TAM is also applicable in Bangladesh or
not, quantitative data is used for testing the hypotheses. Research objectives of this research paper
suggest that sample should be the persons who use e-banking. So, population of this research paper
is the Bangladeshi citizens who use e-banking. As bank accounts are confidential, only the account
holder/s has/have access to e-banking of their individual accounts. The sampling unit of this research
is the owners of the bank accounts who use e-banking. The sample size of this research paper is 120.
An online consumer survey was conducted to collect data. Random sampling method is adopted to
collect the data.

A single page questionnaire was prepared using Google Doc. The questionnaire contains twelve
likert-scale questions and 2 demographic questions and a question on the usage pattern. First twelve
likert-scale questions were adopted from the paper of Davis and modified according to the objectives
of this research paper and in the context of e-banking. First five questions represent the perceived
usefulness and next five questions represent perceived ease of use. Next two represent the user
acceptance. PU and PEOU are the independent variables. UA is the dependant variable.

Table 1: Scale Items for Variables

Factor Items
E-banking gives me greater control over my account (PU1)
The e-banking system provides me with all the banking facilities I want (PU2)
Perceived
Usefulness I can accomplish banking tasks more quickly using e-banking (PU3)
(PU)
Using e-banking saves my time (PU4)
E-banking improves the quality of my work (PU5)
The e-banking system is often confusing to me (PEOU1)
I make errors frequently when using e-banking system (PEOU2)
Perceived Ease
I need to give a lot of effort to operate the e-banking system (PEOU3)
of Use (PEOU)
I often encounter error while using e-banking system (PEOU4)
I find the e-banking system tough to operate (PEOU5)

User I find the e-banking system useful (UA1)

Acceptance I find the e-banking system easy to use (UA2)

Link of the online questionnaire was posted in various Facebook and LinkedIn groups, which are
related to internet banking. Posts were given once in a week to remind the respondents about the
survey. One and half months were needed to collect the data.

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To analyze the data, Statistical software SPSS is used and three tests have been performed. At first,
to check the reliability of the collected data, Cronbach's Alpha (1951) is performed. Reliability means
that the result of the research is same as the previous studies that were carried under the same
conditions with the same variables. As the research is conducted to find out whether results of
previous researches are valid in Bangladesh or not, the Cronbach's Alpha test is performed. Secondly,
Principal Component factor analysis (Jolliffe, 2002) is performed to measure validity of the collected
data. Validity is important to measure because it says whether the measurements or items of a
variable in the study behave in exactly the same way as the variable itself. Correlation matrix is
constructed to find the correlation among items representing a single variable, KMO test is performed
to find the suitability of data for factor analysis. Bartlett's test is performed to find the strength of
the relationship among the variables. Finally, multiple linear regression analysis is performed to test
the hypotheses. Regression Analysis measures what portion of the dependent variable can be
explained by the independent variables. Multiple regression is used because this research is
conducted to find empirical evidence of the influence of independent variables on the dependent
variable; has more than 1 independent variable and the data is ordinal.

Findings
The hypotheses are derived from the research paper of Davis (1989) and modified according to the
objective of this research paper. As a rule of thumb, it is known that in a hypothesis testing, null
hypothesis always denotes no relation between the dependent and independent variable. In this
research, null hypothesis is that the selected variables have no influence on user acceptance of e-
banking in Bangladesh. The alternative hypotheses state that there is positive influence of
independent variables on the dependent variable.

Hypothesis 1
H0A: Perceived usefulness (PU) has no influence on the user acceptance of e-banking in Bangladesh.
H1A: Perceived usefulness (PU) has a positive influence on user acceptance of e-banking in
Bangladesh.
Hypothesis 2
H0B: Perceived ease of use (PEOU) has no influence on user acceptance of e-banking in Bangladesh.
H1B: Perceived ease of use (PEOU) has a positive influence on user acceptance of e-banking in
Bangladesh.

