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Ali Tarhini
Information Systems, Sultan Qaboos University, Al Khoud, Muscat, Oman
Abstract
Purpose Mobile banking (Mbanking) is one of the most widely used mobile technology applications in
recent times. This research aims to develop and test a research model by integrating social influence, trust and
compatibility along with demographic variables into the original technology acceptance model (TAM) for
Mbanking adoption which can be useful for understanding individual behaviours from an international
business perspective.
Design/methodology/approach Data were collected through a structured survey from 208 Omani
Mbanking users and analysed using a two-staged regression and neural network (NN) model.
Findings The results showed that perceived ease of use and demographic variables were not statistically
significant in the multiple linear regression model, whereas the importance of the aforementioned variables
was relatively high in the results obtained from the NN model. Furthermore, other predictors, namely, trust,
perceived usefulness, compatibility and social influence included in the proposed research model that were
established as significant by the regression model were assigned high relative importance by the NN model as
well.
Practical implications The study reflects the customers opinion from a developing country
perspective. In addition, the research makes a significant theoretical contribution by using predictive
modelling instead of causal or explanatory modelling for the development of a new and extended TAM model.
The findings can be gainfully used by international business to understand Omani customer- and
design-appropriate strategies for market penetration.
Originality/value This study offers deeper understanding about Mbanking adoption from a developing
country perspective and identifies and integrates important variables that influence the adoption in the
aforementioned context.
Keywords TAM, Developing country, Mobile banking, Predictive modelling
Paper type Research paper
1. Introduction
The diffusion of information and communication technologies (ICTs) in global banking
industry has witnessed rapid growth in the past decade. These technologies are increasingly Review of International Business
being implemented for achieving competitive advantage through economies of scale and Strategy
Vol. 27 No. 1, 2017
resulting from larger customer base, personalization of banking services and reductions in pp. 133-148
operational cost (Laukkanen, 2016; Sharma et al., 2015). ICT implementations involve Emerald Publishing Limited
2059-6014
considerable expenditure of financial and human resources. To achieve better returns on DOI 10.1108/RIBS-11-2016-0074
RIBS these technology investments, modern banks attract customers by providing enhanced
27,1 service using technology and strive to increase the level of technology use by existing and
potential customers. Mobile banking (Mbanking) supports customers to perform various
banking activities using mobile devices. The term Mbanking refers to the banking activities
conducted through mobile internet technologies (Chong, 2013). The penetration of mobile
technologies has been quite rapid as compared to internet technologies because of the
134 portability of the device and widely available mobile and 3G networks that render Mbanking
more flexible (Chong et al., 2012). The availability of 3G and 4G networks has made
Mbanking an attractive option in Oman. In addition to the development in mobile
communication technologies, the increased range of products and services made available
through Mbanking delivery channels by banking industry, and greater attention to ease of
use and interactivity, has provided a further boost to Mbanking services. Moreover,
advances in smartphone technologies have attracted the attention of banking and
telecommunication industries which are increasingly partnering to enhance the Mbanking
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Oman is an important country within the GCC. As per the 2011 census, its population is
3.77 million (Omani Ministry of National Economy, 2010). The major part of the Omani
economy comes from its oil and gas exports. The country has witnessed a rapid growth in its
information technology infrastructure subsequent to the launch of internet services in 1990s.
The proportion of internet users has grown steeply at a compounded annual growth rate of
27 per cent between 2000 and 2010 (Sharma et al., 2015). Oman has recorded a substantial
increase of more than 20 per cent in the number of active mobile broadband subscribers up
to November 2016 as stated by the National Centre for Statistics and Information (NCSI,
Oman). As per the report published by NCSI December 2016, the post- and prepaid mobile
connections in Oman are 612,226 and 6.22 million, respectively. These figures about the
penetration of mobile technologies are significant in justifying the interest and investments
in Mbanking in Oman.
