Adoption of mobile banking in vietnamese urban areas pptx

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NATIONAL ECONOMICS UNIVERSITY NEU BUSINESS SCHOOL ------- ------- NGUYEN THI HUONG AN adoption of Mobile Banking in Vietnamese urban areas Supervisor : Dr. LE THI BICH NGOC Hanoi - 2013 i ACKNOWLEDGEMENT I would like to thank Dr. Le Thi Bich Ngoc, my instructor, who has provided me very valued guidance throughout the course of my thesis. Her every specific advice and promptness, despite her busy schedule was instrumental in getting my research work organized in its final shape. I offer my sincere thanks to her. Any research of this nature cannot be successful without the active involvement of people who participate in the survey. I would like to thank all of respondents. My colleagues and friends in banking industry were very co-operative and provided me valuable inputs. I would like to express my gratitude to them. I would like to give my thanks to the family members who sustained my grumpiness and moods during the process of compiling this research work. In fact, they went beyond that and motivated me immensely throughout. Sincerethanksalsogo to the Business School of Hanoi National Economics University where I got a good chance to attend the very useful MBA course. Hanoi, September 2013. ii TABLE OF CONTENTS ACKNOWLEDGEMENT......................................................................................i TABLE OF CONTENTS ......................................................................................ii ABRIVIATION ....................................................................................................iv LIST OF TABLES.................................................................................................v LIST OF FIGURES..............................................................................................vi EXECUTIVE SUMMARY ...................................................................................1 CHAPTER 1: INTRODUCTION .........................................................................3 1.1. Rationale .....................................................................................................3 1.2. R esearch objectives& research questions .................................................4 1.3. The research targets are:............................................................................4 1.4. Research methodology................................................................................6 1.4.1. Data collection .......................................................................................6 1.4.2. Research process....................................................................................6 1.5. Scope of study .............................................................................................6 1.6. Limitations of study ....................................................................................7 1.7. Thesis structure...........................................................................................7 CHAPTER 2: THEORETICAL BACKGROUND..............................................9 2.1. Fundamentals of mobile banking...............................................................9 2.2. U taut model..............................................................................................13 2.3. The factors affecting adoption of mobile bankingin vietnam .................16 2.3.1 Performance Expectation ......................................................................16 2.3.2 Effort Expectance .................................................................................17 2.3.3 Social influence ....................................................................................18 2.3.4 Perceived financial cost.........................................................................18 2.3.5 Perceived credibility .............................................................................19 iii CHAPTER 3: CURRENT SITUATIONS OF USING MOBILE BANKING IN VIETNAM ...........................................................................................................21 3.1. Global mobile banking trends ..................................................................21 3.2. Current situations of using mobile banking in vietnam..........................22 CHAPTER 4: FINDINGS ABOUT VIETNAMESE CUSTOMERS’ ADOPTION OF MOBILE BANKING ..............................................................29 4.1. Research methodology ...........................................................................29 4.1.1. Methodology........................................................................................29 4.1.2. Research process..................................................................................29 4.1.3. Sample selection ..................................................................................30 4.1.4. Questionnaire design............................................................................30 4.2. Data analysis .............................................................................................32 CHAPTER 5: RECOMMENDATIONS TO ATTRACT MORE VIETNAMESE CUSTOMERS USING MOBILE BANKING .........................40 5.1. Increase perceived usefulness...................................................................40 5.2. Promoting marketing and customers relationship..................................40 5.3. Increase the level of security.....................................................................41 5.3.1. Risk based authentication.....................................................................42 5.3.2. Mobile Application ..............................................................................42 5.3.3. One – time passwords ..........................................................................43 5.3.4. Biometric authentication ......................................................................44 5.3.5. Educating people on how to protect their information ..........................45 5.3.6. Digital signature...................................................................................46 5.4. Increasing perceived ease of use for older people....................................47 5.5. Building policy ..........................................................................................47 REFERENCES ....................................................................................................49 iv ABRIVIATION DTPB The Decomposed Theory of Planned Behavior EE Effort Expectance FC Facilitating Conditions HTTP Hypertext