Imperial Journal of Interdisciplinary Research (IJIR)

Vol-2, Issue-5, 2016

ISSN: 2454-1362, http://www.onlinejournal.in

Customer Resistance towards Internet Banking

Among the Literates: An Empirical Study With
Reference To Rayalaseema Region
M. Umrez1 & N. Ramanjaneyulu2
1
Assistant Professor, SREC, Nandyal.
2
Research Schoolar, SKU, Anantapur
Abstract: Internet banking is emerged as a part of Dube et. al., 2009). Pikkarainen et al., (2004)
technological development in the financial sector, defines Internet Banking as an ―Internet portal,
which is introduced in almost all the banks in all through which customers can use different kinds of
the countries. Much more literature is available, banking services ranging from bill payment to
which explain the influence and adoption of IB making investments‖. Thus Internet Banking is the
among the customers. But still some of the use of internet by bank customers for transacting
customers prefer traditional banking than internet their banking transactions. It provides additional
banking. The present study is undertaken to features including traditional banking services. The
determine the reasons or views of customers who services of internet banking includes the account
resist innovation (internet banking) and their information, online fund transfer, bill payments,
intention to resist. The respondents are taken from online shopping, request and intimation (fixed
the Rayalaseema region, who are the customers of deposits, issue of cheque book, issue of ATM pin
various banks and educated. Principal component etc.) Demat account share trading, etc.
method of Factor analysis is applied for data
analysis and it is found that many of the customers 1.1 FACTORS AFFECTING THE INTERNET
does not have complete knowledge about the usage BANKING ADOPTION:
and various services offered by the internet
banking, risk and security concerns are resisting Adoption can be defined as “the
them to adopt internet banking but they are acceptance and continued use of a product, service
preferring to adopt in future. Thus, the bankers or idea.” The critical question is whether customers
have to improve the awareness on internet banking will accept the electronic form of receiving
to encourage the customers. information and performing transactions. Many
people has conducted research to determine the
Index Terms: Internet banking, consumer various factors that are influencing the customers to
resistance, adoption, innovation. adopt new technology/ internet banking. These
factors include awareness, knowledge of new
1. INTRODUCTION: development i.e., computer/internet knowledge,
accessibility, security concerns, risk, ease of use,
Technological changes in the world have cost concern, traditional prospective, psychological
influenced every part of the business. E-banking factors etc., Because of these factors many of the
has been emerged as a development of technology development of internet banking is very slow in
in the financial/ banking sector, which has opened many of the semi-urban and urban areas. Online
wide range of opportunities to the banking industry. with Wallis (1997) whose report states that new
E-banking is one where the banking transactions technology adoption by the majority of the
can be done through the electronic devices. It customers depends mainly on following factors.
includes ATM, Smart card, Tele-banking, EFT, 1.1.1 Awareness
EBT, internet banking, mobile banking etc. Internet According to Rogers and Shoemaker (1971),
banking is introduced in the early 1980’s with slow consumers go through “a series of process in
acceptance by the customers. knowledge, conviction, decision and confirmation”
before they are ready to adopt a new product or
Internet Banking refers to systems that service. The adoption or rejection of an innovation
enable bank customers to get access to their begins when “the consumer becomes aware of the
accounts and general information on bank products innovation” (Rogers and Shoemaker, 1971).
and services through the use of bank‘s website, Howard and Moore (1982) emphasized that
without the intervention or inconvenience of adoption “consumers must become aware of new
sending letters, faxes, original signatures and brand.” Lack of awareness is the most important
telephone confirmations (Henry, 2000 cited in

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-5, 2016
ISSN: 2454-1362, http://www.onlinejournal.in

