International Journal of Bank Marketing

Usage based upon reasons: the case of electronic banking services in India
Sangeeta Arora, Supreet Sandhu,
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IJBM
36,4 Usage based upon reasons:
the case of electronic banking
services in India
680 Sangeeta Arora and Supreet Sandhu
Guru Nanak Dev University, Amritsar, India
Received 28 March 2017
Revised 16 July 2017
1 October 2017
Accepted 2 October 2017 Abstract
Purpose – The purpose of this paper is to determine factors influencing customers’ usage of electronic
banking (e-banking) services.
Design/methodology/approach – A survey was conducted to collect information from bank customers
regarding their perceptions about e-banking services and their demographics. Multiple regression analysis is
used to test the hypothesised relationships.
Findings – E-banking usage is found to be high for female, more educated, younger, and middle income
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customers. Among the 11 perceptual variables studied, only six variables, namely: information, performance,
self-interest, service quality, satisfaction, and experience are found to be significantly and positively
associated with e-banking usage.
Practical implications – This study identifies factors which may be focussed on by bankers during the
formulation of their operations and marketing strategies to provide the best e-banking experience to their
customers, enabling bankers to augment bank profitability through the strategic use of technologies.
Originality/value – Past studies have seldom examined the combined influence of demographics and other
factors on e-banking services usage in the context of developing countries. Most of the earlier studies have
considered single service or examined the adoption as only a binary variable.
Keywords Banks, Multiple regression analysis, Usage, Electronic banking services
Paper type Research paper

1. Introduction
Electronic services have received considerable attention over past years as these are located at
the intersection of two major developments in the business world: the services growth and
information and communication technology (ICT) penetration. Within the service sector, banking
is one domain where information technology (IT) diffusion is more popular and rapid as well as
critically owing to the unique characteristics ( financial and personalised) of banking services.
Technological innovations in banking resulted in an upsurge in electronic commerce
transactions, migration of cash-based transactions to electronic transactions, and general
development in banking and the economy through the inclusion of masses under the
purview of banking – specifically electronic banking (e-banking).
e-Banking is a well-known term by now as it is entrenched in both the depth and width of
banking operations. It is an electronic system that connects banks and their customers
together facilitating preparation, management, and control of financial transactions through
transferring information (Pikkarainen et al., 2006).
e-Banking offers value to the customers in terms of information, serviceability,
convenience, wider assortment of offerings, and much more. Moreover, it also contributes
towards socioeconomic development of any nation. Cashless payments are strongly growing
globally (Retail Banking Research, 2016). The e-banking system has shown a steady growth
in both value and volume terms.
Despite the benefits, the growth in the e-banking services usage is not aligned with the
International Journal of Bank
Marketing requirements of cashless or less cash economy specifically in developing countries.
Vol. 36 No. 4, 2018
pp. 680-700
The success of service innovations depends greatly on the consumption patterns of the
© Emerald Publishing Limited
0265-2323
intended users of such services. The attitude of bank customers is of significant importance
DOI 10.1108/IJBM-03-2017-0060 for the adoption and proliferation of innovative services offered to them.
 For the success of economic programmes aimed at a cashless economy, it is imperative to Electronic
focus on factors governing the adoption of e-banking services and examine the banking
preparedness of intended customers. Understanding the factors associated with customers’ services in
likelihood of using electronic services is important in an environment that is becoming
increasingly technological and competitive. For every market setting there may be a India
different set of influencers. For the successful implementation of an e-banking programme,
it is imperative on the part of bankers to understand why customers prefer an offering and 681
they devise the marketing strategies accordingly.
In the context of banking, with the exposure to different communication channels, the
customers (both actual and potential) develop various feelings and judgements about the
services (more for innovative services) offered by banks. These feelings or judgements form
the basis of their preferences that in turn influence their behavioural intentions or actual
usage of such services. So, customer usage may vary out of demographic (age, gender,
income, occupation, etc.) or psychographic (attitude, preference, etc.) differences among
them. This paper intends to congregate these factors towards determining customers’ actual
usage of e-banking services.
There is a dearth of studies dealing with usage of e-banking in developing countries like
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India. Cultural differences and the level of development across countries cause different
dimensions to have different impacts on behavioural intention across countries (Al-Hajri and
Tatnall, 2008; Bandyopadhyay and Bandyopadhyay, 2010). Therefore, the intention behind this
research is to fill this gap by exploring thoroughly and comprehensively this field of research.
The remainder of this paper is divided into four sections. Section 1 comprises of literature
review analysing the gaps in the extant literature. Section 2 outlines the research
methodology adopted and Section 3 presents the research results. Finally, the last section
assesses some of the strategic implications for the banks through detailed discussion and
concluding remarks.

2. Review of literature
2.1 Underlying theories
Adoption is defined as the acceptance and continued use of a product, service or an idea
(Aliyu et al., 2012). In order to examine how and why adoption occurs, it is imperative to turn
to the theories underlying the adoption in related fields. The most recognisable theory of
technology adoption, the technology acceptance model (TAM) was proposed by Davis
(1989) based on a general theory of human behaviour, and the theory of reasoned action
(Ajzen and Fishbein, 1973). Accordingly, two key constructs of human behaviour that
influence the technology adoption process are perceived usefulness and perceived ease of
use. Perceived usefulness is defined as the degree to which individuals believe that using a
particular system would enhance their job performance, whereas perceived ease of use
relates to the degree to which individuals believe that using a particular system would
require no effort (Davis, 1989). Various attempts have been made to extend the model in
varied organisational and cultural settings (Davis et al., 1989; Jayawardhena and Foley,
2000; Kolodinsky et al., 2004; Pikkarainen et al., 2004). These efforts resulted in a new theory,
the unified theory of acceptance and use of technology (UTAUT) (Venkatesh et al., 2003),
based on the constructs of performance expectancy, effort expectancy, social influence, and
facilitating conditions, with moderators of gender, age, experience, and voluntariness of use
in explaining the individual intention to adopt new technologies. Taking into consideration
the technological factors, task-technology fit (TTF) theory asserts the importance of the fit
between users’ tasks and technology to have influence on the use and performance of new
technologies (Goodhue and Thompson, 1995).
Zhou et al. (2010), further, combine and validate TTF model and UTAUT model towards
user adoption of mobile banking services. Cheng et al. (2006) extend TAM to include
 IJBM perceived security towards studying adoption of internet banking. The elements of trust are
36,4 also found to have influence on intentions towards adoption of e-banking (Suh and Han,
2002; Pavlou, 2003; Yousafzai et al., 2003).
Two recurring constructs in these TAMs are perceptions about the innovation’s
characteristics (labelled beliefs in TAM) and individuals’ usage intentions regarding the
innovation. Innovation diffusion research, on the other hand, postulates that apart from
682 initial manifestation (decision or willingness) to use the system, other outcomes like the
continued or sustained use of the innovation are important towards understanding the
peculiarities of technology acceptance (Agarwal and Prasad, 1998; Rogers, 2003). There is
dearth of studies dealing with preference of customers and its relation with the extent of
adoption or usage of e-services, that is, the primary focus of the present study.

