Perceived Security Trust Indicator in Adoption of Internet Banking in Developing Country An Empirical Study

International Journal of Strategic Information Technology and Applications, 6(3), 35-49, July-September 2015 35
Perceived Security as
Trust Indicator in Adoption
of Internet Banking in a
Developing Country:
An Empirical Study
Mamta Sareen, University of Delhi, Delhi, India
ABSTRACT
Internet Banking is becoming an important channel for banks to deliver banking services to their custom-
ers. In view of the potential benefits of Internet banking, banks are making heavy investments in building
infrastructures, to offer to their customer’s facilities for transacting with the bank online. While the Internet
technology holds the potential to fundamentally change banks and the banking industry, it is still haunted by
low rate of adoption by bank customers due to perceived risks in transacting in the virtual environment of
Internet. This study makes a modest attempt to find the various factors/components of security that influences
the user’s security perception which in turn acts like a trust indicator towards adoption of Internet banking
and proposes a research model for the same. This paper presents the empirical validation of the research
model proposed through a survey of 107 internet banking users.
Keywords Adoption, Authentication, Authorization, Confidentiality, Customers, Integrity, Internet Banking,

Perceived Security, Privacy, Reliability, Structural Assurances, Trust
INTRODUCTION
Continued and advanced innovations in Internet technologies have made sophisticated applications
economically feasible. However, because of the low rate of adoption among the users, many of
such applications are unable to justify the investment made to build the required infrastructure
for such technological applications. Banking, being an information intensive activity, has been
quick in adopting Information Technology (IT) and especially Internet in almost all its opera-
tions. Banks use Internet as the delivery channel to conduct its various banking activities such
as transferring funds, paying bills, viewing current and savings account balances, etc. (Haque
et al, 2009) and this activity is termed as Internet banking or online banking. Internet Bank-
DOI: 10.4018/IJSITA.2015070103
Copyright © 2015, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
36 International Journal of Strategic Information Technology and Applications, 6(3), 35-49, July-September 2015
ing is becoming an important channel for banks to deliver banking services to their customers
(Christopher et al, 2006). The proponents of Internet banking believe that it offers convenience
to customers and enhanced efficiency to bankers. From the perspective of the customer, the
customer is not bound by operational timings, there are reduced geographical barriers, the
speed of execution of transaction is high and the payment and other services can be obtained at
a minuscule cost (IAMAI’s, 2006). From the perspective of a bank, Internet banking helps in
reducing not only the cost of servicing the customers (Mittal et al., 2004; Berger, 2003) but also
has greatly contributed in reducing the cost per transaction (Orr, 1999). In view of the potential
benefits of Internet banking, banks are making heavy investments in building infrastructures,
to offer to their customer’s facilities for transacting with the bank online. While the Internet
technology holds the potential to fundamentally change banks and the banking industry, it is
still haunted by low rate of adoption by bank customers due to perceived risks in transacting in
the virtual environment of Internet.
Despite the benefits of internet banking, the use of an electronic medium makes it difficult
for banks to acquire consumer trust (Meuter, Ostrom, Roundtree & Bitner, 2000). Lack of trust
in the faceless, virtual environment of Internet banking, (Floh & Triebllmaier, 2006), makes it all
the more important to understand the determinants of trust affecting its adoption. Another factor
commonly cited as an impediment in the adoption of Internet banking is the user’s perception
of security. Analyzing the various factors that help in developing a user’s perception regarding
security its subsequent impact on trust provides a pathway to study the role of security in trust
development. Although there is a plethora of research on both these factors, there is little mate-
rial that focuses them together in a comprehensive manner, and particularly, in online banking
(McCole, 2002). This study makes a modest attempt in this direction and tries to find the various
factors/components of security that influences the user’s security perception which in turn acts
like a trust indicator towards adoption of Internet banking.
OPERATIONALIZATION OF THE CONSTRUCTS

