Technology adoption: A conjoint analysis of consumers‫ ׳‬preference on future online banking services 7 PUBLICATIONS 33 CITATIONS PDF

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See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/276460524 Technology adoption: A conjoint analysis of consumers‫ ׳‬preference on future online banking services Article in Information Systems · May 2015 DOI: 10.1016/j.is.2015.04.006 CITATI...

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See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/276460524

Technology adoption: A conjoint analysis of consumers‫ ׳‬preference on future online banking services Article in Information Systems · May 2015 DOI: 10.1016/j.is.2015.04.006

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2 authors: Samson Yusuf Dauda

Jongsu Lee

7 PUBLICATIONS 33 CITATIONS

62 PUBLICATIONS 652 CITATIONS

Nasarawa State polytechnic Lafia, Nigeria

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Seoul National University

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Information Systems 53 (2015) 1–15

Contents lists available at ScienceDirect

Information Systems journal homepage: www.elsevier.com/locate/infosys

Technology adoption: A conjoint analysis of consumers' preference on future online banking services Samson Yusuf Dauda n,1, Jongsu Lee Seoul National University, Technology Management, Economics and Policy Program (TEMEP), Administrative Office (International Energy/ IT Policy Program), Bldg #37-307, 1 Gwanak-ro, Gwanak-gu, 151-742 Seoul, Republic of Korea

a r t i c l e i n f o

abstract

Article history: Received 3 March 2015 Received in revised form 24 April 2015 Accepted 25 April 2015 Recommended by: Prof. D. Shasha Available online 12 May 2015

The importance of service delivery technology and online service adoption and usage in the banking industry has received an increased discussion in the literature in recent years. Owing to the fact that Strong online banking services are important drivers for bank performance and customer service delivery; several studies have been carried out on online banking service adoption or acceptance where services are already deployed and on the factors that influence customers' adoption and use or intention to use those services. However, despite the increasing discussion in the literatures, no attempt has been made to look at consumers' preference in terms of future online banking service adoption. This study used conjoint analysis and stated preference methods with discrete choice model to analyze the technology adoption pattern regarding consumers' preference for potential future online banking services in the Nigerian banking industry. The result revealed that to increase efficiency and strengthen competitiveness, banks need to promote smart and practical branded services especially self-services at the same time promote a universal adoption of e-banking system services that add entertainment or extra convenience to customers such as ease of usage including digital wallet, real-time interaction (video banking), ATMs integrated with smart phones, website customization, biometric services, and digital currency. These services can contribute to an increasing adoption of online services. & 2015 Elsevier Ltd. All rights reserved.

Keywords: Technology adoption Conjoint analysis Stated preference Discrete choice

1. Introduction In recent years, technology has increasingly been employed in the delivery of services. Service delivery technology has become the vital operating elements of today's organizations that help to reduce costs and improvements in the overall efficiency of operations [1–5]. Technology adoption is

n

Corresponding author. E-mail addresses: [email protected] (S. Yusuf Dauda), [email protected] (J. Lee). 1 Department of Science Nasarawa State Polytechnic, P.M.B. 109 Lafia, Nasarawa State, Nigeria. http://dx.doi.org/10.1016/j.is.2015.04.006 0306-4379/& 2015 Elsevier Ltd. All rights reserved.

the choice to acquire and use a new invention or innovation [6]. According to Saleem and Higuchi [7], technology adoption is the main reason why developing countries are yet to develop; old technology produces less quantity, low quality product, and short life span. They import old technology due to less investment in technology, risk aversion, additional cost of assessment, and lack of appropriate consultant for selection of appropriate technology. Innovation is not based on the R & D alone but in some firms, it is also by the use of innovative product and process from external source [8]. The paradigm shift in the way companies interact with their customers, this has been led by the proliferation of technology-based systems mostly in the service industry and the banking sector are the