2.2 Demographics and e-usage behaviour

Previous studies of technology adoption have also established relations between user
demographics (age, gender, income, education) and e-usage behaviour (Kolodinsky et al.,
2004; Porter and Donthu, 2006; Mirza et al., 2009; Nasri 2011; Margaret and Ngoma, 2013).
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Venkatesh and Morris (2000) assert that men’s technology usage decisions are more
influenced by their perceptions of usefulness. In contrast, women are more strongly
influenced by perceptions of ease of use and subjective norm. Mattila et al. (2003) contend
that internet banking is the most popular among mature customers but they are late
adopters and highly insecure about such technologies.
As majority of the e-banking services need some basic infrastructure support (mobile, PC/
laptop, and internet), it is empirically proven that income and usage (willingness or actual use)
are positively correlated (Mattila et al., 2003; Kolodinsky et al., 2004; Mansor and Mat, 2009).
However, Mirza et al. (2009) state that middle income groups are more inclined towards internet
banking adoption. Education is also reported to have a significant positive effect on the
adoption of the internet as a banking channel (Mattila et al., 2003; Mirza et al., 2009; Nasri, 2011).

2.3 Some other factors influencing e-usage

Many researchers contend strong and direct link between perceived service quality and
customer satisfaction (Naik et al., 2010) and it has been shown that service quality affects
satisfaction and satisfaction in turn affects behavioural intentions (Cronin and Taylor, 1992;
Wang and Shieh, 2006). There seems to be a great deal of similarity between these two
concepts, yet some researchers carefully state that these are different constructs
(Parasuraman et al., 1988; Bolton and Drew, 1991; Spreng and Mackoy, 1996). Parasuraman
et al. (1985) have highlighted some instances where consumers satisfied with a service still did
not perceive it of high quality. Moreover, satisfaction is transaction specific while quality can
be perceived without actual consumption experience (Oliver, 1989). Satisfaction with the
current service also has some mediating effect in customer’s pre-purchase and post-purchase
attitude (perceived service quality) about a service offering (Oliver, 1980; Bolton and Drew,
1991). Dabholkar (1995) summarises that for recent customers, service quality and satisfaction
are different constructs but for mature customers, these two constructs overlap.
Experiences with the same or related technologies also influence the usage behaviour of
customers (Taylor and Todd, 1995). More the customers use the technologies the more
comfortable they become in using innovative e-services with gain of related experience.
Experience has positive effect on willingness and adoption of technologies
(Prompattanapakdee, 2009) as it also increases users’ ability to take advantage of
information systems (Chang, 2006). Internet/mobile experience as well as experience with
e-banking services may be perceived to have positive effect on usage of such services. Some
other studies state positive moderating effect of experience on linkages of user behaviour to
 other determinants like trust (Riffai et al., 2012), perceived ease of use (Prompattanapakdee, Electronic
2009), and effort expectancy (Venkatesh et al., 2003). banking
Information provision is one of the three basic functions of e-banking as offered by services in
banking institutions (others being transactional and relationship building) (Diniz, 1998;
Arora and Sandhu, 2014). The term “Information” designates not only the knowledge that India
provides the content of communication, but the aspect of newness or variability that
knowledge has in some context (Loftus and Loftus, 1976). The information aspects of the 683
electronic channel positively influence the user perceptions of e-services as well as their
behavioural intentions (Barnes and Vidgen, 2002; Loiacono et al., 2002; Zeithaml et al., 2002;
Pikkarainen et al., 2004; Gupta, 2008; Yoon, 2010).

2.4 Literature gaps

There is increasing convergence of the theories of services marketing; service quality,
customer satisfaction, behavioural intentions, IT, and adoption theories creating need for
restructuring business models and marketing paradigms. This convergence inhibits
building consensus on critical issues (like factors affecting adoption, perceived e-service
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quality, etc.) and provides scope for further research in different contexts (countries/regions
as well as industries).
In the e-banking context, earlier studies mostly focus on the user interface (website, web
portals) or a single service (mobile or internet). This study intends to capture the intricacies
of e-banking adoption more fully by considering all the electronic services offered by banks
(ATM, internet, mobile, fund transfer, etc.). Regarding the adoption of new technologies,
almost all the previous studies have focussed on adoption as a binary variable; that is,
consumers or firms either have adopted or have not adopted the innovation under study.
In this study, the focus is placed on the adoption continuum indicating the extent of usage.
With regard to IT adoption, only a handful of studies focus on actual usage of such
technologies (in contrast to adoption intention or initial adoption). The set of beliefs that
influences an individual to continue using the technology may not be the same as the set of
beliefs that leads to his or her initial adoption (Venkatesh et al., 2003; Yang et al., 2012).
Moreover, earlier studies focus on service attributes as factors influencing adoption. This
study intends to explore customers’ behaviour more fully focussing on reasons behind their
preference (that reflect their need as well as service attributes) and its relation with the
usage extent (Table I).

3. Research methodology
This study presents the customers’ perspective of e-banking services adoption wherein the
factors influencing their e-banking use behaviour have been explored and summarised
employing exploratory factor analysis technique. Further, the influence of these perceptual,
demographics and some other behavioural factors on actual usage of such services has been
analysed through multiple regression analysis.