The primary objective of the study was to identify various security factors impacting the adoption
of Internet banking among Indian customers. More specifically, the study aimed at:
• Identifying the trust inducing security components that have the potential to impact the
perceptions regarding security and there by influencing the Internet banking adoption.
• Examining the applicability of Technology Acceptance Model (TAM) in Internet banking
adoption.
• Developing a model that explains the customers’ perceptions towards Internet banking.
Based on the existing literature, the author formulated various constructs for the proposed
model to be empirically validated. These constructs include adoption, trusting beliefs, disposition
to trust and bank’s perceived security and its associated components like integrity and reliability,
authentication and authorization, privacy and confidentiality, security practices, structural as-
surances, security related service quality and security related benevolent policies are described
in the following sections.
Perceived Security
Internet banking security is one of the important future challenges for banks to mitigate the fear
and risks perceived by customers who use the Web for financial transactions (Cunningham,
2003). Operationalization of perceived security is based on Ratnasingham’s (1998) definition of
e-commerce security, as protection from the threats and risks of transactional integrity, authenti-
cation, and authorization. Perception of security is described as a subjective belief of a user that
their communication with the systems is protected from all potential threats (Ally & Toleman,
2005). Operationalization of perceived privacy is based on the dimensions of awareness of
information collection, information usage, access, and enforcement (Chellappa, 2003). A major
concern about virtual security is one common reason why consumers are unwilling to use Internet
banking services (Madu, 2002). Most customers are not comfortable with the infrastructure of
Web security systems (Black, Lockett, Winkhofer, and Ennew, 2001). Liao and Wong (2007)
argue that perceived security has a positive effect on customers‟ relationships with e-banking.
Furthermore, Sathye (1999), Liao and Cheung (2002) show that the more secure that consum-
ers perceive Internet banking to be, the more likely the consumers are to use Internet banking.
Internet banking is often cited as risky decision because technology-enabled services exhibit
pervasive technological breakdown, unfamiliar and ambiguous stimuli. In addition, security
violation can lead to various problems such as destruction of operating systems, disruption of
information access, or intrusion of the customer’s accounts (Min and Galle, 1999). In Liao &
Cheung (2002)’s study, perceived security was rated to be of high importance by users of online
banking systems. Based on the literature review, this study has indentified certain security related
components that have the potential to influence the user’s perception regarding security of the
Internet banking site. These include integrity and reliability, authentication and authorization,
privacy and confidentiality, security practices, and structural assurances.
Integrity and Reliability
During and after exchange of information, the content should remain unchanged and should be
tamper free. This covers both accidental and intentional damage to information data (Grandison
& Sloman, 2000). Ally & Toleman (2005), state integrity ensures that messages that are not
created, modified, interception or deleted by unauthorized people. The information required by
users should be accessible when required by them. This ensures that the system is reliable (Mai-
jala, 2004) and authorized personnel can access the services of an application within a desired
time frame (Knorr & Röhrig, 2000). The author would primarily test the following hypotheses:
H1a: Integrity and reliability positively affects a user’s perception of security with respect to
adoption of Internet banking.
Authentication and Authorization
Traditionally authentication deals with verification of parties who are communicating to guar-
antee that they are who they claim to be (Maijala, 2004; Suh & Han, 2003). Claessens et al.
(2002), stated that authentication includes both authentication with respect to entity and data
authentication. Entity authentication includes the verification of the entities or people involved
in a transaction, whereas data authentication is ensuring the data is valid at a particular point in
time. Authorization mainly aims at ensuring that the user accessing information has the right to
view/manipulate this information (Maijala, 2004). This also includes ensuring that users of e-
commerce applications have the permission to send requests and communicate with the system.
The author would primarily test the following hypotheses:
H1b: Authentication and authorization positively affects a user’s perception of security with
respect to adoption of Internet banking.
Privacy and Confidentiality
Confidentiality is the assurance that the communication between the user/customer and the service
provider would not accessible to any other third party (Suh & Han, 2003). It also means to prevent
any unauthorized access of information (Knorr & Röhrig, 2000). Hence, confidentiality not only
includes confidentiality of information that is passed over the network during communication but
the confidentiality of information that is stored at different locations (Maijala, 2004). Privacy,
though considered by some researchers a separate issue from that of security (Mukherjee & Nath,
2003), has been included by many as part of the security objectives (Nilsson et al., 2005; Patton,
2004). From a customer’s perspective, security and privacy may not be discrete concepts, and
in most circumstances, security would imply privacy (Suh & Han, 2003). Privacy is defined as
the need to guarantee that the customer information is not accessible to unauthorized users and
is not misused. The author would primarily test the following hypotheses:
H1c: Privacy and confidentiality positively affects a user’s perception of security with respect
to adoption of Internet banking.
Security Practices
Kesh et al. (2002) explain security cannot be defined only as technological measures. There
are several mechanisms that are non-technical in nature such as policies, strategies, practices
followed and so on. All these measures are solutions to countering the threats to the security of
the applications and services. The security practices followed act as antecedents of a subjective
belief of a user that their communication with the systems is protected from all potential threats
(Ally & Toleman, 2005). This can either give the customers confidence to interact with their
bank accounts and transact online or can inhibit them from doing so (Ally & Toleman, 2005;
Suh & Han, 2003). The author would primarily test the following hypotheses:
H1d: Security practices followed by a bank positively affects a user’s perception of security
with respect to adoption of Internet banking.
Structural Assurances
Structural assurance implies that one believes that structures like guarantees, legal recourse,
promises, regulations, or other procedures are in their right place to promote success (Shapiro
1987, Zucker 1986). Say, one whose structural assurances regarding the Internet environment
are high with respect to legal and technological Internet protections like data encryptions then
