Internet Technology Adoption in the Banking Industry * ^ ^ Salim Al-Hajri 9|e 9|e 9|c Internet Technology Adoption in the Banking Industry * * * SALIM AL-HAJRI A thesis submitted to Victoria University of Technology for the fulfilment of the degree of Doctor of Philosophy (PhD.) January 2005 ACKNOWLEDGMENT First of all I would like to say thanks to God (Allah the almighty) for giving me the strength and power to carry on through this project. Secondly, without the marvellous help I received from my supervisors, my family and my friends this thesis would not have been accomplished. Specifically, I thank my supervisors: professor Robert Clift, Dr. Arthur Tatnal and Dr. Keryn Chalmers (who was my previous supervisor) for their valuable time, guide and support. Their knowledge and experience enabled me put the pieces of this thesis together. Thanks also go to School of Accounting and Finance in Victoria University for their help and assistance. I also would like to thank all participants in the Omani and Australian banking industry who contributed significantly with their insightful views and opinion to this thesis. Secondly, I would like to say many thanks to my family who always were with me. Especially my loving grandmother Fatma Al-Hajri who passed away in 1990 and my father Amor Al-Hajri who also passed away in 1982. They provided me with love, patience and hope. God bless them all and let their soul rest in piece amen. Finally, I extend my special thanks to Dr. Muneer Al-Maskery and Dr. Abdul- Hakeem Al-Ismaili for their valuable help in the Ministry of Manpower in Oman. I also would like to extend my thanks to all my friends especially Abul-Latif Al- Bulushi and Sameer Al-Zadjali for their wonderful help. ABSTRACT The banking industry in Oman is of major importance to Oman's economy, yet the banks continue to conduct their banking transactions using traditional methods. A strong banking industry supports economic developments significantly through its efficient financial services. The role of the banking industry in trying to achieve the objectives outlined by the Sultan of Oman will depend heavily on the industry's capabilities. This requires banks to introduce changes (both at the procedural level and at the informational level) such as the banking industry moving from traditional distribution channel banking to electronic distribution channel banking. Given the prevalence of Internet technology adoption by the banking industry in developed countries, the reason for the lack of such an innovation in developing countries such as Oman is a fruitful research question. The aim of this thesis is to explore managers' perceptions of Internet technology and their tendency to adopt it in the banking industry. Specifically, the research question addressed in this thesis is What were the enablers and the inhibitors of Internet technology adoption in the Omani banking industry compared with those in the Australian banking industry? In an attempt to accomplish this aim, this thesis was carried out as follows: (1) extant literature was reviewed to explore the perceptions that tend to affect Internet technology adoption in the banking industry, namely: • perceived relative advantage • perceived organisational performance (not previously investigated) • perceived ease of use • perceived organisational/customer relationship (not previously investigated) (2) a semi-structured interview with 27 responsible bank managers (decision makers) from the two banking industries of Oman and Australia was carried out. (3) from an interpretative qualitative analysis (utilising NVIVO software)' of the two banking industries of Oman (non-adopter of Internet technology) and Australia (adopter of Internet technology), the findings revealed that the four perceptions ' NVIVO is computer software used to assist qualitative researchers to conduct qualitati\ e analysis of evidence collected through in-depth interviews. 11 jointly provided a deeper understanding of Internet technology adoption in the banking industry. The major enablers and inhibitors of Internet technology adoption in the banking industry are illustrated in Figure 6.1,6.2,6.3, and 6.4 in Chapter 6. This study is important for both academics and professional organizations because it emphasises the enabling and the inhibiting factors of Internet technology adoption and how to manage them effectively for both adopters and non-adopters. It indicates the need for both banking industries of Oman and Australia to consider improving their Internet technology adoption. Furthermore, the list of the enablers and the inhibitors provides insight for software companies to consider improving Internet technology as a whole in the banking industry. in DECLARATION I, SaUm.AI-Hajri, declare that