Research question Adoption pattern of IT-based banking services

Research objective To determine factors influencing customers’ actual usage of e-banking services
Literature used Technology acceptance, social psychology, behavioural
Sample and data source Bank customers
Primary data
Statistical tools used Multiple regression analysis, factor analysis, weighted average
Variables used e-Services usage, reasons for preference, demographics, experience, service Table I.
quality, satisfaction Research scheme
 IJBM The variables considered under the study are based upon the following customers’ adoption
36,4 dimensions that have been derived from the extant literature and are shown in Table II.
In the present study, service quality and satisfaction are taken as two different
predictors of e-banking adoption. Service Quality is based on expectations of customers
regarding e-banking services which can be regarded as expected service quality.
And satisfaction is based on actual past consumption experience of these services. This
684 satisfaction may be based on single service experience out of multitude of services offered
by banks or dealings with the bank. The influence of both factors (satisfaction and service
quality) is examined individually in explaining e-banking adoption.

Item Author/s (year)

Perceived usefulness Davis (1989), Teo et al. (1999), Dabholkar

Variety of services and Bagozzi (2002)
Satisfying all banking and financial needs
Reduced cost of transaction
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Quick resolution of complaints

Perceived ease of use Davis (1989)
Flexible to interact with
User-friendly interface
Easy to do banking activities
Convenient time
Easy to access
No queue
Quick transactions
Greater control
Social influence Venkatesh et al. (2003), Yang et al. (2012)
Others are using
Status symbol
Exposure to advertisement Polasik and Piotr Wisniewski (2009)
Perceived enjoyment Dabholkar (1996), Teo et al. (1999),
Enjoyment Pikkarainen et al. (2004),
Entertainment Lin and Hsieh (2011), Widjana and
Rachmat (2011)
Trust Prompattanapakdee (2009), Margaret and
Trust on bank security system Ngoma (2013)
Confidentiality is preserved
Trust on bank
Self-efficacy Bandura (1982), Dabholkar and Bagozzi
Understandable (2002), Amin et al. (2007), Widjana and
Learning to use is easy Rachmat (2011)
Fits into my lifestyle
Self-charge
Knowledge about related technologies
Information Barnes and Vidgen (2002), Loiacono
Prompt information about new services et al. (2002), Zeithaml et al. (2002),
Prompt information about new or revised rules/charges Pikkarainen et al. (2004), Gupta (2008),
Information regarding existing services Yoon (2010)
Past experience Taylor and Todd (1995), Agarwal and
Experience in using internet/mobile Prasad (1999), Prompattanapakdee (2009)
Experience in using e-banking
Satisfaction Cronin and Taylor (1992), De Ruyter
Table II. Customers’ satisfaction level with e-banking et al. (2001), Wang and Shieh (2006)
Factors considered Service quality Cronin and Taylor (1992), Zeithaml
under the study Customers’ overall evaluation of e-banking services quality level et al. (1996), Olorunniwo and Hsu (2006)
 The study was carried out among the bank customers in Punjab (India). For the aforesaid Electronic
purpose a sample of ten private and ten public most profitable scheduled commercial banks banking
was taken from each selected city of Punjab, i.e., Amritsar, Jalandhar, and Ludhiana. services in
A sample size of 600 customers was selected taking ten customers from each bank.
As customers were personally approached, response rate was 100 per cent. India
For collecting data regarding customer perceptions about e-banking services, two
branches (where existing) of each selected bank in each city were considered, one being 685
largest and another smallest branch in the city based on business. Five customers from each
considered branch were contacted for collecting data. In case the bank had single branch in
the selected city, ten customers from the single branch were contacted based on a judgement
sampling method. Criteria for selection of customers were availing at least one form of
technological innovation, and normally banked through that particular bank.
The study is based on primary data that was collected from the selected respondents
directly by administering a comprehensive questionnaire. Questionnaire was pre-tested to
check its construct and content validity. The data so collected were analysed with the help
of various statistical tools appropriate in the context of collected data in order to arrive at
the result and authenticate hypotheses that were set during the course of the study. Out of
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600 bank customers approached, 524 preferred e-banking services. Their demographic
profile is shown in Table III.

3.1 Model formulation

With the intention to determine what factors significantly contribute towards adoption
extent, multiple regression analysis has been performed with the eight extracted perceptual
factors plus three other factors, namely: “overall service quality”, “satisfaction level”, and

Frequency %

Gender
Male 365 69.7
Female 159 30.3
Age
Less than 25 yrs 88 16.8
25-34 yrs 271 51.7
35-44 yrs 92 17.6
45 and above 73 13.9
Education
High school 54 10.3
Bachelor 248 47.3
Masters 222 42.4
Total 600 100
Occupation
Professional 90 17.2
Service 270 51.5
Business 125 23.9
Others 39 7.4
Income
Less than 3 L 280 53.4 Table III.
3-6 L 167 31.9 Respondent
More than 6 L 77 14.7 customers’
Total respondents 524 demographic profile
 IJBM “experience” as independent variables. Customers’ usage score has been taken as dependent
36,4 variable. As reported in the previous studies demographic variables also have substantial
impact on adoption of e-banking services. In order to address their influence for better
predictability of e-banking adoption, demographic variables have also been introduced in
the regression model. Hierarchical regression procedure was used to examine the
contribution of two different sets of factors (demographic and perceptual) towards the
686 usage. Demographics were entered first followed by other perceptual factors. Various
propositions tested in this regard were:
H1. “Functionality” factor is not a predictor of customers’ e-banking usage.
H2. “Information” factor is not a predictor of customers’ e-banking usage.
H3. “Effort expectancy” factor is not a predictor of customers’ e-banking usage.
H4. “Credibility” factor is not a predictor of customers’ e-banking usage.
H5. “Performance” factor is not a predictor of customers’ e-banking usage.
H6. “Self-interest” factor is not a predictor of customers’ e-banking usage.
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H7. “Social influence” factor is not a predictor of customers’ e-banking usage.