the probability of safeguarding one from loss of privacy, identity, or money also increases.
McKnight and Chervany (2000) suggested that structural assurance is related to customers’
trusting beliefs, as they are more likely to develop trust if they believe that the environment is
safe and secure. Structural assurance leads the customer to believe that it is not in the best inter-
est of the businesses to defect (Doney & Cannon, 1997), based on the assumption that the trust
violations will damage reputations and reputation matters a lot to the businesses (Rousseau et
al., 1998). “Structural assurance is information that can be used to give a web services provider
or requestor the confidence that measures exist that can provide safeguards and reduce the risk
when something goes wrong” (Coetzee & Eloff, 2005 p.501). In their empirical study on Internet
banking Sareen M.(2013) highlighted the relevance of the structures created by the bank that aim
at increasing the trusting beliefs of the Internet banking customer. The author would primarily
test the following hypotheses:
H1e: Associated structural assurances positively affect a user’s perception of security with respect
Perceived Usefulness
Perceived usefulness (PU) is defined as the extent to which a person believes that using a par-
ticular system will enhance his or her performance (Davis, 1989). The rationale for using the PU
as an antecedent to adoption is based on Theory of Reasoned Action (TRA). Various research
scholars have cited PU as an important antecedent for adoption of electronic banking (Guriting
and Ndubisi, 2006; Eriksson et al., 2005; Laforet and Li, 2005). In the context of Internet bank-
ing, perceived usefulness often refers to saving of time, cost effectiveness, convenience, free
from errors, easily accessible, efficiency, effective management of finances, etc.
Perceived Ease of Use
Perceived ease of use (PEOU) refers to the extent to which a person believes that using a par-
ticular system is effortless or requires less effort (Davis et al., 1989; Gefen and Straub, 2000). In
the context of Internet banking, PEOU also would include error free interaction with the site and
execution of transaction (Lee, 2009; Chau et al., 2002; Hernandez and Mazzon, 2007; Guriting and
Ndubisi, 2006; Eriksson, 2005; Wang et al., 2003). Drawing inference from literature, the author
feels that in the context of internet banking, perceived ease of use might refer to appeal of the
site, easy navigation, simple to use, easily accessible, high functionality and easy to understand.
Disposition to Trust
Disposition to trust is the extent to which a person displays a tendency to be willing to depend on
others across a broad spectrum of situations (McKnight et al., 2002; Mayer et al., 1995). It also
signifies the inclination to trust other people (Ferres et al., 2004). It also defined as the personal-
ity traits that are formed through an individual’s experience (Tan & Sutherland, 2004). A person
who has high propensity to trust others trustworthy relationship trustor and trustee (McKnight
et al., 2002). Tan and Sutherland (2004) stated that online trust is likely to be influenced by the
user’s disposition to trust. In the online banking context, it works similarly. If a person feels that
others are generally reliable and can be easily trusted then such people will also believe that the
online bank can act in his/her best interest, keeps promise and honest and would adopt it easily.
Sareen, M (2013) indicated that the trusting beliefs have much greater role in level of adoption
of Internet banking than even the PU and PEOU. In the virtual environment, a person who has
the tendency to believe that others are generally reliable and easy to trust will also believe that
the Internet banking system will behave in his/her best interest, keeping promises and remaining
honest. The author would primarily test the following hypotheses:
H2a: Disposition to trust positively influences the user’s perception of security with respect to
adoption of Internet banking.
Internet Banking Service Quality
Internet banking quality can be specified as container of service quality and the benevolence
provided to its users. The service quality is the perceptions about the overall assessments of the
perceived performance of the service provider (Montoya-Weiss et al., 2003). It revolves around
customers comparing their expectations about the service with their perception of the way the
banks provide their e-service (Parasuraman et al., 1988). Hewer and Howcroft (1999) argued that
customers’ expectations and preferences are often enough to determine the transition from one type
of service delivery system to another. Also, strong attitude affects behavior when customers are
influenced by service quality (Baldinger and Rubinson, 1996). Yang et al. (2004) identified five
online service quality dimensions (responsiveness, reliability, access, competence, and security)
and their relationships with the customer satisfaction. Wolfinbarger and Gilly (2002) observed
that customer satisfaction often related to reliability and fulfillment. Liu and Arnett (2000) identi-
fied five critical dimensions of online service quality in relations to customer satisfaction in the
website. Among these, the quality of information that is relevant, accurate, timely, customised
and complete are given priority for the customer satisfaction in the online service. Antovski, Lj.
et al. (2001) related high availability as delivery of continuous E-banking services to customers
as one of the key drivers for adoption of internet banking by the customers. Yibin, MU (2003)
also stated that the improvement of the infrastructure related to electronic transactions, reporting
services, payment systems and telecommunications infrastructure help in developing trusting
intention towards internet banking. Internet banking quality also include perceived benevolence
which is based on items that refer to whether or not the bank demonstrates empathy and reception
towards customers’ concerns and its interest in the customers well-being (Gefen, 2002; McKnight
et al., 1998). The author would primarily test the following hypotheses:
H2b: Internet Banking Quality positively influences the user’s perception of security with respect
Trusting Beliefs
This refers to the truster’s belief that the trustee, in this context, the bank, has attributes that
benefits the truster. Though many types exist in the literature (e.g., Butler 1991), yet there are
three trusting beliefs that are most often utilized (Bhattacherjee 2002, Gefen 1997, Mayer et
al. 1995): competence (ability of the trustee to do what the truster wants), benevolence (trustee
caring and motivation to act in the truster’s interests), and integrity (trustee honesty and prom-
ise keeping). Accordingly, the respondents were asked to indicate their agreement score on the
statements regarding their perceptions/beliefs relating to the bank’s perceived security and its
associated components like integrity and reliability, authentication and authorization, privacy
and confidentiality, security practices, structural assurances, security related service quality and
security related benevolent policies adopted for the users. Later, an aggregate value indicating
general belief with regard to the bank was then arrived at. The author would primarily test the
following hypotheses:
H3a: Perceived Security positively influences the user’s trusting beliefs.