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most beneficial. They are developing a number of alternate delivery channels with a view of attracting tech-savvy customers, improving customers' expectations and ensuring customer loyalty [9]. The need to explain the user acceptance of new technologies and the factors influencing the acceptance of such technologies is increasing [10]. According to Martins et al. [11], the banking sector has been using information services not only to run internal business activities and to promote products, but also to provide main services to their customers. Thus, the better use of the numerous new information services available in the market is a challenge facing this sector. Zhu and Chang [12] argued that Information technology is the basis of technology-based services; consumers may be concerned with the usefulness and ease of use of a technology-based service before they decide to avail themselves to try it. The effective service delivery on behavioral factors may result in customer loyalty (which impacts their future utilization of online banking patterns) in relation to other factors just like it has on customer satisfaction [13]. According to Martins et al. [11] adopters of internet and online banking have a lower propensity to leave the bank and have increased banking activity, acquire more products, and maintain higher asset and liability balances [5]. Information and communication technology, competition, deregulation and globalization have forced banks to balance the goals of outreach and sustainability, characterized based on the services the banks offer to customers across the globe and in numerous channels [13,14]. Banks have largely implemented service delivery technology as a way of augmenting the services traditionally provided by bank personnel, but technologybased services could only improve corporate performance through consumer acceptance or adoption [15,16,12]. Thus, online banking may be the instigator of this new environment and the prime mover in terms of providing the potential solution for bank's survival in the near future [17–20,4,21]. The level of online banking adoption will directly impact on the degree to which the customers are satisfied, in terms of the behavioral factors [19]. Several studies analyze online banking service adoption or acceptance when the services are already deployed and they look at factors that influence customers' adoption and use or intention to use those services. However, despite the increasing discussion about online banking service adoption in the literature, no attempt has been made to look at consumers' preference with regards to future online banking service adoption. Based on the aforementioned, the following questions have been raised by the current study: what is the preference structure and willingness of the customers to pay for the future online banking services? Which future online banking service promotion policy can be applied base on the heterogeneous population in Nigeria that can best promote an increasing online banking service adoption? According to Miltgen et al. [22], the isolated impacts of technical, social, and risk factors on intention to accept IT have limit the ample view of different factors that organizations trying to succeed with IT implementation have to carefully address in order for the target users to accept the IT under investigation. Jayawardhena and Foley [23] identified the benefit of increasing the customer base, because using multiple distribution channels (branch networks, Internet banking, mobile banking, etc.) amplifies market coverage

by enabling different products to be targeted at different demographic segments. Thus, with a larger customer base, banks can profit from marketing and communication, with the possibility of mass customization for each group of clients, offering innovative products [11]. This is an important issue because many organizations today are saturated with mass automation and homogenized products and services. In the customer view, there is an increase in the autonomy with less dependency on the branch banking and consequently less time and effort. According to Miltgen et al. [22], IT is becoming increasingly complex and crucial for business operations, thus making the issue of acceptance an important challenge in IT implementation. Despite impressive advances in technology capabilities, the problem of underutilization of IT, especially for more radical technologies, is still present [24].This study uses a conjoint based discrete choice modeling with stated preference data to construct the banking customers' behavior corresponding to the future online banking service preference of Nigerian banking customers. The objective of this research is to use the conjoint and discrete choice analysis to investigate and test the variance of consumers' behavior in relation to future online banking products/service preferences and willingness to pay – that will reveal a basic background for potential pricing themes and funding directions for banks in the developing countries with specific empirical analysis of the Nigeria banking industry. This study seek to help banks to understand the type and nature of future online banking services that can be well accepted by the customers and to create the right policies and actions to attract customers to use these services. In addition, it is in the banks' and clients' interest to direct their communication from bank branches to online channels in order to be more productive and cost-effective. This paper is organized as follows: the next section presents the theoretical background and justification of attributes selection, followed by the research methodology. Then, we present the experimental design and data collection, followed by the empirical analysis and findings. Finally, the interpretation of the findings and both theoretical and practical implications are described. This paper concludes by presenting the research limitations and proposing avenues for future research. 2. Literature review 2.1. Adoption models The growth of information services and IT acceptance and use has been studied using various models and varied conclusions have been drawn from such studies that offer new insights at both the individual and organizational levels with focus on a country or a set of countries [15,25,10]. Each of the several models that have been proposed in the literature has the same dependent variable, use or intention to use [11], but with various antecedents to understand acceptance of technology. Technology acceptances are information service theories that model how users come to accept and use a specific technology. These theories suggest that when users are presented with a new technology, a number of factors influence their decision about how and when they will use it. Many authors have studied different aspects of