H8. “Service content” factor is not a predictor of customers’ e-banking usage.
H9. “Overall service quality” factor is not a predictor of customers’ e-banking usage.
H10. “Prior satisfaction level” factor is not a predictor of customers’ e-banking usage.
H11. “Experience” factor is not a predictor of customers’ e-banking usage.
H12. “Age” factor is not a predictor of customers’ e-banking usage.
H13. “Gender” factor is not a predictor of customers’ e-banking usage.
H14. “Education” factor is not a predictor of customers’ e-banking usage.
H15. “Occupation” factor is not a predictor of customers’ e-banking usage.
H16. “Income” factor is not a predictor of customers’ e-banking usage.
As demographic variables are qualitative in nature, these were first converted into
11 dummy variables as Gender_dummy, Age_dummy1, Age_dummy2, Age_dummy3,
Edu_dummy1, Edu_dummy2, Occu_dummy1, Occu_dummy2, Occu_dummy3,
Inc_dummy1, Inc_dummy2 and coded likewise to be included in the regression
model. For five demographic variables having n categories, n−1 dummies were
constructed for each variable.
The following model was used to examine the relationship between dependent variable
and independent variables:

Y ¼ aþb1 X 1 þb2 X 2 þb3 X 3 þb4 X 4 þb5 X 5 þb6 X 6

þb7 X 7 þb8 X 8 þb9 X 9 þb10 X 10 þb11 X 11 þb12 X 12

þb13 X 13 þb14 X 14 þb15 X 15 þb16 X 16 þb17 X 17
þb18 X 18 þb19 X 19 þb20 X 20 þb21 X 21 þb22 X 22 þei
where Y is the dependent variable: e-Banking usage; α the intercept; β1, β2, β3, β4, β5, β6, β7
…, β22 the regression coefficients; X1, X2, X3, X4, X5, X6, X7 …, X22 the independent variables;
and εi the error term.
 Further, to test the overall significance of the model, analysis of variance was performed Electronic
with the following null hypothesis (Table IV ): banking
H 0 : b1 ¼ b2 ¼ b3 ¼ b4 ¼ b5 ¼ b6 ¼ b7 ¼ b8 ¼ b9 ¼ b10 ¼ b11 . . . ¼ b22 ¼ 0 services in
India
4. Results and analysis of research findings
4.1 Customers’ preference for e-banking services 687
For the present study, a comprehensive set of variables, indicating the reasons for customers’
preference for e-banking services, was compiled which was majorly based on the existing
theories. A set of 28 items indicating the reasons for e-banking preference was developed.
Through the study it has been found that majority of the respondents (524 respondents) prefer
e-banking channels presuming or experiencing its benefits. The opinions of these customers
on the above set of variables were measured on a five-points Likert scale from 5 to 1
depending upon the importance of each variable for their preference for e-banking services
(5 for highly important followed by 4 for quite important, 3 for slightly important, 2 for not
important, and 1 for not at all important). All variables are coded likewise.
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It has been observed that the most important variables that drive e-banking services
preference by the customers range from “Convenient time”, “Easy to access”, “Easy to do
banking activities”, “No queue”, “Quick transactions”, “Trust on bank”, “Trust on bank
security system”, to “Variety of services” provided through electronic channels ( for details
refer Table AII).
4.1.1 Perceptual factors – the factor analysis result. With the intention to enhance
understanding of the variables influencing preference of e-banking services, these variables
were subjected to factor analysis for summarisation. Kaiser-Meyer-Olkin measure of
sampling adequacy is found to be 0.844 (W0.5) showing high adequacy. Bartlett’s test of
sphericity indicates test value χ2 ¼ 6,067.27 which is highly significant (p ¼ 0.00). These
measures indicate that the data set is fit for factor analysis. Through this process, eight
factors were extracted accounting for 64 per cent of variations in responses on various
items. The latent roots or eigenvalues of 1 or higher criterion was used to retain the factors.
The factor pattern with an orthogonal rotation was then used to interpret the factors. Factor
structure is shown in Table AIII.
4.1.2 Perceptual factors – discussion. Eight factors representing the reasons for e-banking
preference by the customers have been extracted and presented in Table V in the order of their
importance (based on weighted average scores). These factors are described below:
• F1: functionality – functional aspects constitute by far the most important explanatory
variable for e-banking preference. Functionality factor comprises of convenience,

Label Name Description

X1 Gender_dummy Dummy for male respondents

X2 Age_dummy1 Dummy for 25-34 age group
X3 Age_dummy2 Dummy for 35-44 age group
X4 Age_dummy3 Dummy for more than 45 age group
X5 Edu_dummy1 Dummy for graduate respondents
X6 Edu_dummy2 Dummy for post graduate respondents Table IV.
X7 Occu_dummy1 Dummy for professionals Description of
X8 Occu_dummy2 Dummy for others demographic dummies
X9 Occu_dummy3 Dummy for businessmen considered for
X10 Inc_dummy1 Dummy for 3-6 lac income group predicting customers’
X11 Inc_dummy2 Dummy for more than 6 lac income group e-banking adoption
 IJBM Factor loading Weighted Avg score SD
36,4
I Functionality 4.53 0.406
V13 Easy to do banking activities 0.742
V5 Convenient time 0.735
V12 Easy to access 0.673
V14 No queue 0.662
688 V3 Quick transactions 0.607
V4 Greater control 0.452
II Information 3.86 0.758
V7 Prompt information about new services 0.883
V8 Prompt information about new or revised rules/charges 0.868
V6 Information regarding existing services 0.815
III Effort expectancy 4.02 0.457
V16 Understandable 0.789
V17 Learning to use is easy 0.788
V27 Fits into my lifestyle 0.511
V18 Self-charge 0.486
V15 Knowledge about related technologies 0.48
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IV Credibility 4.25 0.581

V26 Trust on bank security system 0.85
V25 Confidentiality is preserved 0.758
V24 Trust on bank 0.755
V Performance expectancy 3.82 0.621
V19 Quick resolution of complaints 0.694
V9 Reduced cost of transactions 0.656
V20 Flexible to interact with 0.654
V21 User-friendly interface 0.485
VI Self-interest 3.02 1.08
V22 Enjoyment 0.855
V23 Entertainment 0.835
VII Social influence 3.04 0.868
V2 Others are using 0.802
V1 Status symbol 0.735
Table V. V28 Extensive advertisement 0.487
Factor analytic VIII Service content 4.05 0.554
(rotated) results for V11 Variety of services 0.702
e-banking preference V10 Satisfying all banking and financial needs 0.652

quickness, accessibility, availability of banking services through electronic media.