Transfer Protocol IDG International Data Group IDT Diffusion of Innovation Theory IVR Interactive Voice Response MB Mobile Banking MM Motivational Model MPCU The Model of Personal Computer Utilization PC Perceived Credibility PDA Personal Digital Assistance PE Performance Expectance PFC Perceived Financial Cost RBA Risk – based Authentication SCT Social Cognitive Theory SI Social Influence SMS Short Message Service TAM Technology Acceptance Model TPB The Theory of Planned Behavior TRA The Theory of Reasoned Theory UTAUT Unified Theory of Acceptance and Use of Technology WAP Wireless Access Protocol v LIST OF TABLES Table 2.1: Summary of Research findings on factors affecting technology adoption.....14 Table 4.1: Dimensions and factors affecting using of Mobile Banking in Vietnam 31 Table 4.2: Demographic profiles of respondents....................................................32 Table 4.3: Mean score and standard deviation of survey on Mobile Banking.........35 vi LIST OF FIGURES Figure 2.1: The Unified Theory of Acceptance and Use of Technology (UTAUT) 16 Figure 2.2: The proposed research structure...........................................................20 Figure 4.1: How survey customers interact with banks ..........................................34 vii 1 EXECUTIVE SUMMARY Fast advances in the wireless technology and the intensive penetration of cell phones have motivated banks to spend large budget on building Mobile Banking systems.In many countries, Mobile Banking has gained wide acceptance and Vietnam is no onlooker to this phenomena. Banks in Vietnam started embracing technology in a massive way in the 2000’s, led in particular by the new private banks and multinational banks. However, the adoption rate of Mobile Banking in Vietnamese urban areas is still underused than expected.Therefore, research to enrich current knowledge about what affects individuals to use Mobile Banking is required. Consequently, this study employs the Unified Theory of Acceptance and Use of Technology (UTAUT) to investigate what impacts people to adopt Mobile Banking.A research was carried out to see what factors affecting adoption of Mobile Banking in Vietnam. The data is organized using Likert seven – point scale to access each response of the participants. Quantitative methodology is used to analyze the collated numeric data. The questions are grouped and mapped to each of the identified factor groups. The average score for each issue has been worked out based on this grouping. Through sampling 309 respondents, this study empirically concluded that individual intention to adopt Mobile Banking was significantly influenced by performance expectancy, social influence, perceived credibility and perceived financial cost. On the other hand, effort expectancy was proved that it was not a significant factors that affecting adoption of Mobile Banking. Based on the finding result above, there are a number of recommendation that has been suggested to improve the quality of Mobile Banking service in Vietnam and in order to attract more customers to use the services. The bank should increase the perceived usefulness of Mobile Banking, promote marketing and 2 customer relationship, increase the level of securities by using risk based authentications, mobile application, one – time password, biometric authentication such as finger print or iris scan and educate people how to protect their own information or use digital signature. Then the bank should focus on increasing the perceived ease of use for old people and building policy to fulfill the quality of the Mobile Banking services for customers. 3 CHAPTER 1: INTRODUCTION 1.1. Rationale Mobile Banking is creating dramatic changes for the banking industry. Mobile Banking is a system that allows customers of a financial institution to conduct a number of financial transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). Mobile Bankinghelps consumers in conducting fast and convenient financial transaction activities. In many countries, Mobile Banking has gained wide acceptance and Vietnam is no onlooker to this phenomena. Banks in Vietnam started embracing technology in a massive way in the 2000’s, led in particular by the new private banks and multinational banks. The growing competition andgrowing expectations led to increased awareness amongst banks on the role and importance of technology in banking, forcing banks to go in for the latest technologies so as to meet the threat of competition and retain their customer base. There are a lot of benefits through adoption of Mobile Banking for the banks and their customers, those benefits would be mentioned in more detail in chapter 2 of this study. Not only that, Mobile Banking also help the economic to develop, so that it also has benefits for the society. It created a new mode of operation, contributing to the economic and commercial activities, services and tourism development, facilitating open extensive trade and economic cooperation with other regions in the world. Vietnamese commercial banks realize the huge advantages of Mobile Banking for them as well as the customers, they had spent large budget on building Mobile Banking systems, but the adoption rate of Mobile Banking is still underused than expected. Although in recent year, the number of Mobile Banking users has 4 grown rapidly, there is some evidence supporting that Mobile Banking acceptance is faced with problems,the evitable result is that the huge number of people who tried Mobile Banking services had not become active users. The possible reason could be the customer still doubt about the benefits of Mobile financial services and the level of securities provided along with such services. Therefore, the purpose of this report is to investigate the factors that affecting the adoption of Mobile Banking in Vietnamese urban areas. This study could be of special interest and value to the banking sector and other commercial sectors linked to banking. The findings and recommendations to banks could help them to analyze and restructure their strategy to attract customers. The banking industry can attract potential customers towards Mobile Banking by taking into account the factors influencing user decisions or preferences. Other researchers and allied industries may use the results by analyzing the behavior and resistance patterns of customers leading to innovations. 