H3b: Disposition to trust positively influences the user’s trusting beliefs.
H3c: Internet Banking Quality positively influences the user’s trusting beliefs.
Adoption
Adoption is the acceptance and continued use of a product, service or idea (Rogers 1983). TAM
(Davis et al., 1989) model suggests that customer adoption behavior is determined by the in-
tention to use a particular system, which in turn is determined by the perceived usefulness and
perceived ease of use of the system. Adoption of internet banking not only helps in reducing
costs and improving competitiveness but also helps bank’s ability to retain the existing customer
base and to attract new customers (Sareen M. 2012; Guriting and Ndubisi, 2006; Gerrard and
Cunningham, 2003; Rotchanakitmnuai and Speece, 2003; Akinci et al., 2004). Since all of the
respondents in the survey were users of Internet banking, however, it was found that the level
of its adoption varied. The levels ranged from users adopting Internet banking for just balance
enquiry as low level to users using it for electronic fund transferring and/or trading as high level.
The author would primarily test the following hypotheses:
H4a: Users’ trusting belief positively influences the adoption of Internet banking.
H4b: Perceived Security positively influences the adoption of Internet banking.
H4c: Perceived ease of use positively influences the adoption of Internet banking.
H4d: Perceived usefulness has a positive influence on adoption of Internet banking.
H4e: Disposition to trust positively affect the level of adoption of Internet banking
SAMPLE SELECTION
For the purpose of study, a survey of Internet banking users of leading banks of India was conducted.
Convenient sampling was used to select the respondents belonging to different age groups and of
different educational background. A structured questionnaire was given to these respondents in
advance either personally or through e-mail so that they have understood the questions before they
were approached for responses. The questionnaire and items were modified based on the feedback
from a pilot study group. The questionnaire consisted of closed questions. The answers for the
question set were represented by the Likert scale, allowing the respondents to select the level of
impact the objectives referred to had on their adoption to internet banking. This enabled scoring
the replies and quantification of the research findings. The respondents belonging to different
cities like Delhi, Gurgaon, Noida, Mumbai, Pune, Chennai, Hyderabad, Bangalore, Chandigarh,
Dehra Dun, etc. constituted the sample. In total 107 completed responses were received. The
main aim behind the survey was to get the perceptions of the user regarding the service quality
offered by the bank and various components of security like integrity, confidentiality, privacy,
authorization and structural assurances. However, the scope of the present paper is limited to
only to two constructs namely integrity and reliability and privacy and confidentiality. The aim
of the paper is to explore their relationship with the demographic profile. This would give us a
glimpse on the general perception of the users of internet banking and their expectations from
the services provided by the banks.
The descriptive statistics of the respondents’ demographic characteristics were analyzed
and presented in Table 1. As can be observed, the sample was fairly diversified in respect of
the attributes identified. The number of the male respondents (56%) and female respondents
(44%) are comparable which can account to an impartial feedback from both perspectives. The
age group of the respondents ranged from 20 years to more than 40 years. As is clear from the
Table 1. Descriptive statistics
Demographic Profile Frequency Percent