These are some operational benefits that lure the customers’ towards adoption or use of
electronic media for banking activities.
• F2: credibility – the second most important factor for e-banking preference is found to
be “credibility”. Credibility may be defined as “believability” (Tseng and Fogg, 1999),
whether the system is trustworthy and worthy of belief or confidence. It is the
customers’ perception or belief of protection for the information or money from any
unauthorised access. Customers want to conduct the financial transactions securely
and maintain privacy of their financial information over electronic media.
• F3: service content – the features and diversity of the product offering also dictate its
preference. The product is an important driver of bank strategy centred around two
concerns: the need to understand clients’ needs and deliver the “right” set of products
in response, and the need to innovate, and be seen to be innovating (KPMG, 2005).
The technological innovation in the banking products is brought to lure the existing
and potential customers to satisfy their varied financial needs.
 • F4: effort expectancy – it is defined as the degree of ease of technology use (Venkatesh Electronic
et al., 2003). Effort expectancy implies a person chooses a specific course of action or feels banking
motivated to behave in a certain way because of lesser effort involved in it over other services in
alternatives. The customers prefer the electronic media of banking for conducting their
financial tasks as they perceive it involving lesser efforts as compared to the conventional India
banking modes. E-banking is perceived to be easily understandable, requires lesser
resources in terms of efforts and time, and easily adaptable in the lifestyle of customers 689
who are active users of related technologies of internet and mobile telephony.
• F5: information – the essence of IT system is the information content that implies a
message or a series of messages. System informativity is important as it concerns
with how new or unexpected the content is (De Beaugrande, 2006). People seek
information for comfort, to make choices, to act, for support, empowerment or simply
to learn (Wathen and Burkell, 2002) and the electronic media is known to be the best
mode for information gathering, storage and dissemination.
In the context of banking, internet, mobile telecommunication and other electronic devices
are used to educate the current and potential customers regarding banking services as well
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as any change in the current banking processing and their potential impact on them:
• F6: performance expectancy – this factor signifies the degree to which an individual
believes that using the system will help him or her to attain gains in task
performance. Customers believe that using electronic media for banking tasks will
enhance their performance with minimum cost. As one element, interactivity refers to
the extent to which electronic media facilitate interaction between bankers and the
customers. The facets assessed are – online demos, complaint filing and resolution,
telephonic assistance, or ready reference.
• F7: social influence – the seventh factor – social influence, is defined as change in an
individual’s thoughts, feelings, attitudes, or behaviours that results from interaction
with another individual or a group (Rashotte, 2007). People generally make real
changes in their beliefs or behaviour after interacting with persons they believe to be
powerful, similar or desirable (Latané, 1996). Other people’s influence (either real or
projected as in the case of celebrity advertisement) is very significant in
understanding customers’ behaviour. Sometimes they start using something just
because others are using or they think it might lead to enhancement in their status in
the society. Its impact is higher in case of card (debit and credit) services. It is less
applicable to internet banking services as these are highly personal and no one
actually wants to make these transactions in the presence of others.
• F8: self-interest – sometimes customers’ preference is out of their personal interest or
advantage that defines the intrinsic motivation. Self-interest signifies the extent to
which the activity of using a specific system is perceived to be enjoyable in its own right,
aside from any performance consequences resulting from system use. Sometimes, the
customers just perform an activity for no apparent reinforcement other than the process
of performing the activity per se (Teo et al., 1999). This factor is significant when the
customers prefer to do low value banking transactions or other informational and
interactional tasks within banking domain over electronic channels. As indicated by the
responses of customers, this is by far the least important factor for e-banking preference.

4.2 Adoption of e-banking services

In the present study, adoption of e-banking services is defined in terms of usage of such
services by the customers which is multi item construct and both number and extent of
 IJBM services availed have been considered. In order to find out the customers’ extent of usage of
36,4 the e-banking products, the respondents’ frequencies of usage for 22 services (refer Table AI)
were asked. The services set was compiled based on all e-services provided by the selected
banks. Data regarding the offerings were collected and compiled through meetings with bank
managers and websites of the banks. The frequencies of usage were measured using a
five-point scale with weight of 4 for very often use, 3 for often, 2 for sometimes, 1 for rarely
690 and 0 for never used. Summated score of these services were calculated for each respondent
and the pattern is shown in Table VI. Value of usage score varies between 1 and 88 (4 × 22).
The minimum is one as non-users (0 × 22) who never used any e-service were not considered.
It is evident that majority of the respondents (55 per cent) are regarded as low users
(usage score 0-22) of e-banking services.
In the context of present study, it has been hypothesised that bank customers’ e-banking
adoption behaviour is influenced by perceptual, behavioural factors as well as personal traits.
Perceptual variables are attributed to factor scores extracted from the responses of customers
towards variables influencing their preference for e-banking services. Other variables
included are overall service quality perceptions, satisfaction level with the previous services,
and experience of customers in using related technologies (internet/mobile/e-banking).
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Tolerance and variance inflation factors (VIF) are reported in Table VIII. VIF for each
independent variable is below 10 indicating that data are free from the problem of
multicollinearity. The value of Durbin-Watson test outcome (1.98) is found very close to 2.
So the data meet the assumption of independent errors. Tables VII and VIII present the
summary of the regression model. To assess predictive accuracy of the regression model, a
measure “coefficient of determination” (R2) is employed. Calculated as the squared
correlation between the actual and potential values of the dependent variable, it represents
the combined effect of the entire variate in predicting the dependent variable. The value of
adjusted R2 tells how well the model generalises.
In Model 1, only demographic variables are entered to examine the individual
contribution of demographic and perceptual variables in explaining variance in usage score.
Table VII shows that demographic variables significantly explain 14 per cent variance
adjusted to 12.2 per cent. Demographics along with perceptual factors explain 34 per cent
(adjusted to 31.1 per cent) variance. There is significant F change.
In model 2, the value of R2 is 0.34 which indicates that all the 22 variables jointly explain
34 per cent variance in the dependent variable, i.e. usage of e-banking services. The rest
66 per cent of the variance is unexplained that might be attributable to some other factors
not considered in the analysis. The model is a good fit as the difference between R2 and
adjusted R2 is fairly small (0.03). This indicates that the model would give 3 per cent

Usage Usage score No. of respondents % of respondents

Table VI. Low 0-22 288 55

Respondents’ usage Moderate 23-44 164 31.3
score for e-banking High 45-66 58 11
services Very high 67-88 14 2.7