2. Literature review
2.1 TAM and Mbanking adoption studies
Technology acceptance by individual users is a result of complex interaction between social
factors, psychological factors and the perceived efficacy of the system. Technology
acceptance by the user can be a major determinant of the success of the any major technology
implementation initiative. Early research in this area included models that sought to the
explain the technology acceptance using intention-based models, namely, theory of reasoned
action (TRA) (Fishbein, 1979) and theory of planned behavior (TPB) (Ajzen, 1991). Whereas,
TRA and TPB are important models that model behavioural intention, the TAM by Davis
(1989) is a model specifically designed to understand user intentions with regard to
acceptance of a technology. TAM adapts the TRA to explain technology acceptance by
explaining the attitude variable using two constructs, perceived usefulness (PU ) and
perceived ease of use (PEOU). The definitions of these two constructs are as follows: PU is
the degree to which a person believes that using a particular system would enhance his or her
job performance and PEOU refers to the degree to which a person believes that using a
particular system would be free of effort. A sample of empirical studies that tested TAM or
proposed and tested a modified TAM includes studies by Thornton and White (2001), Luarn
and Lin (2005), Cheng et al. (2006), Gu et al. (2009), Wessels and Drennan (2010), Hsu et al.
(2011), Tarhini et al. (2013, 2014a, b), Sharma et al. (2014), Mansour et al. (2016). TAM was
further extended by Venkatesh et al. (2003) by proposing the unified theory for acceptance
and use of technology (UTAUT) by adding elements from expectancy theory to the
intention-based models. The UTAUT 2 model proposed in 2012 by Venkatesh et al. (2012)
RIBS includes three new variables, hedonic motivation, price value and habit, and the model seeks
27,1 to explain the relationship of these variables with behavioural intention and technology use.
Following the success of online and Mbanking in developed countries, a number of
developing economies in the GCC undertook major initiatives for the establishment of a
digital banking infrastructure based on internet and Mbanking. The banks in the GCC region
are significant contributors to the global banking industry and have effected large-scale
136 investments towards implementing mobile communication technologies in banking.
Nevertheless, the number of research studies that focus on user acceptance of Mbanking in
GCC in general, and Oman in particular, is quite limited. Further, some of these studies relate
to m-commerce and internet banking. One of the often-cited studies with respect to internet
banking in the GCC region is the study of acceptance behaviours by Saudi Arabian internet
banking users (Al-Somali et al., 2009). Two studies that specifically investigated the
acceptance of internet banking in Oman include works by Riffai et al. (2011) and Sharma et al.
(2015). As regards, mobile technologies Al-Hinai et al. (2010) proposed a framework for
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education level have been discussed in the literature in connection with adoption of
information systems (Chong et al., 2012; Chong, 2013; Sharma, 2015). These studies show
that demographic variables can influence the adoption of information systems both as an
independent variable or a moderating variable. For example, Riffai et al. (2011) found that
demographic variables such as age, gender and education play the role of moderating
variables in the trust-adoption relationship. On the basis of the literature discussed above,
the following research diagram is proposed as shown in Figure 1 below.
where, i n
138 Trust
mBanking
Adoption
Compatibility
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Perceived
Usefulness
Gender, Age, and
Educaon
Perceived
Figure 1. Ease of use
Research diagram
usually defined as a network composed of a large number of simple processors that are
massively interconnected, operate in parallel, and learn from experience (Specht, 1991). The
computational model embedded in this complex network is similar to human brain, as the
structure of the network enables acquisition of knowledge through training or learning
processes. A hidden layer feed-forward network with x1,xn as the inputs and yk as the
output involves application of synaptic weights to each input which are then transferred to
the neurons in the hidden layer. The output of NN is dependent on the weighted sum of inputs
and the nonlinear activation function and is given as follows:
yk ( w v ) (v)
kn k
where wkn is the synaptic weight between output of neuron k and input of neuron n and
(v) is the nonlinear activation function. The activation function used in the NN model was
Hyperbolic tangent (Sharma et al., 2015).
NNs have been used in several fields including stock markets (Shen et al., 2011), fraud
detection (Lei and Ghorbani, 2012), m-commerce (Chong, 2013) and internet banking (Sharma
et al., 2015). The main reasons for the widespread use of NNs include their ability to learn and
handle all types of data. Further, these models can be applied without making restrictive
assumptions regarding the distribution of the input data. NNs have been preferred over
traditional regression methods, as they are able to capture linear and nonlinear relationships
(Sharma et al., 2015). Applications of NNs are increasing in business research because of its
computational power, flexibility and ease of use (SPSS, 2010).