Reliability and Validity

To test the reliability of data, this research performed Cronbach's Alpha (1951) test. It is a standard
scale reliability test. The test is used to check the internal consistency reliability. Table 2 shows that
Cronbach's Alphas for PU and PEOU are 0.857 and 0.867 respectively. Both values are greater than

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the critical threshold of 0.7 as suggested by Nunnally (1967). So, the test shows that the measures
are reliable.
Table 2: Reliability test result

Independent Variables No. of Items Cronbachs Alpha

Perceived Usefulness (PU) 5 0.857

Perceived Ease of Use (PEOU) 5 0.867

Source: Analysis of Data Collected

The following table contains the correlation matrix of the 10 items. It is found from the correlation

matrix that items representing one variable are positively correlated with each other and negatively

correlated with another variable. According to Wong and Hiew (2005), the values of correlation

coefficients ranging from 0.50 to 1.0 is considered strong. Among the items of PU, PU1 and PU5

shows high correlation, correlation between PU2 and PU4 is moderate. Among the items of PEOU, the

highest correlation value is 0.755, which indicates PEOU3 and PEOU5 are highly correlated. However,

moderate correlations exist between PEOU4 and PEOU5, between PEOU1 and PEOU4, between

PEOU2 and PEOU5, finally between PEOU3 and PEOU4.

Table 3: Correlation Matrix

PU1 PU2 PU3 PU4 PU5 PEOU1 PEOU2 PEOU3 PEOU4 PEOU5
PU1 1.000
PU2 .535 1.000
PU3 .570 .609 1.000
PU4 .515 .418 .661 1.000
Correlation PU5 .664 .538 .636 .603 1.000
PEOU1 -.454 -.400 -.381 -.333 -.495 1.000
PEOU2 -.360 -.258 -.372 -.310 -.470 .633 1.000
PEOU3 -.378 -.387 -.446 -.362 -.387 .635 .521 1.000
PEOU4 -.439 -.283 -.473 -.440 -.518 .462 .611 .465 1.000
PEOU5 -.385 -.462 -.422 -.350 -.461 .634 .472 .755 .458 1.000
Source: Analysis of Collected Data

KMO and Bartlett's tests are done before factor analysis. Both of the test results show that items are
valid. Test result and interpretation is provided in the Appendix - A.

Factor Analysis is done to check whether all the items are loaded in the two variables as described
above. Test result and interpretation is provided in the Appendix - B.

Finally, to test the hypothesis, the research employed Multiple Linear Regression Analysis. From the

table 4, it is found that the value of adjusted R is 0.31, which implies that 31% of the variation in

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user acceptance of e-banking is explained by these two independent variables (perceived usefulness

and perceived ease of use). It is found that F value of 27.729 being significant at p = 0.000. Thus,

this implies that the entire model in this study is well fit and significant.

Table 4: Model Summary

Model R R Square Adjusted R Std. Error of the F Sig. (p-value)

Square Estimate
a
1 .567 .322 .310 .5824 27.729 .000
Source: Analysis of Collected Data
Results of Table 5 shows that Perceived Usefulness is significantly lower p-value (p < 0.05) and it

indicates a positive relationship as the standardized coefficient (beta) value is positive. The beta

values are what the regression coefficients would be if the model were fitted to standardized data,

that is, from each observation, the sample mean is subtracted and then divided by the sample

standard deviation. It rejects the null hypothesis H0A and accepts alternate hypothesis, which states
that Perceived usefulness (PU) has a positive influence on the user acceptance of e-banking in

Bangladesh.

In contrast, PEOU is a weak predictor with greater p-value at 5% significance level (p > 0.05). It
means the null hypothesis cannot be rejected. Perceived ease of use (PEOU) has no influence on user

acceptance of e-banking in Bangladesh.

Table 5: Coefficients
Model Unstandardized Coefficients Standardized t Sig. (p-value)
Coefficients

B Std. Error Beta

(Constant) 1.449 .509 2.849 .005

1 PU .589 .092 .610 6.378 .000

PEOU .060 .076 .076 .792 .430

Source: Analysis of Collected Data

Demographic and frequency of use data is presented in Appendix - C

Discussion

From the test results, it is found that Technology Adoption Model (TAM) proposed by Davis is not
entirely true in the context of Bangladesh. Perceived ease of use has no significant influence in the
user acceptance of e-banking in Bangladesh. From the response of the questionnaire, it is seen that
almost half of the respondents find it somewhat difficult to operate the e-banking system. They find it