Change Statistics
Model R R2 Adjusted R2 SE of the estimate R2 change F change Sig. F change
Table VII.
Regression model 1 0.375 0.140 0.122 15.17012 0.140 7.600 0.000
summary 2 0.583 0.340 0.311 13.44254 0.199 13.732 0.000
 Collinearity
Electronic
Unstandardised Coefficients statistics banking
B SE t Sig. Tolerance VIF services in
Model 1 India
(Constant) 19.554 3.212 6.088 0.000
X1 Gender_dummy −3.959 1.866 −2.121* 0.034 0.850 1.177
X2 Age_dummy1 1.884 1.927 0.978 0.329 0.474 2.111 691
X3 Age_dummy2 −2.689 2.367 −1.136 0.256 0.542 1.847
X4 Age_dummy3 −6.508 2.514 −2.589* 0.010 0.579 1.726
X5 Edu_dummy1 6.737 2.300 2.929* 0.004 0.333 3.004
X6 Edu_dummy2 10.839 2.434 4.454* 0.000 0.304 3.293
X7 Occu_dummy1 −1.013 1.874 −0.540 0.589 0.879 1.138
X8 Occu_dummy2 −5.051 2.721 −1.856 0.064 0.861 1.161
X9 Occu_dummy3 −2.269 1.772 −1.281 0.201 0.770 1.298
X10 Inc_dummy1 5.802 1.562 3.714* 0.000 0.829 1.207
X11 Inc_dummy2 6.071 2.142 2.835* 0.005 0.764 1.309
Model 2
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(Constant) −41.16 9.23 −4.46* 0.00

X1 Gender_dummy −4.22 1.94 −2.17* 0.03 0.843 1.186
X2 Age_dummy1 0.84 1.73 0.48 0.63 0.446 2.242
X3 Age_dummy2 −3.89 2.11 −1.84 0.07 0.526 1.901
X4 Age_dummy3 −6.00 2.32 −2.59* 0.01 0.556 1.797
X5 Edu_dummy1 2.40 1.56 1.53 0.13 0.308 3.247
X6 Edu_dummy2 3.69 1.87 1.97* 0.05 0.271 3.683
X7 Occu_dummy1 −0.91 1.77 −0.51 0.61 0.859 1.164
X8 Occu_dummy2 −4.05 2.37 −1.71 0.09 0.829 1.207
X9 Occu_dummy3 −0.43 1.52 −0.28 0.78 0.740 1.352
X10 Inc_dummy1 3.89 1.47 2.65* 0.01 0.766 1.306
X11 Inc_dummy2 3.70 2.13 1.73 0.08 0.687 1.456
X12 Satisfaction level 3.36 1.47 2.28* 0.02 0.760 1.244
X13 Overall Service 3.03 1.43 2.12* 0.03 0.720 1.317
Quality
X14 Experience 0.59 0.21 2.79* 0.01 0.804 1.389
X15 Functional −0.20 1.67 −0.12 0.90 0.688 1.453
X16 Information 3.01 0.92 3.27* 0.00 0.708 1.412
X17 Effort expectancy 0.90 1.76 0.51 0.61 0.532 1.879
X18 Credibility 0.24 1.18 0.20 0.84 0.727 1.376
X19 Performance 5.81 1.16 4.99* 0.00 0.528 1.893
X20 Self-interest 1.78 0.70 2.54* 0.01 0.654 1.529
X21 Social influence −0.36 0.92 −0.39 0.70 0.672 1.489
X22 Service content −1.52 1.42 −1.07 0.29 0.704 1.420
R2 0.340 Mean dependent var 25.33969
2
Adjusted R 0.311 SD dependent var 16.18887
F-statistic 11.706* Durbin-Watson stat 1.975
Prob (F-statistic) 0.000000 SE of regression 13.44 Table VIII.
Sum squared residual 90,531.62 Regression model for
Notes: Sample: 600. Dependent variable: USAGE. Method: least squares (hierarchical regression procedure). predicting customers’
Included observations: 524 (respondents who prefer e-banking). *Significant difference at the 0.05 level e-banking adoption

variation in the outcome (prediction of customers’ e-banking adoption) if it were to be

derived from the population rather than the sample.
Table VII also shows the ANOVA results and indicates that F-statistic is highly
significant. Significant F ratio indicates that at least one or more partial regression
coefficients have a value other than zero. Overall, it indicates that the model is significantly
good at predicting the outcomes.
 IJBM The partial regression coefficients for the variables are also shown in Table VIII. The β
36,4 values tell us about the relationship between the dependent and independent variables.
The regression coefficient (B) reflects the change in dependent variable for per unit change
in the independent variable showing the relative importance of each variable in the
regression model. For dummy variables, β values reflect the relative difference between each
group (dummy variable) and group chosen as a baseline category (reference category) in
692 explaining variance in the dependent variable.
As indicated in Table VIII, out of all the 22 factors (independent variables) studied, only
ten variables (out of which four are demographic dummies) are significantly associated with
customers’ e-banking adoption.
The most important factor in predicting customers’ e-banking adoption positively is
variable X19, performance (with coefficient ¼ 5.81). The associated regression coefficient
indicates that an increase of 1 point in the customer’s need for performance or service
performance level will result in an average increase of 5.8 points on the usage scale.
Demographic variable positively influencing e-banking adoption is income group of
3-6 lac (coeff: 3.88) which is significantly different (higher) from reference income group of
“less than 3 lacs”. Education category of “Masters” is also significantly and positively
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different (coeff: 3.69) from baseline category of Education “up to High School”. Among
variables which are negatively associated with usage of e-banking services, the absolute
highest coefficient is of age group “more than 45” years. This shows the usage of customers
who are 45 or more than 45 years old is significantly lower by 6 points from the customers
who are less than 25 years old (baseline category). Same way male respondents’ usage
is significantly lower by 4.22 points from that of their female counterparts.
“Service Quality expectations” are found to be positively and significantly ( β 3.03,
p o0.05) associated with the customers’ usage of e-banking services. Another important
variable is “satisfaction” of customers from the prior services availed, X12 whose regression
coefficient is 3.357. Variable X16 having partial regression coefficient (B) of 3 indicates that
the factor “Information” positively explains the variation in the usage of e-banking services.
This concurs with the findings of Pikkarainen et al. (2004) who reported that as consumers
get more information about technology enabled banking services the more informative they
become about the benefits it offers. Factor X20 (self-interest) having coefficient as 1.78, and
past electronic experience (X14, β ¼ 0.59) of the customers are also found to have positive
significant contribution in explaining variations in customers’ e-banking adoption.
Each β value has corresponding standard error which indicates the extent to which
β values will vary across the samples. The significant t-values corresponding to each
variable confirm the significant contribution of each independent variable to the model.
Larger the value of t-statistic greater will be the contribution of the respective variable.