1.2. R esearch objectives& research questions 1.3. The research targets are: • To review the theoretical framework in Mobile Banking. • To assess the current situation of using Mobile Banking in Vietnamese urban areas in recent years. • To study factors influencing on the customers’ adoption of using Mobile Banking in Vietnam. • To recommend solutions for improve the number of customers using Mobile Banking in Vietnam. Hence, the questions for this research would be: • What theories could be applied in study of Mobile Banking adoption? • How Mobile Banking is applied now in Vietnam? • What factors influencing the customers’ adoption of using Mobile Banking in Vietnam? 5 • What could be done to increase the number of Vietnamese customers using Mobile Banking? 6 1.4. Research methodology 1.4.1. Data collection The research both use secondary data and primary data to figure out the factors that affectingMobile Banking adoption in Vietnam. ∗ Secondary data Secondary data is pre – existing data collected in the past for another purpose. The information collected is not only expressed by figures but also by the real activities of doing research investigating Mobile Banking adoption all over the world. The secondary data in this research includes information from various model theories that developed by a number of authors and were proved by many empirical tests; from different articles about the application of Mobile Banking in Vietnam as well as in many regions of the world; from Internet searching for more information and references; as well as from other thesis that could be borrowed at the library of the university. ∗ Primary data After collecting and reading secondary data, the author also investigates to collect primary data form the survey with 300 online questionnaires and 200 questionnaires deliver physically. The process of conducting survey and collecting data would be described carefully in chapter 4. 1.4.2. Research process A research was carried out to see what factors affecting adoption of Mobile Banking in Vietnam. The data is organized using likert seven – point scale to access each response of the participants. Quantitative methodology is used to analyze the collated numeric data. The questions are grouped and mapped to each of the identified factor groups. The average score for each issue has been worked out based on this grouping. 1.5. Scope of study 7 The population of the study should be every Vietnamese people, however, due to the limitation of time and budget, the study just collect the sample of 309 Vietnamese people lives in urban areas where they have more chance to use smart phones and access to the Internet. 1.6. Limitations of study The aim of this study was to look at the reasons that currently impact the growth of Mobile Bankingin Vietnam and identifying the factors that influence its adoption. The structure of this study was to empirically test the multiple factors identified with Performance Expectation, Effort Expectance, Social Influence, Perceived Financial Cost, Perceived Credibility of Mobile Bankingthat affect the customer’s adoption ofMobile Banking in Vietnamese urban area. However, any research inevitably has limitations associated with it, and this study is not an exception. In the current study, the sample used had a skew towards an urbanite, especially in Hanoi area rather than Ho Chi Minh City and other big city like Da Nang, HaiPhong; the sample also has the bias of Internet savvy customer base. These findings therefore may not be construed representative of the entire population of potential Mobile Banking users. The data for the study was collected using the same survey instrument and constricted to a limited time frame. Avolio et al. (1991) suggests that there is a potential of variance for the data collected from the same mode and not spatially distributed in time. Perceptions of users are subject to change over time and are dependent on situational paradigms. Investigations spread over time can have a moderating impact on such variances, leading to more reliable data. Future research could adopt multi – modal channels such as field studies, interviews of stakeholders dispersed over different time frames to improve the accuracy and reliability of the collated data. It will also help differentiate behavioral patterns of user groups and their influences based on varying socio – economic and technology exposures. 1.7. Thesis structure The report is presented as follows: 8  Chapter 1: Introduction This first chapter provides background information and rationale for the research.  Chapter 2: Theoretical background The second chapter synthesizes the theories on Mobile Banking, which had been studied all over the world.  Chapter 3: Current situation of using Mobile Banking in Vietnam The third chapter analyses the trends of using Mobile Banking all over the world and the actual situation of using Mobile Banking in Vietnam in the recent years.  Chapter 4: Findings about Vietnamese customers’ attitude toward using Mobile Banking The fourth chapter gives out the findings about Vietnamese customers’ attitude toward using Mobile Banking.  Chapter 5: Solutions to attract more Vietnamese customers using Mobile Banking This chapter suggests some solutions to attract more Vietnamese customers using Mobile Banking in the future. 9 CHAPTER 2: THEORETICAL BACKGROUND 2.1. Fundamentals of mobile banking In the broadest sense, Mobile Banking can be considered traditional banking services accomplished by portable devices. In a stricter sense, Mobile Banking is a channel for customers to interact with a bank via mobile device with the emphasis being on data communication. Mobile Banking precludes voice or telephony banking that forms part of call center operations (Barnes and Corbitt, 2003). Currently, the three most popular channels of mobile banking are data – centric services (Infogile, 2007): • Short Message Service (SMS): SMS is a popular text – messaging standard using a push or pull methodology. In the push form, the bank transmits alerts and messages, while pull recovers information at the customer’s behest. • Wireless Access Protocol (WAP): The function of WAP is similar to Internet Banking using Hypertext Transfer Protocol (http). The mobile device has a WAP enabled browser, which interfaces the banking applications to the customers. • Standalone Mobile Client Application: These are specialized banking applications, which allow customers to execute more complex functionalities like equity or foreign currency trading. It also allows the banks to enable high-level securities implementations through application clients. Interactive Voice Response (IVR) was introduced for Mobile Banking services, but had limited success being expensive and inefficient (Narendiran, 2011). The scope of this study is therefore restricted to the use of mobile devices for data and does not include voice, either in its traditional form of voice dial – up or through a service based on touch – tone phones. The study focuses in mobile data technologies around three widely accepted and distinctive paradigms: messaging, browsing, and applications. 