Factors affecting the adoption of internet banking in the Kingdom of Bahrain

Abstract

The emergence of the Internet in business as a marketing tool and as a communication medium is one of the existing challenges for the banking industry. Because of this evolution, the banking industry has adopted Internet banking both for financial transactions and for the provision of information about products and services. Based on the ideas mentioned, this study aimed to examine the factors which may affect the intention to use Internet banking in the Kingdom of Bahrain with the following research objectives to be achieved: first, to identify the factors which affect the intention to use and adopt Internet banking in the Kingdom of Bahrain; second, to develop a model based on the identified factors that affect the intention to use Internet banking in the Kingdom of Bahrain; and third, to test the reliability and validity of the proposed model and find its implications on the intention to use and adopt Internet banking. In this study, five variables were initially chosen, namely, perceived privacy protection, perceived security protection, perceived trust, perceived information quality and perceived risks/benefits that may affect the intention to use Internet banking. Besides the five variables, two more variables were included: cultural dimension and biometric technology to measure a significant relationship with any of the five variables that might affect the intention of bank customers to use Internet banking in Bahrain. As a quantitative method of research, the study focused on assessing the co-variation among naturally occurring variables with the goal of identifying predictive relationships by using correlations or more sophisticated statistical techniques. In analysing the data, the descriptive statistics were used. In addition, construct reliability and discriminant validity tests were conducted and structural equation modelling were used to test the research model and verify the hypotheses. The cultural context has rarely been commented on in previous research, but as a result of taking this factor into account in addition to the more technical issues, a number of practical implications became evident for banking in Bahrain that may have applicability elsewhere in the Arab world. These include both a focus on relationship management as well as the need for additional levels of security through biometric fingerprinting to be implemented by banks wishing to increase the adoption of Internet banking amongst existing customers. These strategies also have potential to attract new market segments.