factor that negatively affects Internet banking second is the bank charge and cost (Sathye, 1999).
adoption ( Sathye, 1999). In this same context that If consumers are to use new technologies, the
if the average consumers not adopting Internet technologies must be reasonably priced relative to
banking services due to they unawareness of the alternatives (Willis Report, 1997). Otherwise, the
availability of such a service and /or benefits it acceptance of the new technology may not be
offers. viable from the standpoint of the consumer. Virtual
1.1.2 Ease of Use Society Project researcher (Buzz, 2000), point out
Cooper (1997) identifies “ease of use” as one of the that millions of users are now turning their backs
three important characteristics from customer’s on the Internet due to its limitations and high
perspective for adoption of innovative service. access charges.
Dover (1998) and Daniel (1999) studies in USA 1.1. 5 Reluctance to change
and UK respectively found that ease of use as one Quinn and Mueller (1982) found that human beings
of the factors for customer acceptance internet try to resist change, especially towards
banking. A study conducted by a company called technological innovations. According to Daniel
Cyber Dialogue has revealed that as many as 3.1 (1999) also stated that there is a high level of
million USA adults have discontinued their use of customer inertia in changing their established
online banking because they found the service too banking arrangements. Sathye (1999) emphasized
complicated or were dissatisfied with the level of that customers, particularly the senior citizens,
customer service. Katz and Aspden (1997), Walis prefer personal interaction and that they have
(1997) and Mols (2000) suggested that it is crucial technology phobia. Bank customers till patronize
for the Internet to be easy to use to increase the bank branches and they remain to value personal
adoption rate Internet banking. Scarbrough and interactions (Guru et al., 2000).
Corbett (1992) identified the understanding of 1.1.6 Accessibility
consumers as an important element for the Finally, availability of access to computers/Internet
diffusion of innovation technology. For successful is a prerequisite for adoption of Internet banking
implementation of Internet banking, banks must (Sathye, 1999). The more widespread the access to
ensure that the services are simple, easy and of computer/Internet the greater the possibility of use
sufficiently high quality to ensure customer of Internet banking adoption. O, Connell (1996)
satisfaction in order to maintain online customers. study found that lack of access to computers as one
1.1.3 Security of the reason for slow adoption of Internet banking.
Security is one of the very important factors in Daniel (1999) study in UK reveals that lack of
determining the decision of consumers to use customer access to suitable PCs as the main reason
Internet banking. In a study ABF (1997) found that for low usage of electronic banking. In the same
security concerns are keeping both consumers and view Ramsay and Smith (1999) found that
bankers away from Internet banking. The Walls accessibility as one of the main reasons for non-
report (1997) also reported that unless security is adoption of Internet banking.
improved, more households would be willing to
conduct their transactions over the Internet. 1.2 ADOPTION OF INNOVATION:
O’Connel (1997) conducted study in Australia
found that security concerns were discovered as the Philips Kotler, Keller and Kevin Lane (2009) in
main cause for the slow growth of Internet banking their book Marketing Management have explained
in the country. Polatoglu and Ekin (2001) the tendency of customers towards innovation.
established risk in terms of financial, physical and Based on the adoptability customers are of five
social characteristics. In USA, Thorton Consulting types: innovators, early adopters, early majority,
(1996) which conducted a survey focusing on late majority and laggards. Among them the
banks concluded that 67 percent of US banks feel innovators are waiting for the innovation to test and
that “security concerns” is the major barriers for adopt whereas the laggards are traditional bounded
Internet banking. The same results obtained from and more conscious.
the study of Booz et al. (1997), reveals that security
concern among customers was the top-ranking
obstacle for non-adoption of Internet banking in
Latin America.
1.1.4 Cost
Price/costs is one of the single most important
factor that influences the consumer adoption of
innovation. Suganthy et al (2001) found that cost as
a characteristics of Internet banking. Two types of
costs are involved in the Internet banking, i.e.
normal costs associated with Internet activities and

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-5, 2016
ISSN: 2454-1362, http://www.onlinejournal.in

