The impact of trust and perceived risk on internet banking adoption in India

TLDR

The study adds a perceived risk construct to the traditional TAM framework for internet banking adoption. The paper extends the TAM to include security and privacy threats for internet banking adoption in India. Using Davis’s TAM as a base, the authors incorporated security‑ and privacy‑related inhibitors and the bank website as determinants of perceived risk and perceived ease of use. Perceived risk negatively affects behavioral intention, while trust reduces perceived risk, and a well‑designed website eases use and lowers risk, prompting banks to focus on risk mitigation and user‑friendly design to retain and attract customers.

Abstract

Purpose The main purpose of this paper is to extend the technology acceptance model (TAM) in the context of internet banking adoption in India under security and privacy threat. Design/methodology/approach Keeping the TAM proposed by Davis as a theoretical basis, an extended TAM incorporating security‐ and privacy‐related issues for internet banking adoption is conceptualized. The authors have incorporated various inhibitors of internet banking which restrict the use of internet banking adoption under “perceived risk”, and also consider the role of the bank web site as a key determinant of perceived risk and of perceived ease of use in the context of internet banking services. Findings The paper reveals that perceived risk has a negative impact on behavioral intention of internet banking adoption and trust has a negative impact on perceived risk. A well‐designed web site was also found to be helpful in facilitating easier use and also minimizing perceived risk concerns regarding internet banking usage. Practical implications Financial bank institutions should give attention to the inhibitors or perceived risk factors of internet banking adoption in order to retain existing customers as well as attract new consumers. The study also suggests that banks should build a web site with features to facilitate users' assessment of internet banking services and thus minimize the perceived risk and maximize the perceived ease of internet banking services. Web‐based retailers depending on online payments would also be benefit by incorporating the elements of perceived risk and trust in their own web design and online services. Originality/value In addition to the traditional construct of TAM, a new construct of perceived risk has been added. The impact of web site design and trust on internet banking adoption has also been examined and shown to be significant in India in the context of internet banking adoption.