5. Discussion and managerial implications

This study clarifies the influence of various factors on the usage of e-banking services.
These factors are not service attribute but customers’ perceptions about the service
attributes based on their needs. For example, a service may be highly informative but
customers might not prefer it on informative grounds. Study reveals that “performance” is a
factor that explains usage variability to the maximum among the studied variables. This
gives an indication that usage or adoption levels of e-banking services are highly sensitive
to performance of e-system. This factor is analogous to “perceived usefulness” that is found
to be significant and most apparent factor in the literature influencing adoption (Davis,
1989; Teo et al., 1999; Dabholkar and Bagozzi, 2002). The second factor is “information” that
signifies information content, its newness and consistency. Importance of information for
e-adoption is well documented in literature (Zeithaml et al., 2002; Pikkarainen et al., 2004;
Gupta, 2008). There are many customers who visit bank’s website, ATM, avail net banking
 or SMS/mobile banking just to get latest banking information or get access to their Electronic
transactions records. Through improvements in information domain of e-banking services banking
the banks can get advantage of increased customers’ usage of such services. services in
“Self-interest” is another significant factor that implies entertainment and enjoyment. Its
significant positive relationship with usage revealed in the study is in line with studies of India
Dabholkar (1996), Pikkarainen et al. (2004), and Widjana and Rachmat (2011). Some studies
also highlight the indirect influence of enjoyment on acceptance. Teo et al. (1999) for instance 693
argue that enjoyment is related to the use of the internet whereas Lin and Hsieh (2011) assert
that enjoyment has an impact on perceived service quality. By making their e-channels more
interactive and more entertaining employing advanced technologies of interactive media,
data mining and multimedia, the banks can increase the usage levels of their customers.
These factors are vital for the banks to be considered for new product development as well
as for formulating marketing strategies for existing services in the ever changing and
competitive business environment. Modern customer is more aware and has more choices.
Other significant factors influencing customers’ usage are service quality, satisfaction, and
experience. Their positive associations are in line with the earlier studies of adoption that
considered behavioural intentions as dependent variable. If customers are having some
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internet/mobile or related technological experience, they tend to use e-banking services more as
there would be less technological barriers and more confidence with technologies. Some other
studies reported positive moderating effect of experience on user behaviour (Venkatesh et al.,
2003, Prompattanapakdee, 2009; Riffai et al., 2012). Same is the case with satisfaction.
If customers are satisfied with the services, their level of dependence increases. Earlier studies
have found positive significant relationship between satisfaction and behavioural intentions to
use e-services (Cronin and Taylor, 1992; De Ruyter et al., 2001; Wang and Shieh, 2006).
If customers perceive the service to be of high quality as initial evaluations, their attitude
will be positive towards its usage. Among the significant variables, “service quality” is the
only factor that reflects long run overall evaluation of the service offered by a firm.
“Satisfaction” and “experience” are transaction-specific variables. And other remaining
factors studied are customer specific (mostly need based or demographic). Contribution of
service quality expectations towards customers’ adoption level has strategically important
implications for bank marketers who are continuously working towards improving upon it.
Earlier studies have found positive significant relationship between perceived service
quality and behavioural intentions to use e-services (Cronin and Taylor, 1992; Zeithaml et al.,
1996; Olorunniwo and Hsu, 2006).
The demographic variables – gender, age, education, and income are found to have
significant influence on customer usage of e-banking services. It is obvious as with change in
demographics, customers’ needs and risk tolerances vary. E-banking adoption is found to be
high for female, more educated, younger, and middle income customers. Earlier studies
reported controversial findings regarding the influence of gender. Mattila et al. (2003) and Mirza
et al. (2009) reported that males are more inclined towards internet banking adoption. However,
Mansor and Mat (2009) and Izogo et al. (2012) found that there are no statistical differences
between males and females in the use of e-banking services. The difference in the findings is
justified on the grounds of the dependent variable. Almost all studies considered bank
customers as their sample and took adoption as the dependent variable. In the present study,
e-banking services users constitute the sample and usage extent is taken as the dependent
variable. Female e-banking early adoption may be lesser but who have adopted their usage
extent is higher compared to their male counterparts owing to their different shopping
behaviour comprising of online shopping, ATM or debit cards usage at POS terminals, etc.
With respect to “age”, result shows that usage of customers of 45 and above age is
significantly lower than younger customers (25 and less age) as their banking needs
(transactions) decline with age. With increase in age, customers risk tolerance also
 IJBM decreases. This shows a gradual but steady decline in the usage of e-banking as the age
36,4 group increases. This finding is akin to the findings of Poon (2008), Izogo et al. (2012), and
Takele and Sira (2013). Regarding “Income”, it is evident that middle income group
customers are more inclined towards e-banking services adoption. Similar findings are
reported by Mirza et al. (2009) for internet banking adoption. Banking needs vary with the
level of income. Low income group customers have relatively lesser banking needs.
694 High income customers banking transactions are usually of high value and low volume, as
they are more concerned about the security of their transactions.
“Education” is also found to have a significant positive effect on the e-banking adoption
comparable to the findings of Mattila et al. (2003), Mirza et al. (2009), Nasri (2011) who
observed positive effect of education on internet adoption for banking services. Although
less educated people are using electronic services as these are also available in their regional
languages and assisted by the service providers but as the services become more complex
and risky with the use of advanced technologies the understand ability decreases for them.
Banks should formulate their marketing strategies in the way to reap the benefits of
current usage (providing customer service to delight customers with high usage) and to lure
other classes of customers towards e-banking by developing new services fitting into their
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requirements.
Functionality, credibility, effort expectancy, social influence, and service content are not
found to be significant influencers of e-banking usage. Regarding functionality variable
which was found to be most important factor for preferring e-banking services, its
insignificance in explaining usage is due to low variability in customers’ responses towards
it (lowest standard deviation ¼ 0.406). Other factors are also considered by customers for
preferring but they are not significant enough to determine or explain the extent of usage of
e-banking services.

