Mapping the reasons for resistance to Internet banking: A means-end approach

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Abstract

Although Internet banking has been widely adopted in developed countries, there is still a group of customers resisting the services. In other words, Internet banking, although proven to be a successful innovation, has still not become adopted by the laggards, and hence, has not met all the expectations of banks. Therefore, the purpose of this paper is to identify the reasons for consumer resistance to Internet banking. The special interest is to explore resistance among those bank customers who already have valid contracts for Internet banking but prefer to pay their bills via ATM. The objective is to identify those characteristics generating resistance to Internet banking and their connections to values of individuals. In order to achieve the objective, 30 Finnish bank customers were interviewed in-depth using the means-end approach and the laddering interviewing technique. The findings indicate both functional and psychological barriers arising from service-, channel-, consumer- and communication-related means-end chains inhibiting Internet banking adoption. The contribution of the paper lies in achieving a more profound understanding of consumer resistance to Internet banking, and further, in offering suggestions and practical advice for service providers’ decision-making.

Introduction

It is argued that Finland is one of the leading countries in electronic banking (Karjaluoto, Mattila, & Pento, 2002). Already 76% of the Finnish population use Internet at home or elsewhere and 64% describe Internet as the primary channel for payment transactions (The Finnish Bankers Association, 2005). When compared to other payment channels, Internet has seen to offer many advantages both for banks and for customers. It is low-priced, not dependent on place or opening hours of banks, and moreover, it puts the customer in control (Karjaluoto, 2002). Consequently, banks have increased investments in Internet services and reduced the number of branch offices and payment automated teller machines (ATMs).

However, 36% of Finnish bank customers still use ATM and non-electronic methods for payment transactions. Payment ATM, especially, is still a remarkably popular channel in Finland. Therefore, banks are required to continue to offer ATM payment service despite the additional costs involved when compared to Internet channel. Although Internet banking is a growing phenomenon, the factors inhibiting its diffusion are not sufficiently recognised (Bradley & Stewart, 2002; Mols, 1999).

Consumer resistance to innovations has received relatively little attention in the marketing literature when compared to the attention paid to innovation adoption. Most innovation studies have focused on successful diffusion through the market. This is due to the biased idea that all innovations are improvements over existing products providing added value for the majority of consumers. However, resistance to change is seen as a normal consumer response to the changes innovations imply for consumers (Ram, 1987). Resistance represents the other side of the phenomenon and there is a need to see both sides of the coin. Sheth (1981) argues that

…it is about time we paid respect to individuals who resist change, understand their psychology of resistance and utilize this knowledge in the development and promotion of innovations rather than thrust upon them preconceived innovations… (p. 274).

The objective of this study is to explain, why Internet banking encounters resistance and what are the barriers inhibiting its adoption among the group of laggards, who already have adopted ATM bill payment service. For this purpose, a total of 30 customers of a large Scandinavian bank were interviewed in-depth using the means-end approach and the laddering interviewing technique. The sample consists of individual customers, who have valid contracts for Internet banking but who prefer ATM in payment transactions.

The study reveals both functional and psychological barriers producing resistance to Internet banking and elicits the attribute-value connections driving these barriers. The paper begins with a review of the essential literature of innovation resistance and makes a recap on previous studies on Internet banking. The latter part of the paper presents the approach and the method used and reports the main results of the study. Finally, the main results are discussed and the implications are presented.

Section snippets

Resistance to innovations

For a long-time innovation research suffered from different biases. The greatest problem in the research has been so-called pro-change bias (Sheth, 1981) standing for an assumption that every innovation is good and should be adopted by all the members of a social system (Ram, 1987). According to the assumption, innovation should neither be rejected nor re-invented. Due to the biased preconceptions the phenomenon of resistance has not received as large attention as innovation adoption in

Factors inhibiting Internet banking adoption

Despite its advantages, Internet has encountered resistance in banking actions. Chang, Cheung, and Lai (2004) state that both perceived characteristics and the degree of involvement of a financial product influence channel choice. Whereas high involvement transaction requires a channel that is perceived extremely secure, a payment transaction with only a small amount of money transferred requires the most convenient channel (Black, Lockett, Ennew, Winklhofer, & McKechnie, 2002). Due to the high

Means-end approach

Earlier studies have indicated some factors inhibiting Internet banking adoption. However, the underlying connections between the concrete channel attributes and the desired end-states of individuals driving the resistance have remained unclear. It is argued that core values i.e. the desired end-states of an individual are the most basic and fundamental motivators of behaviour (Woodruff & Gardial, 1996) guiding the selection or evaluation of human behaviour (Schwartz & Bilsky, 1987). Bagozzi

Results

The results suggest that there are several attributes connected with different consequences and values generating resistance to Internet banking. Lack of a computer, routine usage of ATM, lack of information, usage of own device, absence of an official receipt, Internet surroundings, absence of bar code reader, changeable passwords and unclear proceeding at the monitor seem to be the main attributes generating resistance and causing final rejection. Furthermore, the most influential values seem

Discussion

Comparing the results of the study to the adoption barriers categorisation by Ram and Sheth (1989), similarities can be found. Many customers, who use ATM for their payment transactions seem to face the usage barrier perceiving Internet banking to be unsuitable for them. Similarly to Ram and Sheth's (1989) categorisation, usage barrier arises from concrete, functional elements of Internet channel. The lacks of an Internet connection, official receipt and bar code reader, and further, changeable

Managerial implications

Resistance to innovations retards their adoption and requires the service providing companies to continue to provide the existing options in customer service. It also decreases the ability of the service providers to realise the full potential of their innovations. In the banking context, regardless of the financial benefits of using Internet, banks still have to offer ATM payment service in order to cater for the banking needs of those customers who are not yet ready to adopt the new channel.

Limitations and future research

Due to the qualitative nature of the study the objective was merely to gain deeper understanding of consumer resistance to Internet banking. In order to gain full advantage of this study, a quantitative follow-up study based on the results is needed. Due to the observation of service and channel characteristics being interrelated, it also seems reasonable to examine resistance to other services and services within other electronic channels in order to better distinguish the resistance

Tuire Kuisma is a postgraduate student at the Department of Business and Management at the University of Kuopio, Finald. Her main reaserch interests include e-business and, in particular, e-banking. At the moment, Tuire Kuisma is working on her Doctoral Thesis concerning resistance to internet banking.

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    Tuire Kuisma is a postgraduate student at the Department of Business and Management at the University of Kuopio, Finald. Her main reaserch interests include e-business and, in particular, e-banking. At the moment, Tuire Kuisma is working on her Doctoral Thesis concerning resistance to internet banking.

    Tommi Laukkanen is a project manager at the Department of Business and Management at the University of Kuopio, Finland. His research interests include management, marketing, and consumer behaviour, especially in an electronic environment. Currently, he is running a multidisciplinary research project focusing on innovation resistance. He teaches electronic commerce, mobile business and online consumer behaviour.

    Mika Hiltunen holds a Master's degree in psychology from the University of Tampere, Finland. Hiltunen works as a vice president and head of the user interfaces and research in Nordea, which is the largest financial services group in the Nordic and Baltic sea region and has a leading Internet banking solution with more than 4.5 million online users. His research interests and publications differ from mobile service product development to personalisation and consumer behaviour. Prior to Nordea, Hiltunen has worked in Accenture as an R & D consultant and team leader.

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