3. Research methodology Mobile
This study uses a research methodology that involves the application of NNs and MLR for banking
analysing the empirical data and comparison of the results obtained from the two models
with regard to the prediction of Mbanking adoption (Chong, 2013; Sharma et al., 2015).
adoption
per cent were less than 25 years of age, 50 per cent were between ages 25 to 35 years and the
remaining were above 35 years. Education of respondents was as follows: 54 per cent
respondents (bachelor degree or less), masters degree 41 per cent and remaining were PhDs.
The percentage of Omanis among respondents is 57 per cent. Based on the recommendation
by Hair et al. (2010), a minimum sample size of ten samples was achieved for each
independent variable.
demographic variables (for all, p-value 0.01) are not statistically significant at the 1 per
cent level of significance in the proposed regression model in equation (1). Furthermore,
tolerance is used in the regression model to test the multicollinearity, which can be defined as
the proportion of variability of each independent variable which is not explained by its
linear relationship with other independent variables in the model. The range for tolerance
varies from 0 (low) to 1 (high). A low value of tolerance implies high multiple correlation and
the possibility of multicollinearity (Field, 2009). In Table II, all values of tolerance for
independent variables are greater than 0.7, indicating lower chances of multicollinearity in
the proposed regression model. Variance inflation factor (VIF) in the MLR model is used as a
sign of multicollinearity. VIF is the reciprocal of tolerance (Field, 2009). All VIF values
(Table II) are not greater than 1.3, implying lower probability of multicollinearity and hence
justifying appropriateness of the MLR model in the context of predicting adoption of
Mbanking.
Collinearity
Statistics
Model Beta values t-values Significance Tolerance VIF
included in the output layer of the network model. The RMSE (Table III) of the training model
was 0.334 and that of the testing model was 0.342, and the RMSE of the regression model was
0.807. Thus, it can be seen from the results that the NN model is a better choice than the
regression model.
The higher value of RMSE in case of MLR indicates that the non-linear NN model is able to
obtain a better fit in comparison with MLR. Further, the improvement in RMSE value when using
NNs may be attributed to the ability of the NN model to capture non-linear relationship of
independent variables with the dependent variable, mBanking Adoption (Figure 2).
A sensitivity analysis was performed wherein the average importance of the input
variables (independent variables) in predicting the output was calculated. These values are
useful to understand the relative importance of independent variables. The results showing
normalized values of relative importance are presented in Table IV. Using the values from
Table IV, the most important independent variable in predicting mBanking Adoption was
SocialInfluence, followed by Compatibility, PEOU, Trust, PU, Age, Gender and Education.
The normalized importance SocialInfluence was the highest (100 per cent), and the
normalized importance of Compatibility and PEOU was 80.7 and 73.5 per cent, respectively,
compared with that of SocialInfluence. The importance of these variables is also shown in
terms of weights in Table IV. Trust and PU were found to be equally important with only a
slight difference. This shows the importance of trust in a developing economy. The
demographic variables that were ignored by the regression model showed up as important
1 0.324 0.395
2 0.301 0.345
3 0.323 0.341
4 0.325 0.337
5 0.329 0.334
6 0.353 0.358
7 0.309 0.336
8 0.312 0.315
9 0.392 0.312
10 0.373 0.346 Table III.
Mean 0.334 0.342 RMSE for neural
SD 0.029 0.023 network model
RIBS Input Layer Hidden Layer Output Layer
27,1
x1
142 x2
x3
x4
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mBanking
Adoption
x5
x6
x7
x8
Figure 2.
Proposed neural Notes: x1: Social Influence; x2: Trust; x3: Compatibility; x4:Perceived ease
network architecture of use; x5: Perceived usefulness; x6: Age x7: Gender x8: Education
predictors in the NN model results. The relative importance of these variables Age, Gender
and Education in comparison to the SocialInfluence was 58.2, 43.2 and 36.3 per cent,
respectively.