Sex Female 46 44
Male 61 56
Age Less than 25 10 10
Between 25 and 30 25 24
More than 40 35 31
Occupation Pvt Sector Employee 37 34.6
Govt. Sector Employee 43 40.2
Bank Employee 6 5.6
Professional/Self Employed 18 16.8
Non-Earning Group 3 2.8
Educational Qualification Graduate or less 22 20.5
Post Graduate 38 35.5
Professional Degree 47 44
Monthly Income Less than Rs. 50,000 52 48.6
Between Rs.50,000 and Rs.1,00,000 44 41.1
More than Rs.1,00,000 11 10.3
table, there is comparable distribution of sample in all the age groups. People falling under the
age group of 25-35 years are most technology savvy and hence almost half of the respondents
fell in this category. About one third of the sample constituted of people between 35-40 years.
These constituted the working class and hence Internet banking users either by choice or by force.
In regard to the occupation, care was taken to involve respondents from all walks of pro-
fession like private sector employees, government sector employees, bank employees, business
professionals, etc. Another group as ‘non-earning group’ was also included that mainly comprised
of students and home makers who were Internet banking users. About 40% of the respondents
were government employees, 35% were private sector employees and 17% were self-employed
professionals. This amounted to an almost unbiased sampling.
RELIABILITY
In order to check the reliability of the scales, Cronbach’s Alpha test was carried out. Cronbach’s
alpha is dependent on the correlation between the items, and a higher degree of correlations is
represented by a higher value of alpha. Thus, this provides an indication of the internal reliability
of the measurement items under consideration.
As can be seen from the Table, the composite reliability score for each of the constructs was
found to be above .70 and hence all items were retained in the study.
Table 2. Reliability of measurement items
Construct Cronbach’s Alpha (>0.7)

