International Journal of Bank Marketing

Offline and online banking – where to draw the line when building trust in e-banking?
Kenneth B. Yap David H. Wong Claire Loh Randall Bak
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Offline and
Offline and online banking – online banking
where to draw the line when
building trust in e-banking?
27
Kenneth B. Yap
University of Western Australia, Perth, Australia, and Received March 2009
David H. Wong, Claire Loh and Randall Bak Revised October 2009
Accepted October 2009
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Curtin University of Technology, Perth, Australia

Abstract
Purpose – The purpose of this paper is to examine the role of situation normality cues (online
attributes of the e-banking web site) and structural assurance cues (size and reputation of the bank,
and quality of traditional service at the branch) in a consumer’s evaluation of the trustworthiness of
e-banking and subsequent adoption behaviour.
Design/methodology/approach – Data were collected from a survey and a usable sample of 202
was obtained. Hierarchical moderated regression analysis was used to test the model.
Findings – Traditional service quality builds customer trust in the e-banking service. The size and
reputation of the bank were found to provide structural assurance to the customer but not in the
absence of traditional service quality. Web site features that give customers confidence are significant
situation normality cues.
Practical implications – Bank managers have to realise that good service at the branch is a
necessary condition for the promotion of e-banking. They cannot rely on bank size and reputation to
“sell” e-banking.
Originality/value – This is the first study that examines how traditional service quality and a
bank’s size and reputation influences trust in e-banking.
Keywords Trust, Customer services quality, Electronic commerce, Banking
Paper type Research paper