4. Discussion
The primary aim of this research was to investigate the factors influencing Mbanking
adoption and predict adoption using the key determinants based on an extended TAM
proposed in the paper. The comparison of the two methods showed that the NN model Mobile
performed better than the MLR model with respect to the prediction of Mbanking adoption. banking
The percentage of variance in the Mbanking adoption explained by MLR was as low as 37
per cent. This lower percentage of variance may be attributed to the inability of MLR in
adoption
capturing nonlinear relationships.
The NN model was able to capture the nonlinear relationship between the independent
variables and Mbanking adoption and it minimized the squared error by more than 50 per
cent. The results obtained from the NN model show that all the eight determinants (e.g. social 143
influence, compatibility, trust, usefulness, ease of use, gender, age and education) are
significant predictors of Mbanking adoption in Oman. In terms of relative importance, social
influence was the most important predictor of the Mbanking adoption. Similar results were
obtained with regard to social influence by Al-Somali et al. (2009) in a study conducted on
internet banking adoption in Saudi Arabia in GCC. This implies that the influence of social
groups, including peers and relatives, tends to influence the usage of Mbanking by
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individual users. Society in the Arab World in general and in Oman in particular plays a
major influence in individual behavior. The social bond is very strong in Oman because of
tribal strong bond among the tribe members which influences the decision taken by
individuals. Families bond and friends and peers bonds are also very influential on
individuals decision.
The next determinant or predictor in terms of relative importance was compatibility. Wu
and Wang (2005) reported a similar finding in an m-commerce study in which compatibility
was found to have the most significant influence on the intention to use mobile commerce.
The third important predictor was PEOU, a primary construct of TAM. This is consistent
with the findings of the study by Hanafizadeh et al. (2014) which established that PEOU
significantly influences the adoption of Mbanking. Independent variables Trust and PU are
also significant predictors of adoption of Mbanking. Therefore, individuals in Oman adopt
Mbanking to reduce uncertainty and risk. They are looking for technology that fits well with
different individuals needs and fits well with other technology. Also, they are selecting
technology that is ease to use and perceived to be useful. These predictors are important in
the studies related to information systems research (Al-Somali et al., 2009; Chong et al., 2012).
Among the three demographic variables included in the study of gender, age and
education, age was the most important predictor of Mbanking adoption, followed by
gender and education. The results associated with these three variables were able to show
the efficacy of NN over MLR. MLR results failed to support none of these as significant
predictors of Mbanking adoption, whereas the NN model supported that the three
demographic variables are significant predictors of Mbanking adoption. This may be
attributed to the nonlinear relationship between these variables and the dependent variable
mBanking Adoption which MLR model was not able to capture.
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Further reading
Reuters (2012), Omans real GDP up 6% in 2011 official, available at: www.reuters.com/article/2012/05/
08/oman-gdp-idUSL5E8G8EIZ20120508 (accessed 8 August 2012).
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Telecom Regulatory Authority of Oman (2012), First Quarter telecom sector indicators, available at:
www.tra.gov.om/newsite1/sectorIndicatorsQ12012.aspx?Lang1 (accessed 8 August 2012).
Wang, Y.S., Wang, Y.M., Lin, H.H. and Tang, T.I. (2003), Determinants of user acceptance of internet
banking: an empirical study, International Journal of Service Industry Management, Vol. 14
No. 5, pp. 501-519.
RIBS Appendix
27,1
Mean SD
Compatibility
Mobile banking is close to my life style 3.31 1.14
Mobile banking is compatible with the way I manage transactions 3.42 1.07
Mobile banking is compatible with my work style 3.19 0.92
Social influence
I use mobile banking on the recommendation of my relatives 3.72 0.98
I use mobile banking on the recommendation of my peers 3.89 0.92
Most people influence my decisions thinks I should use mobile banking 3.91 1.18
The use of mobile banking improves my status in society 3.17 1.23
Trust
The mobile banking site is trustworthy 3.54 1.03
The mobile banking site keeps customers best interest in mind 3.61 1.05
The mobile banking sites do not disclose my personal information 3.90 0.87
Corresponding author
Sujeet Kumar Sharma can be contacted at: drsujeet@squ.edu.om
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