Integrity and Reliability 0.7186
Confidentiality and Privacy 0.7188
Authentication and Authorization 0.7224
Security Practices 0.7605
Structural Assurance 0.7989
Internet banking Quality 0.7955
Disposition to trust 0.8295
Trusting beliefs 0.9388
RESULTS AND INTERPRETATIONS

Multiple linear regression (MLR) model is used to estimate response variables with independent
predictors which is defined as follows:
Yi = β 0 + β1 X i ,1 + β 2 X i ,2 + .................. + β j X i , j + ei (1)
where Yi , a response variable and X i ,1 , X i ,2 , X i ,3 , X i ,4 , X i ,5 , X i ,6 ,..... are independent predic-

tors for the i ( i = 1, 2......., n ) case .The parameter β 0 is the intercept and parameter β j ' s
th
( j = 1, 2...) are referred to as partial regression coefficients to be estimated by the method of

least square; and ei is a random error assumed to be normally distributed with expectation 0
and constant variance . MLR models are based on the assumptions: Linearity of relationship,
homoscedasticity, no autocorrelation and the independence of predictors (Draper and Smith,
1998). The overall goodness of fit of the regression model (i.e. whether the regression model is
at all helpful in predicting the values of Y ) can be evaluated using an F-test. To test the null
hypothesis: H 0 : β1 = β 2 = ....... = β j = 0 the statistic F is defined as follows:
(R2 / j)
F= (2)
(1 − R 2 ) / (n − j − 1)
2
where R is the coefficient of determination and is described as the proportion of variance
“accounted for”, “explained”, or “described” by regression. Further, whether a particular variable
contributes significantly to the regression equation can be tested through t − test as follows. For
any specific variable X i , j , we can test the null hypothesis Ho: β j = 0 by computing the
statistic as:
β j
t= (3)
Sβ j
and statistic follows t - distribution with (n − ( j + 1)) degrees of freedom.

The results of the data analysis primarily relate to a) Factors influencing Perceived Security, b)
Factors influencing Trusting Beliefs, and c) Factors influencing adoption of Internet banking. The
results in respect of each of these types of trust have been discussed in the following paragraphs.
FACTORS INFLUENCING PERCEIVED SECURITY

In order to identify the factors that have significant influence on the perceived security in Internet
banking, seven factors namely integrity and reliability, authentication and authorization, privacy
and confidentiality, security practices, structural assurances, security related service quality and
security related benevolent policies were regressed against the dependent variable Perceived
Security (PS) as perceived by the respondents. The MLR model used to estimate the perceived
security (PS) for all cases (i= 1,2,…107) with the predictors and is defined as follows:
( PS)i = β 0 + β1 ( I )i + β 2 ( C )i + β3 ( A )i + β 4 ( Sec )i + β5 (SA )i + € I (4)
2
The fitting of the model (4) is tested through R , which came out to be .689. Thus about
68.9% of the variance of PS can be explained by independent predictors. The fitted model is
found to be statistically significant, as p < .001 . The author also applied t - test to find the
independent contribution of each predictor in estimating the mean for each case to assess the
overall effect of perceived security. Further, F value is 41.085 (p<0.000) which is highly sig-
nificant (See Table 3). Thus, H1a, H1b, H1c, H1d, H1e, H1f, and H1g were supported by the
results.
All the five factors namely structural assurances, authentication and authorization, privacy
and confidentiality, integrity and reliability, and security practices in the order of importance,
were found to be significant contributors to perceived security. Thus, the hypothesis H1a, H1b,
H1c, H1d, and H1e are supported.
The results indicate that customers perceive security by the associated structural assur-
ances. Banks can build these structural assurances in the form of demonstrating the security
policy, privacy policy and online dispute resolution policies. Presence of seals from Trusted
third parties like Verisign also helps in building higher perceptions regarding security. This was
followed by the measures taken by the banking site to ensure authentication and authorization of
the bank accounts. Users are apprehensive that any unauthorized user might get access to their
information and may cause them harm either financially or through information leak. Since,
the Internet banking users are technology savvy and hence they are aware of various structural
assurances adopted by any Internet banking site to ensure security and reliability of transmis-
sion of information. Hence, this component was also indicated to be a good contributor in their
perception of security.
Table 3. Perceived Security: Coefficients of Regression Analysisa
Model Unstandardized Unstandardized