the PhD thesis entitled Internet TecMplo^y.Adgptip^^ ii\..the.Banldn^.industry is no more than 100,000 words in length, exclusive of tables, figures, appendices, references and footnotes. This thesis contains no material that has been submitted previously, in whole or in part, for the award of any other academic degree or diploma. Except where otherwise indicated, this thesis is my own work. [This thesis may be available for loan and limited copying in accordance with the Australian Copyright Act 1968]. Salim Al-Hajri Date IV TABLE ofCONTENTS ACKNOWLEDGMENT i ABSTRACT ii DECLARATION iv TABLE of CONTENTS v LIST of TABLES AND FIGURES ix LIST OF ABBREVIATIONS AND DEFINITION OF TERMS xii Chapter One: Introduction 1 1.1 Introduction 1 1.2 Aims of the Study 2 1.3 Significance of the Study 2 1.4 Contribution To knowledge 3 1.5 Justification for the Study 4 1.6 Research Methodologies 5 1.7 N4ajor Findings of the Study 6 1.8 Organization of this Study 6 Chapter Two: Review Of Extant Literature - Research Issues 2.1 Introduction 9 2.2 Definition of Internet Technology Adoption in the Banking Industry 9 2.2.1 Role of Internet Technology in the Developed Countries 10 2.2.2 Role of Internet Technology in the Banking Industry 10 2.2.3 Classification of Internet Technology in the Banking Industry 12 2.2.4 Internet Banking Services 14 2.2.5 Electronic Communication Media Technologies in the Banking Industry 18 2.3 Exploring Research Issues 21 2.3.1 Perceived Relative Advantage and the Tendency to Adopt Internet Technology 22 2.3.2 Perceived Organisational Performance and the Tendency to Adopt Internet Technology 30 2.3.3 Perceived Customer/Organisational Relationship and the Tendency to Adopt Internet Technology 47 2.3.4 Perceived Ease of Use and the Tendency to Adopt Internet Technology Adoption 64 2.4 Summary of the Chapter 74 2.41 Critique of the Validity of Appropriate Research Literature 75 Chapter Three: Theoretical Framework For Understanding Internet Technology Adoption In The Banking Industry 3.1 Introduction 78 3.2 Theoretical and Empirical Studies Examining Theory of Reasoned Action 82 3.3 Theoretical and Empirical Studies Examining Theory of Planned Behaviour 91 3.4 Theoretical and Empirical Studies Examining Technology Acceptance Model 95 3.5 Theoretical and Empirical Studies Examining Diffusion of Innovation Theory 107 3.6 Summary of the Chapter 110 Chapter Four: Qualitative Research Methodologies, Design and Sites Description 4.1 Introduction 112 4.2 Guidelines for Selecting Research Methodologies 114 4.2.1 The Research Problem 116 4.2.2 The Philosophical Assumption 116 4.2.3 The Degree of Uncertainty Surrounding the Phenomena 124 4.2.4 The Researchers' Skills 124 4.2.5 Academic Politics 125 4.3 Guidelines for Gathering evidence from the Field 125 4.3.1 Sampling Strategy 127 4.3.2 Types of Interviews 131 4.3.3 Wording of Questions 136 4.3.4 Recording of Statements 139 4.4 Guidelines for Analysing Field Evidence and Drawing Conclusion 140 4.4.1 Data Reduction 141 4.4.2 Data Display 144 4.4.3 Drawing Conclusion 148 VI 4.5 Guidelines for Ensuring Confidentiality and Validity 150 4.5.1 Confidentiality 150 4.5.2 Validity of Research Findings 153 4.6 Site Description 153 4.6.1 Background of the Omani Banking Industry 163 4.6.2 Background of the Australian Banking Industry 163 4.7 Summary of the Chapter 165 Chapter Five: Analysing Evidence and Data Presentation 5.1 Introduction 167 5.2 Perceived Relative Advantage 174 5.2.1 Convenience of Services 175 5.2.2 Innovation of Ideas 177 5.2.3 Management of Services 178 5.3 Perceived Organisational Performance 180 5.3.1 Profitability 180 5.3.2 Market Environment 183 5.3.3 Productivity of Employees 184 5.4 Perceived Customer/Organisational Relationship 186 5.4.1 Customer Trust 187 5.4.2 Customer Commitment 189 5.4.3 Customer Satisfaction 190 5.5 Perceived Ease of Use 192 5.5.1 Easy to Navigate 193 5.5.2 Easy to Learn 196 5.5.3 Easy to Manage 198 5.6 Summary of the Chapter 200 Chapter Six: Conclusion 6.1 Introduction 206 6.2 Review of the Thesis 206 6.2.1 Overview of the Thesis Purpose 206 6.2.2 Review of Stages Undertaken to Accomplish the Thesis Purpose 208 Vll 6.3 Summary of the Major Findings and Discussion 213 6.3.1 Perceived Relative Advantage 216 6.3.2 Perceived Organisational Performance 218 6.3.3 Perceived Customer/Organisational Relationship 223 6.3.4 Perceived Ease of Use 227 6.4 Implication and Recommendations for the Omani Banking Industry 232 6.5 Implication and Recommendations for future Research 237 6.6 Limitations of this Investigation 238 6.7 Concluding Comments 239 References 246 Appendix A: Sample of Letters Sent to Participants 269 Appendix B: Sample of Consent Form 274 Appendix C: Sample of Transcribed Document, Coding Report and Output of Results 275 Vlll