Laukkanen, P., Sinkkonen, S. & Laukkanen,

T.(2008) the purpose of this paper is to further the
understanding of innovation resistance by dividing
internet banking non-adopters into three groups
based on their intentions to use the innovation.
Thereafter, the aim is to identify how the resistance
differs in these customer groups. This study
identifies three groups of internet banking non-
adopters, namely postpones, opponents and
rejecters. The data were collected by conducting an
extensive postal survey among the retail banking
customers in Finland who had not adopted internet
banking. The measurement development was based
2. LITERATURE REVIEW: on consumer resistance theory and the earlier
literature on internet banking. Principal component
Literature review explains about the previous
analysis was used to analyze the statistical
studies done by the various researchers on internet
differences in resistance to internet banking
banking. Some of the available literature on
between the three groups. Significant differences
internet banking is:
were identified between the groups explored. The
According to Roger’s (1983) Innovation Diffusion resistance of the rejecters is much more intense and
Theory (IDT), innovation adoption is a process of diverse than that of the opponents, while postpones
uncertainty reduction. Based on three decades of show only slight resistance. The results also
innovation study, five key attributes affecting the indicate that psychological barriers are even higher
adoption of any innovation were suggested. They determinants of resistance than usage and value,
are relative advantage, compatibility, trialability, which are constructs related to ease-of-use and
observability and complexity. Among them the first usefulness determining acceptance in the traditional
four positively influencing whereas the last technology acceptance model. Moreover, the
attribute is negatively of influencing the adoption findings highlight the role of self-efficacy in the
of innovation. bank customers’ risk perceptions to internet
banking. This study provides further understanding
Taylor and Todd (1995) proposed the of what inhibits internet banking adoption by
Decomposed Theory of Planned Behaviour comparing three non-adopter groups with respect to
(DTPB), which combines aspects of the TPB with their resistance to internet banking. It also has
aspects of IDT. Taylor and Todd decomposed the implications for management in overcoming non-
attitude into perceived usefulness, ease of use and adopters’ resistance to the innovation postpones,
compatibility and Subjective norm is decomposed opponents and rejecters.
into peer influences and superior influences, and
perceived behavioural control is decomposed into Ajimon and Gireesh (2011b) Identified the factors
self-efficacy, technology and resources. contributing to customer resistance to the use of IB
through extensive literature review. The inhibiting
Suh and Han (2002) investigated the effect of trust factors for the adoption of IB are mainly classified
on customers’ acceptance of IB in Korea by into functional and psychological barriers. The
incorporating trust into the TAM model. The paper concluded the remark that the potential for IB
results of statistical analysis using structural in India is immense and therefore banks in India
Equation Modeling indicated that trust is an should concentrate on increasing the use of internet
important determinant of intention to use IB. Trust, for delivering banking services at low cost to
perceived usefulness and perceived ease of use customers.
were significant determinants of attitude. Attitude
and perceived usefulness had significant effect on 3. STATEMENT OF THE PROBLEM:
the intention. Finally, intention had significant
The diffusion of internet banking also
effect on the actual usage.
influenced by the demographical factors that
Milind (1999) quantified the factors affecting the include age, gender, occupation, income,
adoption of IB by Austrialian consumers. Security educational levels, usage of smart phones and
concerns and lack of awareness about IB and its accessing internet etc., But in an analysis
benefits stand out as the major obstacles to conducted at Rayalaseema Region it is found that
adoption of IB. The other reasons for non-adoption many of the bank customers who are well educated
are difficulty to use, unreasonable price, resistance are not preferring to use internet banking. Thus the
to change, lack of access to computers/ internet. present study is undertaken to determine the

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-5, 2016
ISSN: 2454-1362, http://www.onlinejournal.in

reasons that are resisting the customers to use CHARACTERISTICS OF THE SAMPLE:
internet banking in the Rayalaseema Region.
Responden Percenta
4. OBJECTIVES OF THE STUDY: ts ge
18-25
Internet banking offers its own benefits and 68 27
years
challenges to both the customers and organizations. 26-35
The study has been undertaken to determine: 111 37
Age years
36-45
• The adoptability of customers towards Years
79 26
innovation >45 Years 42 14
• The factors that are resisting the customers Male 192 64
to adopt internet banking Gender
Female 108 46
• The intention/ behaviour of customers Anantapur 123 41
towards the use of internet banking
Area Chittor 64 22
5. LIMITATIONS OF THE STUDY: Kurnool 113 37
SBI 55 18
The study is also conducted under certain ICICI 44 15
limitations such as, the sample has been taken only AXIS 65 22
Bank
from three districts of Rayalaseema Region and the Andhra
Users 83 28
respondents are drawn by using random sampling. Bank
Thus, the data collected may not perfectly represent Syndicate
52 17
the entire population. The data is collected through Bank
structured questionnaire; it may restrict the opinion SSC 42 14
of the customers. Intermedia
65 22
Educatio te
6. DATA ANALYSIS AND n UG 99 33
INTERPRETATION: PG 74 25
PhD 20 6
The survey is conducted on the individuals;
<15,000 143 48
educated having various beliefs belongs to the three
15,000-
districts of Rayalaseema Region i.e., Anantapur, 95 32
Income 25,000
Kurnool and Chittor. Questionnaire is used as the
research instrument, which contains 3 sections: levels 25,001-
37 12
demographical profile of customers, the usage and 35,000
frequency of using internet and major aspects of >35,000 25 8
internet banking. Five points Liker scale is used One in a
49 16
ranging from 1- strongly agree to 5- strongly frequenc month
disagree. A sample of 300 customers is drawn by y of Twice in a
85 29
using convenience sampling technique. The internet month
questionnaire is distributed through e-mail to all the Frequently 166 55
respondents and 246 filled questionnaires are Official
Purpose 187 62
received. Thus the response rate is 82 percent. purpose
of using
Principal Component Method of Factor Analysis Browsing 86 29
internet
with Varimax rotation is employed to analyse the Shopping 27 9
collected data. For the present data the Kaiser- Well
38 13
Mayer-Olkin measure of sampling adequacy is known
Knowled
.821, which is recommended as good by Kaiser Partial
ge about
(1974). And the Bartlett’s test is highly significant informatio 144 48
internet
(p<0.001) and therefore factor analysis is n
banking
appropriate. The average communality after Just
services 63 21
extraction is 0.796, which is greater than 0.7 and known
the number of variables considered are 22, Unknown 55 18
recommended by Kaiser’s criterion. In a year 98 33
Prefer to May be in
172 57
adopt IB future
Never 30 10