Coefficients Coefficients
B Std. Error Beta T Sig
Constant 3.888 0.60 6.464 0.000
Integrity (I) .207 .098 .132 .721 0.007
Confidentiality(C) .108 .076 .130 1.412 0.004
Authentication(A) .341 .085 .412 4.000 0.000
Sec-Practices(Sec) .080 .102 .098 .976 0.005
Structural Assurance .427 .111 .365 3.830 0.000
(SA)
a: Dependent Variable: PS
FACTORS INFLUENCING TRUSTING BELIEFS

Positing that disposition to trust, perceived security and Internet banking qualities will influ-
ence trusting beliefs, their inter-relationships were examined. First, disposition to trust, Internet
banking qualities and perceived security was regressed against trusting beliefs of the bank’s
attributes. All the three factors were found to have a significant impact on the trusting beliefs
and explained almost 70% of the variance (R2 = 0.753, p < 0.001, F value = 68.106). The service
qualities provided by the bank regarding their Internet transactions played an important role in
influencing the trusting beliefs of the customer/user regarding the adoption of Internet banking.
The user gets assured by the benevolent policies offered by the bank and its fair treatment of its
online customers and traditional customers. Further, a person’s disposition to trust also impacts
the trusting belief. His attitude towards trust and its disposition matters in the adoption of new
technology. Thus, H3a, H3b and H3c are supported.
An attempt was also made to examine the relationships between disposition to trust, inter-
net banking qualities and perceived security. For this purpose, disposition to trust and internet
banking qualities were regressed against perceived security and the relationship was found to
be statistically significant (R2 = 0.404, p < 0.001, F value = 20.486). The results indicated that
disposition to trust also influences the level of institution based trust (see Table 4). Thus, H2a
and H2b are supported.
FACTORS INFLUENCING LEVEL OF

ADOPTION IN INTERNET BANKING
In order to identify the factors affecting level of adoption, trusting beliefs, disposition to trust,
PEOU and PU were regressed against level of adoption as perceived by the respondents. The
MLR model used to estimate the level of adoption (LA) for all cases (i= 1,2,…107) with the
predictors and is defined as follows:
( LA )i = β 0 + β1 ( T )i + β 2 ( D )i + β3 ( PEOU )i + β 4 ( PU )i + β5 ( PS)i + € I (5)
Table 4. Trusting intentions: Coefficients of regression analysis
Model Unstandardized Unstandardized

Coefficients Coefficients
C. Dependent Variable: trusting beliefs
Constant 3.222 .132 8.406 0.000
Disposition to trust .176 .127 .133 2.854 0.001
Perceived Security .145 .127 .068 1.626 0.001
Internet banking Qualities .484 .274 .830 7.731 0.000
D. Dependent Variable: Perceived Security
Constant 1.538 .347 12.426 0.000
Disposition to trust 0.196 .094 .055 2.598 0.005
Internet banking Qualities .535 .082 .064 6.537 0.000
2
The fitting of the model (5) is tested through R , which came out to be .694. Thus about
69.4% of the variance of PS can be explained by independent predictors. The fitted model is
found to be statistically significant, as p < .001 . The author also applied t - test to find the
independent contribution of each predictor in estimating the mean for each case to assess the
overall effect of level of adoption. As can be seen from Table 5, the results were found to be
statistically significant (F = 31.978). This would imply failure to reject our hypothesis H4a, H4b,
H4c and H4d.
The results presented above validate the proposed model. They also point out fairly signifi-
cant role of trusting beliefs on the level of adoption of Internet banking. This would imply that
the trusting environment presented by the bank has the potential to impact the adoption of the
system. Further, a user’s disposition to trust also is found to significantly affect his/her level of
usage. This is followed by the perceptions regarding the security of the site. Most of the users
Table 5. Level of adoption: Coefficients of regression analysisa
Model Unstandardized Coefficients Unstandardized