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tough to operate and they need give a lot of effort. The result is presented in Appendix - D. It can
also be observed from the responses that they encounter minimum error, which is a positive side.
The result is consistent with the study of Kazi (2013) that were in the context of Pakistan. Kazi
focused on the students. In this research, 88 among the 120 respondents belong to age group 30 or
less than 30, which indicates that these respondents are still students or recently have joined the
workforce. Another reason of UA not being influenced by PEOU can be the exposure and usage of
internet to the mass people. People of Bangladesh have been introduced to internet in the early 90s
(Wikipedia). Speed was not good enough to surf the World Wide Web. Optic fiber was introduced in
2006. Still, the speed is much lower than the developed countries. Cost is also higher. So, most of the
people do not use internet extensively. People use it to extract the important information and
perform crucial tasks, not because it is easy. This result differs from the developed countries like
Turkey, Singapore and fast developing countries like Malaysia (Poon, 2008; Polatoglu et al., 2001;
Tan and Teo, 2000). Correlation matrix table also indicates that PEOU is not a significantly influencing
factor. Because from the correlation matrix table, it is found that the correlation between the items of
PEOU is not that good. 4 among 10 correlations are found to be moderate. In the regression analysis,
the beta value of PEOU is also insignificant comparing to the beta value of PU (0.076 and 0.610
respectively). However, PU can explain only 31% of the user acceptance of e-banking in Bangladesh.
It indicates that there are other significant factors that influence the user acceptance of e-banking in
Bangladesh.

Conclusion

This research is conducted to find the influence of two selected variables (PU and PEOU) on
independent variable (UA). From the multiple regression analysis, it is found that perceived ease of
use has no influence on user acceptance. However, perceived usefulness has influence and 31% of
user acceptance can be explained by it. Further research can be to find what the other factors that
influence user acceptance are. For example - trust, perceived credibility, perceived risk etc. these
factors are already proven influential in many researches done in many developed and developing
countries. So, these factors can be also tested in the context of Bangladesh. One limitation of this
research is that the population of this research is the people who use e-banking. Therefore, it cannot
be generalized for all the people of Bangladesh. Further research can be done considering non-users
of e-banking.

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 Appendix - A

Kaiser-Meyer-Olkin measure of sampling adequacy test is performed to find the suitability of data for

factor analysis. Kaiser (1974) suggested that the value should be greater than 0.5 for a satisfactory

factor analysis to proceed. He further suggested that values ranging from 0.80 to 0.89 are
meritorious. Table 7 shows the KMO test value is 0.874 which is, according to Kaiser, is meritorious.

Bartlett's test is performed to find the strength of the relationship among the variables. It tests

whether the correlations matrix is an identity matrix. If it is an identity matrix, it will indicate that the
factor model is inappropriate. Because in identity matrix, the items are totally noncollinear. It means

if the items are factor analyzed, It would extract as many factors as items, since each item would be

its own factor. Null hypothesis of this test is that the correlation matrix comes from a population in

which the items are noncollinear. In table 7, test result shows that the null hypothesis can be

rejected as p-value<0.05.

It can be concluded from the test that the strength of the relationship among items is strong and,

therefore, factor analysis can be performed.

Table KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .874

Approx. Chi-Square 654.698

Bartlett's Test of Sphericity df 45

Sig. .000

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 Appendix - B

Extraction method is set at Principal component analysis (PCA). PCA is a statistical procedure that

uses an orthogonal transformation to convert a set of observations of possibly correlated variables

into a set of values of linearly uncorrelated variables called principal components (Wikipedia).
Varimax rotation method is used because it assumes that there is no correlation in among the factors

in the final solution. Table 8 shows the rotated component matrix. The matrix indicates the

correlation of each items with each factor. It can be easily understood from the table that there are
two factors in the data. The first five items are substantially loaded in Factor 1 (Perceived Usefulness)

and the last five items are substantially loaded in Factor 2 (Perceived Ease of Use).

Table Rotated Component Matrixa

Component

1 2

PU1 .756 -.272

PU2 .707 -.234
PU3 .825 -.254
PU4 .782 -.179
PU5 .774 -.350
PEOU1 -.254 .810
PEOU2 -.201 .776
PEOU3 -.228 .818
PEOU4 -.397 .604
PEOU5 -.271 .787

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 3 iterations.

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 Appendix - C

Variable Frequency
Gender Male 63
Female 57
Age Under 21 years 16
21 - 30 years 67
31 - 40 years 20
41 - 50 years 12
51 years and above 5
Frequency of using e-banking Daily 28
Weekly 53
Monthly 25
Quarterly 6
Half-Yearly 5
Yearly 3

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 Appendix - D

Snapshots are taken from the google summary.

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