10 There are a lot of benefits through adoption of Mobile Banking for the banks and their customers. The business benefit of Mobile Banking for the banks is to generate additional revenue, improve customer service, extend marketing and increase cost savings. However, the biggest advantage is eliminating the need for physical branch offices results in the reduction of overhead expenses. Banks can then use the resulting savings to reduce their loan interest rates or increase their deposit interest rates, attracting new customers without the costs of acquiring existing banks or starting up new branches, further growth potential. The success of Mobile Banking is determined not only by banks or government support, but also by customers’ acceptance of it. The customers are enjoying the convenience and the control over their money that Mobile Banking gives them, such as good security, easy access and plentiful applications for smart phones. Moreover, the customers have great influence on the adoption of Mobile Banking as they ultimately decide on whether they would use Mobile Banking or not, based on their individual needs. If the service can clearly show the benefits and how they address customers’ need, then customers are more likely to use it. Indeed there are many advantages to doing Mobile Banking. Firstly, it is easy to open an account. The customer can simple just send text message or call the mobile banking center to register Mobile Banking account. Moreover, Mobile Banking is user friendly as the interface is also very simple. Customers just need to follow the instructions to make the transaction and it also saves the record of any transactions made. Secondly, Mobile Banking is much more convenient than traditional banking. They customers do not have to wait for the bank to open its doors or they do not have to drive to get there. If they are using Mobile Banking at home or at the office or anywhere else, the customers will not have to waste valuable time going to the bank. The customers can manage your funds anywhere, any time. For example, they can make transactions or pay bills anytime which save a lot of time. Customers will 11 get an SMS whenever there is an activity in your account, which includes deposits, cash withdrawals, funds transfer etc. Customers will get a notice as soon as any amount is deducted or deposited in your account. Another benefit is that customers can transfer money instantly to another account in the same or different bank using Mobile Banking. Thirdly, Mobile banking is cost effective. With the advantage of having no physical structure to keep up, virtual banks have low overhead. They can afford to cut the customers a break by offering higher interest rates on your savings. They will also offer lower overdraft fees. Even banks that are backed by physical buildings encourage mobile banking with free bill paying services. Fourthly, these banking allow customers to watch their daily balances. The customers can look at what is going on in their account any day or time to check their balance. They can find out if a particular check has cleared their account or see when automatic deposits are made. All these services make check bouncing nearly a thing of the past. The fifth benefit is that banking through Mobile Banking reduces the risk of fraud of bringing money. Furthermore, customers have a better chance to catch fraudulent use if they have a Mobile Banking account. When they check their debits and deposits, they will most likely notice if something is there that they did not do. If someone withdraws money from their account, they will know it as soon as they log on and look over your account. Then, they can work on correcting the situation long before they would even notice it with conventional banking. There are a lot of benefits through adoption of Mobile Banking for the banks also. The business benefit of Mobile Banking for the banks is to generate additional revenue, improve customer service, extend marketing and increase cost savings. However, the biggest advantage is eliminating the need for physical branch offices results in the reduction of overhead expenses. Banks can then use the resulting savings to reduce their loan interest rates or increase their deposit interest rates, 12 attracting new customers without the costs of acquiring existing banks or starting up new branches, further growth potential. Not only that, Mobile Banking also help the economic to develop, so that it also has benefits for the society. It created a new mode of operation and jobs, contributing to the economic and commercial activities, services and tourism development, facilitating open extensive trade and economic cooperation with other regions in the world as well as reduce cash in circulation, in the result of reduce inflation. The conditions for a customer to access Mobile Banking are very simple; this customer just needs to have a smart phone and a banking account. However, the banks need more complexity conditions to generate an Mobile Banking system. They need to invest in capital, technology and infrastructure technology as the foundation elements. Banks need to optimize the field of different technologies such as server systems, storage systems, data centers, hardware equipment; software has the ability to link between the banking system as well as domestic banking system and other foreign banking system. In addition, the upgrade path to expa nd broadband, high – capacity, high – speed is a necessary move to prevent the case of simultaneous access network congestion caused overcrowding. Moreover, for both banks and customers, privacy factor is very important. This is one of the elements that make up the psychological barrier of customers access to mobile banking services. This requires banks to invest a total solution from infrastructure to security software solutions and teams of security professionals and qualified banking. Furthermore, to be well run in the market, the government needs to build a complete legal framework for Mobile Banking as the same as other methods of banking systems. The law would help the market more stable and prevent from fraud as well as defend the benefits for the customers.
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