Coefficients
Constant .361 .486 .743 0.004
Trusting Beliefs (T) .324 .166 .164 1.285 0.002
Disposition to Trust .289 .077 .335 3.781 0.000
(D)
PEOU .061 .097 .067 0.832 0.004
PU .089 .097 .090 0.924 0.003
Perceived Security .193 .076 .128 2.460 0.001
(PS)
a: Dependent Variable: LA
are found to be technology savvy and hence perceived usefulness scored more than perceived
ease of use.
THE RESEARCH MODEL

The results of the data analysis validate the proposed model which integrates the Mcknight’s
web trust model with TAM. The research model proposed by the author is in congruence with
the Web Trust model by McKnight et al (2002) that suggests adoption of any e-commerce system
is dependent upon the customers trust in the web that in turn is related to trusting beliefs and
disposition to trust of the customer and the institution based trust of the system (Sareen M., 2013).
It was observed that the level of adoption of Internet banking is positively related with levels of
different types of trust and PU and PEOU. The results indicate that the trusting beliefs have much
greater role in level of adoption of Internet banking than even the PU and PEOU. Given this role
of trusting beliefs, it is imperative for any bank that different types of trust remain the focus of
strategies for promoting adoption of Internet banking among its customers. The results highlight
the relevance of the perceived security that aim at increasing the trusting beliefs of the Internet
banking customer. The results also indicate the importance of various security components and
their relative contribution in building perceived security. The relationships with values of the
coefficients are represented in Figure 1.
These beliefs relate to the bank’s attribute such as its associated structural assurances,
authentication and authorization, confidentiality and privacy and integrity. The results also un-
derline the moderating role of the individual’s customers’ attitude towards Internet and Internet
banking as reflected in the disposition to trust. These two factors determine to a large extent
Figure 1. Research model: “Perceived security as trust indicator”
the trusting beliefs of the users which in turn determine the level of adoption as reflected in the
type of services that a user may avail of out of the portfolio of Internet banking services offered.
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Perceived Security Trust Indicator in Adoption of Internet Banking in Developing Country An Empirical Study

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International Journal of Strategic Information Technology and Applications, 6(3), 35-49, July-September 2015 35

Keywords Adoption, Authentication, Authorization, Confidentiality, Customers, Integrity, Internet Banking,

OPERATIONALIZATION OF THE CONSTRUCTS

Integrity and Reliability

Authentication and Authorization

Privacy and Confidentiality

Perceived Ease of Use

Internet Banking Service Quality

H3a: Perceived Security positively influences the user’s trusting beliefs.

Table 1. Descriptive statistics

Demographic Profile Frequency Percent

Table 2. Reliability of measurement items

Construct Cronbach’s Alpha (>0.7)

RESULTS AND INTERPRETATIONS

where Yi , a response variable and X i ,1 , X i ,2 , X i ,3 , X i ,4 , X i ,5 , X i ,6 ,..... are independent predic-

( j = 1, 2...) are referred to as partial regression coefficients to be estimated by the method of

and statistic follows t - distribution with (n − ( j + 1)) degrees of freedom.

FACTORS INFLUENCING PERCEIVED SECURITY

( PS)i = β 0 + β1 ( I )i + β 2 ( C )i + β3 ( A )i + β 4 ( Sec )i + β5 (SA )i + € I (4)

Table 3. Perceived Security: Coefficients of Regression Analysisa

Model Unstandardized Unstandardized

FACTORS INFLUENCING TRUSTING BELIEFS

FACTORS INFLUENCING LEVEL OF

( LA )i = β 0 + β1 ( T )i + β 2 ( D )i + β3 ( PEOU )i + β 4 ( PU )i + β5 ( PS)i + € I (5)

Table 4. Trusting intentions: Coefficients of regression analysis

Model Unstandardized Unstandardized

Table 5. Level of adoption: Coefficients of regression analysisa

Model Unstandardized Coefficients Unstandardized

THE RESEARCH MODEL

Figure 1. Research model: “Perceived security as trust indicator”

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