Mobile Banking Adoption: Application of Diffusion of Innovation Theory
Al-Jabri, Ibrahim M., Sohail, M. Sadiq, Journal of Electronic Commerce Research
Many banks in Saudi Arabia are starting to offer banking services through mobile phones. However, not many studies investigate the factors that may help the bankers to design mobile services, which are suitable for and adoptable by bank customers. This study fills this gap and examines a number of factors affecting the mobile banking adoption. Using Diffusion of Innovation as a baseline theory, data are obtained from 330 actual mobile banking users. It is found that relative advantage, compatibility, and observability have positive impact on adoption. Contrary to the findings in extant literature, trialability and complexity have no significant effect on adoption. Perceived risk has a negative impact on adoption. The findings of this study will have practical implications for banking industry in Saudi Arabia.
Keywords: Mobile Banking, IT Adoption, IT Satisfaction, Diffusion Innovation Theory, Saudi Arabia.
Technological advancements in the area of telecommunications and information technology have continued to revolutionize the banking industry. The delivery of financial services has experienced major changes during the past few years. A feature of the banking industry across the globe has been that it is increasingly becoming turbulent and competitive. Banks, aided by technological developments, have responded to the challenges by adopting a new strategy, which emphasizes on attempting to build customer satisfaction through offering better products and services and at the same time to minimize operation costs [Sohail & Shanmugham 2003]. Provision of mobile banking services has been broadly used, and an understanding of the customer adoption process will have important implications for bankers and customers alike.
Electronic banking is one of the most successful business-to-consumer applications in electronic commerce [Pousttchi & Schurig 2004]. Research in the area of electronic banking has spanned over a gamut of delivery options, from measuring consumers' attitudes toward automated teller machines [Filotto et al. 1997; Moutinho & Smith 2000] to issues on adoption and quality of services of internet banking [Barnes & Corbitt 2003; Black et al. 2002; Enders et al. 2006; Gerrard & Cunningham 2003; Karjaluoto et al. 2002; Lichtenstein & Williamson 2006; Mattila et al. 2003; Polatoglu & Ekin 2001; Sathye 1999; Yu 2012]. More recent studies have analyzed the adoption and use of internet/online banking in Saudi Arabia [Al-Somali et al. 2009; Sohail & Shaikh 2008]. However, with a rapid increase in usage of smart mobile phones in Saudi Arabia and diffusion of WAP-enabled phones, the transformation of banking applications to mobile devices has been a logical development in electronic banking. Mobile banking is emerging as a wireless service delivery channel providing increased value for customers' banking transaction [Pousttchi & Schurig 2004].
The objective of this study is to investigate a set of technical attributes and how they influence mobile banking adoption in a developing nation, like Saudi Arabia. The study uses diffusion of innovation as a base-line theory to investigate factors that may influence mobile banking adoption and use. More specifically, the objective of this research is to examine the potential facilitators and inhibitors of mobile banking adoption. Rogers  identified five attributes of innovations in his seminal book "Diffusion of Innovations". These attributes that are viewed to determine rate of innovation adoption are relative advantage, compatibility, complexity, trialability, and observability. These five attributes, in addition to perceived risk, are investigated in relation to mobile banking adoption and use in Saudi Arabia. This study appears to be the first attempt to use diffusion of innovation theory, in mobile banking context, in a developing country like Saudi Arabia. This paper is organized as follows: the next section sheds some light on mobile telecommunications and banking in Saudi Arabia, followed by the literature review and hypotheses formulation. …