6. Concluding remarks
Customers’ acceptance and continual usage is vital for technology proliferation in providing
e-services by banks. This is assumed to be an important prerequisite for a cashless
economy. No doubt bank customers have accepted technology enabled banking services for
the benefits they offer, but also for propagation of technology in the banking system. The
customer usage must justify the bank expenditure on infusing technological innovations in
the system. The majority of respondents prefer an e-banking medium over a traditional
medium. This paper is an attempt to explore various demographic and perceptual factors
that have some bearing on customer usage of e-banking services. E-banking adoption is
found to be high for female, the more educated, younger, and middle income customers.
Customers develop perceptions and expectations regarding new product
offerings – especially where technologies are involved – that act as a guide for their
purchase decision making. Among 11 perceptual variables studied, only 6 variables,
namely: information, performance, self-interest, service quality, satisfaction, and experience
are found to be significantly and positively associated with e-banking usage. By focussing
on these factors in their operations and marketing strategies development, the banks can
augment their profitability through the strategic use of technologies.

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Appendix
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Summated score

e-Services availed at high level

Cash withdrawals 1,852
e-Services availed at moderate level
Checking account balance 1,792
Getting account statement 1,284
e-Services availed at low level
Purchases/making payments 1,196
Transaction alerts 1,193
Fund transfer 862
Credit card payment 611
e-Services availed at very low level
E-mail/feedback/complaint 568
View credit card statement 550
General information 548
Cheque status/cancellation 495
Products and services information 490
Request for loan, DD, cheque book, TDS inquiry 377
Investment information and statistics 375
Checking demat status 364
Corporate information 352
Mutual fund transactions 321
Recurring deposits summary 286
FD transactions 261
Table AI. Download financial tools, forms 252
E-services availed by Electronic commerce capability 216
respondents Donation 161
 Weighted average
Electronic
banking
V5 Convenient time 4.67 services in
V12 Easy to access 4.61
V13 Easy to do banking activities 4.58 India
V14 No queue 4.58
V3 Quick transactions 4.54
V24 Trust on bank 4.26 699
V26 Trust on bank security system 4.26
V4 Greater control 4.21
V25 Confidentiality is preserved 4.21
V18 Self-charge 4.07
V10 Satisfying all banking and financial needs 4.07
V17 Learning to use is easy 4.06
V16 Understandable 4.05
V27 Fits into my lifestyle 4.04
V11 Variety of services 4.03
V9 Reduced cost of transactions 3.94
V21 User-friendly interface 3.93
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V15 Knowledge about related technologies 3.90

V6 Information regarding existing services 3.89
V7 Prompt information about new services 3.86
V8 Prompt information about new or revised rules/charges 3.83
V20 Flexible to interact with 3.74
V19 Quick resolution of complaints 3.68
V1 Status symbol 3.39
V22 Enjoyment 3.03
V23 Entertainment 3.01
V28 Extensive advertisement 2.91
V2 Others are using 2.81
Average score Significance level
4.00-5.00 Important Table AII.
3.00-3.99 Moderately important Descriptive statistics:
2.00-2.99 Least important reasons for preferring
1.00-1.99 Not important e-banking services
 IJBM Factor
36,4 1 2 3 4 5 6 7 8

V1 Status symbol −0.03 0.08 0.08 0.13 0.01 0.16 0.73 −0.10
V2 Others are using −0.05 0.06 0.05 0.04 0.09 0.22 0.80 0.06
V3 Quick transactions 0.61 0.01 0.08 0.20 0.14 −0.11 0.32 −0.11
V4 Greater control 0.45 0.24 0.20 0.15 0.30 0.28 −0.11 −0.16
700 V5 Convenient time 0.73 0.12 0.06 0.10 0.09 −0.03 −0.17 −0.10
V6 Information regarding existing services 0.04 0.81 0.17 0.08 0.22 −0.01 0.14 0.06
V7 Prompt information about new services 0.03 0.88 0.11 0.06 0.15 0.02 0.08 0.16
V8 Prompt information about new or revised
rules/charges 0.04 0.87 0.13 0.05 0.16 0.09 0.02 0.13
V9 Reduced cost of transactions 0.03 0.18 0.09 0.03 0.66 0.03 0.04 0.06
V10 Satisfying all banking and financial needs 0.19 0.12 0.03 0.19 0.20 0.02 −0.04 0.65
V11 Variety of services 0.11 0.25 0.21 0.03 0.12 0.12 0.03 0.70
V12 Easy to access 0.67 −0.02 0.09 0.18 −0.10 −0.03 −0.05 0.39
V13 Easy to do banking activities 0.74 0.09 0.07 0.12 −0.13 0.09 −0.01 0.35
V14 No queue 0.66 −0.11 0.08 −0.21 0.14 −0.11 −0.07 0.20
V15 Knowledge about related technologies 0.21 0.28 0.48 0.01 0.21 0.19 0.07 0.05
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V16 Understandable −0.07 0.03 0.79 0.12 0.20 −0.06 0.20 0.17
V17 Learning to use is easy 0.07 0.09 0.79 0.14 0.16 0.05 0.10 0.14
V18 Self-charge 0.16 0.29 0.49 0.18 −0.09 0.24 −0.20 −0.06
V19 Quick resolution of complaints −0.01 0.12 0.10 0.15 0.69 0.13 0.10 0.08
V20 Flexible to interact with 0.10 0.20 0.26 0.16 0.65 0.19 0.06 0.11
V21 User-friendly interface 0.18 0.06 0.27 0.16 0.49 0.32 0.06 0.14
V22 Enjoyment −0.04 0.02 0.16 0.10 0.17 0.85 0.25 0.07
V23 Entertainment −0.10 0.03 0.11 0.10 0.18 0.84 0.26 0.05
Table AIII. V24 Trust on bank 0.21 0.03 0.13 0.76 0.08 0.15 0.10 0.07
Factor structure for V25 Confidentiality is preserved 0.01 0.09 0.22 0.76 0.22 0.06 0.04 0.08
variables as reasons V26 Trust on bank security system 0.07 0.07 0.07 0.85 0.11 0.03 0.09 0.10
for preferring V27 Fits into my lifestyle 0.20 0.12 0.51 0.12 0.16 0.23 −0.01 −0.04
e-banking services V28 Extensive advertisement −0.08 0.13 0.11 0.05 0.22 0.46 0.49 0.08

Corresponding author
Supreet Sandhu can be contacted at: [email protected]

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