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-5, 2016
ISSN: 2454-1362, http://www.onlinejournal.in

Barriers to adopt IB identified as a result of transactions (0.861), easy activation (0.507),

factor analysis convenient to access from anywhere (0.907). This
factor indicates that the customers do not clear idea
about the various features of internet banking
Factor Elements of factor services.
& its load
Internet banking is easy to use Connectivity: This factor represents the barriers to
(0.890) connect and use IB services which is least loaded
Quick transactions can be done as 0.767. The elements of this factor are internet
using IB ( 0.856) availability (0.884), electricity shut down (0.741)
IB is progressing with time and easy to connect (0.624). It indicates that the
(0.888) customers are confident to connect with internet
Accessibility IB transactions can be trusted banking.
4.802 (0.861)
Bank account can be controlled Risk: Risk is the second resisting factor loaded as
easy by using IB (0.781) 3.945, compressed of physical evidence (0.801),
risk of illegal accessing (0.898), tapping (0.664),
Activation of IB can be easy
complications in new technology (0.815), problem
(0.507)
of website crashing (0.767). This factor shows the
It is convenient to use IB from
customers perception towards the risk involved
anywhere (0.907)
with the internet banking services because of which
Usage of internet banking
they are preferring traditional banking.
depends on internet availability
(0.884) Cost: It is identified as the fourth barrier with
Connectivity Electricity shut down does not factor load of 2.316 and it is composed of the
0.767 affect the usage of IB (-0.741) various types of cost such as cost of activation
It is easy to connect with IB (0.782), hidden cost (0.650), and cost of
(0.624) maintenance (0.884). This factor indicates that the
IB won’t provide any physical customers are feeling that the IB will increase the
evidence (0.801) unnecessary expenses.
IB can be accessed illegally
(0.898) Psychological barriers: This factor is loaded as
IB can be easily tapped by 3.211. The sub factors of this factor are interaction
Risk
others (0.664) with other employees (0.836), physical transactions
3.945
Adoption of new technology (0.812), positive image (0.895), and influence of
includes more complications others (0.665). It concludes that the psychological
(0.815) barriers are making the customers to prefer
Website crashing will creates a traditional banking than internet banking.
problem while using IB (0.767)
Activation of internet banking is 7. CONCLUSION:
more expensive (0.782)
Cost The results show that the customers are well
IB has more hidden cost (0.650)
2.316 educated, has some knowledge about the internet
Maintenance charges of IB are
usage and need of various banking services. But
very high (0.884)
still they are not ready to adopt internet banking
IB reduces the direct interaction
services because of the some of the reasons such
with employees (0.836)
as: lack of proper knowledge about the various
Physical transactions will be services, benefits and accessing of internet banking,
Psychological more secured than transactions and there negative perception towards internet
barriers through IB (0.812) banking regarding the security & risk during the
3.211 I have positive image towards process, cost of internet banking services, and some
internet banking (0.895) of their psychological factors like influence of
The adoption of IB is influenced others and preference to have face-to-face contact
by others (0.665) with employees.

Internet banking services are providing more

Accessibility: This factor is in the first place with benefits than the traditional banking. As the
the factor load of 4.802. It is compressed with customers have knowledge about the internet and
seven factors namely: easy to use (0.890), Quick they are willing to adopt the internet banking in
transactions (0.856), progress (0.888), trust on future, it is the responsibility of the bankers to

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Imperial Journal of Interdisciplinary Research (IJIR)
Vol-2, Issue-5, 2016
ISSN: 2454-1362, http://www.onlinejournal.in

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