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new technology acceptance from a variety of theoretical perspectives explaining the relationship between user beliefs, attitudes, and intentions, including Theory of Reasoned Action (TRA – [26]), Technology Acceptance Model (TAM – [27]), Theory of Planned Behavior (TPB – [28]), Model of PC Utilization (MPCU – [29]), Motivational Model (MM – [30]), TPB, a hybrid model combining constructs from TAM and TPB (C-TAM-TPB – [31]), Innovation Diffusion Theory (IDT – [32–35]), Social Cognitive Theory (SCT – [36]), and Unified Theory of Acceptance and Use of Technology (UTAUT – [15]). In each of these theories, behavior is viewed as the result of a set of beliefs about technology and a set of affective responses to the behavior. The most popular theoretical models are TRA, TPB, TAM, IDT, and UTAUT. The most employed model in the study of information technology adoption is the TAM [12]. This model examines the causal linkages between two key beliefs and the behavioral attitudes and intentions of users. TAM was designed to predict information technology acceptance and use on the job, in which perceived usefulness and perceived ease of use are the main determinants of the attitudes [27]. Miltgen et al. [22] argued that, despite the simplicity and contentiousness of TAM, it has proven particularly useful in studying the intent to accept new IT in a wide variety of contexts, such as across US companies [15], among college students shopping online [37], in regards to internet banking [38], e-procurement [39], or electronic toll collection service [40]. TPB focuses more on the perceived behavioral control, which is viewed in terms of the perceived ease or difficulty of performing the behavior [28]. Both the TAM and TPB models were based on TRA. The TRA model is one of the most important theories of human behavior drawn from social psychology where attitudes and subjective norms are considered as the determinants of behavior. The theory proposes that beliefs influence attitudes which in turn lead to intentions and then consequently generate behaviors [26]. The IDM separates the adopters into categorizes as: innovators, early adopters, early majority, late majority, and laggards. Innovation must be widely adopted in order to self-sustain. “Individuals are seen as possessing different degrees of willingness to adopt innovations, and thus it is generally observed that the portion of the population adopting an innovation is approximately normally distributed over time” [33]. In addition, he proposes that four main elements influence the spread of a new idea: the innovation itself, communication channels, time, and a social system. In this regard, an organization decision to adopt an innovation or not relies on organizational and market forces. The UTAUT model which can explain as much as 70% of the variance in intention [15], postulates that four constructs act as determinants of behavioral intentions and use behavior: performance expectancy, effort expectancy, social influence, and facilitating conditions. In addition, the model also posits the role of four key moderator variables: gender, age, experience, and voluntariness of use. According to Miltgen et al. [22], while the TAM and IDT perspectives focus almost exclusively on beliefs about the technology and the outcomes of using it, UTAUT includes other beliefs that might influence behavior, independent of perceived outcomes. Recently, researchers have increasingly turned to testing and applying UTAUT to explain technology adoption. Examples are: online bulletin boards [41], Webbased learning [42] and instant messengers [43].

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2.2. Bank service product portfolio Banking service product quality has been found by previous studies to plays an important role in determining customers' perceptions of overall banking service quality. Jun and Cai [44] explained that banking product quality is primarily associated with product variety and diverse features. According to Yang, Jun, and Peterson [45], online customers are more inclined to patronize firms which offer a substantial variety of services. The primary reason for this choice is that it is more likely that their diverse needs can be fulfilled. This is especially the case for desired services that are not widely distributed or unavailable at physical outlets [46]. Thus, a key to gaining customer satisfaction and loyalty is providing a mix of offerings preferred by target customers. Strieter et al. [47] observed that one of the most important developments in banking is the increased emphasis on marketing a wide variety of financial services. In terms of internet shopper satisfaction, Cho and Park [48] have identified “variety of products” as one of the seven key dimensions that influence internet shopper satisfaction. In the same vein, in terms of the banking, Dixon [49] argues that the key to getting more customers from the banks through the online service is not the attraction of the internet itself but the products offered to the customers. Lepkowska-White and Page [50] also pointed out that one of the important ingredients for developing consumer value in online companies is a suitable selection of products/services. Another rationale for customer use of the internet is convenience. Latimore et al. [51] discovered that when possible, 87% of internet banking customers prefers to complete their transactions at one site. Aliyu [13] considered convenience to be an influential factor for the use of online banking and that there is a direct relationship between technology and behavioral (external) factors in the adoption of online banking. For instance, numerous online banking customers wish to pay their bills electronically and automatically, view and print their monthly bank statements, and purchase stocks, insurance, and other financial offerings. For this reason, companies with wide product lines may be able to attract a large number of customers to their sites. Also, introducing new forms of products/services to the marketplace appeals to customers whose needs are unfulfilled by existing offerings. Malarvizhi [52] argued that the relationship of convenience and service delivery via online banking is the ability of online banking to meet users' needs using the different feature availability of the services. Therefore, a key to gaining customer satisfaction is providing a wide range of products/services and diverse features in the format required by customers. In line with this, results of Aliyu [13] shows that convenience and security have strong evidence of customer satisfaction via online banking as the mediator linking the relationship between online banking and customer service delivery. Therefore, with the advent of internet technology, present banking customers can have unlimited access to financial information and enjoy a wider range of choices in selecting financial institutions and competitive products. The key driving force in attracting new customers and enhancing customers' satisfaction is subtly differentiating quality levels in terms of diverse features of bank products and their timely introduction to the marketplace [53].

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Table 1 Variable definition for the future bank services. Variable name Services Rank

Variable

ATM services

ATMCCT

Video banking

RTINT

Mobile Banking

MOBW

Security Services

BIOS ATMISP

OCERT

Internet Banking

DCUR

WEBCUS

COSTa

a

Description

Definition

Rankings of the cards given by the respondents Cardless ATMs (Dummy variable for ATMs with capacity to perform cardless transaction) Real time Interaction (Dummy variable for Video technology integrated with most banking channels) Mobile wallet (Dummy variable for mobile wallet services)

1–3, repeated

ATMs smartphone integration (Dummy variable for mobile-based pre-staging of ATM transactions) Occupational certification (Dummy variable for flexible, authentication and transaction security solutions) Digital currency (Dummy variable for Bitcoin services) Website Customization (Dummy variable for customers chance to personalize each page of the website) Transaction cost (cost per...