Introduction
Online banking, also commonly known as internet banking or e-banking, has
experienced phenomenal growth in recent years. In 2006, Pew Internet and American
Life Project reported that nearly half of internet users in the United States – 63 million
adults – bank online (Fox and Beier, 2006). Nonetheless, the authors note that the
growth rate in e-banking has not kept pace with that of internet usage and attribute
this gap to the lack of trust among bank customers, particularly among internet users
age 65 and older. News headlines about e-mail scams, identity theft, and “phishing”
that undeservedly distort consumer perceptions may be one of several reasons why
such a lack of trust persists (Gerrard et al., 2006).
The authors of this study propose that this lack of trust can be overcome with a International Journal of Bank
better understanding of factors that can boost customers’ trust for e-banking. It is Marketing
Vol. 28 No. 1, 2010
important for bank managers to understand that trust has to be developed and they pp. 27-46
can do so with a combination of traditional and online measures. This proposition is q Emerald Group Publishing Limited
0265-2323
particularly pertinent in the current context because e-banking features prominently in DOI 10.1108/02652321011013571
 IJBM the corporate strategy of many retail banks. The long-term savings in operating costs
28,1 more than offsets the massive start-up cost (investment in technology combined with
marketing expenditure).
However, banks are increasingly faced with a perceived conundrum: customers
may appreciate the convenience of e-banking but as they migrate away from
traditional banking, the extent of personal interaction with bank staff decreases as
28 does the switching cost and ultimately long-term customer commitment (Sarel and
Mamorstein, 2003). Yet, such a conundrum exists only because bank managers view
traditional and online banking as mutually exclusive or substitutable. This view is also
evident in the conceptualisation of academic research in this area because many
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researchers who investigate trust in the e-banking context have limited the scope of
their study to constructs that concern only virtual attributes or the internet.
The authors of the current study do not adopt such a perspective and concur with
Wong et al. (2008) who view traditional and online banking as complementary methods
of banking. Heeding their call for further research in this area, the authors of this study
will investigate the role of brick-and-mortar and virtual elements in developing trust
for e-banking. Three constructs are of particular interest: the attributes of the bank
offering e-banking services, the quality of traditional banking service, and the features
of the e-banking web site. There are no studies to date accounting for both virtual and
non-virtual constructs in a model of e-banking adoption; thus, this study makes such a
contribution by examining the interaction of both elements in predicting trust for
e-banking.
Any valid explanation of how trust for e-banking is developed would be amiss to
neglect these virtual and non-virtual constructs because the customer experience is
integrated and he/she may not view e-banking in isolation from the entirety of benefits
that a bank’s service provides. Research findings by Patricio et al. (2003) suggest that
satisfaction with the bank’s traditional service delivery may lend credence to new or
alternative delivery channels. Findings from other studies prompt the authors of this
study to also consider the role of the bank’s size and reputation in developing customer
confidence in its e-banking service (Doney and Cannon, 1997; Jarvenpaa et al., 2000;
Chen and Dhillon, 2003). Moreover, there is sufficient evidence for the authors of this
study to propose that a customer’s impression of an e-banking web site influences
his/her trust towards it (Koufaris and Hampton-Sosa, 2004; Hampton-Sosa and
Koufaris, 2005; Casalo et al., 2007; Vatanasombut et al., 2008). There is still a lack of
knowledge on how these constructs interact in the development of trust for e-banking.
It is important for bank managers to understand how trust for e-banking develops.
Gan et al. (2006) predict that e-banking is necessary for banks to stay profitable in the
future; however, the aforementioned “trust gap” is a barrier to growth in the adoption
of e-banking services. Vatanasombut et al. (2008) suggest that the formation of trust for
e-banking will help convert non-adopters, particularly those for whom fears about
using the online service is a key inhibiting factor. Customer retention is also at stake:
Morgan and Hunt’s (1994) trust-commitment theory purports that trust leads to
commitment in relationships. If trust for e-banking is developed over time, then the
customer is more likely to adopt it as a complementary service delivery channel. This
adoption, in turn, raises defection costs and the customer will become more committed
to the bank (Mukherjee and Nath, 2003; Vatanasombut et al., 2008).
 Literature review and theoretical framework Offline and
Trust in e-banking online banking
The nature of online service delivery gives rise to a lack of trust in e-banking among
some customers. In an online environment, there is no direct physical contact between
buyer and seller. This spatial distance means that consumers cannot use the physical
cues, such as observing the sales people or the physical office/store space, in order to
judge trustworthiness (Reichheld and Schefter, 2000). In the online environment, 29
consumers and online retailers often face spatial and temporal separation; consequently,
transactions carried out online often do not involve a simultaneous transaction of goods
(or services) and money (Grabner-Kraeuter, 2002). Fears of hackers and privacy invasion
compound the uncertainty surrounding online services (Hoffman et al., 1999; Yoon, 2002).
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Faced by scepticism and uncertainty, bank managers need to bridge the trust gap in
order to grow e-banking as a viable medium of service delivery. Trust plays a large role
in determining consumers’ initial and continued use of the e-banking service (Suh and
Han, 2002; Rexha et al., 2003; Lichtenstein and Williamson, 2006). Research findings
show that trust not only effects intent to use e-banking (Suh and Han, 2002; Liu and Wu,
2007), but trust in e-banking has also been found to be an antecedent to commitment to
e-banking (Kassim and Abdulla, 2006; Vatanasombut et al., 2008). This is a sample of
studies that have conceptualised trust in their research to assist bank managers.
McKnight and Chervany (2002) propose a typology of trust in the e-commerce
context that includes the following: dispositional trust, institutional trust, and
interpersonal trust. The type most pertinent to this study is institutional trust, which is
defined as “an individual’s belief that favourable conditions are in place which are
conducive to situational success” (McKnight and Chervany, 2002, p. 45). Institutional
trust is, in turn, derived from two components – situational normality, and structural
assurance (McKnight et al., 1998; McKnight and Chervany, 2002; Balasubramanian
et al., 2003). Institutional trust is formed when both of these components are present.
Situational normality refers to trustees’ beliefs that “everything seems in proper
order” (Lewis and Weigert, 1985, p. 974), and is said to be formed by a perception that
things in a situation are “normal, customary, fitting or in proper order” (McKnight and
Chervany, 2002, p. 48). Structural assurances refer to “trustees” beliefs that protective
structures in place are conducive to situational success” (McKnight and Chervany,
2002, p. 48). Authors of the present study propose that these are two cues by which
customers use to evaluate the trustworthiness of e-banking. Situational normality cues
are sought from the online attributes of the e-banking web site; while, structural
assurances cues are sought from traditional attributes of the bank offering e-banking.

Online attributes of the e-banking web site

Balasubramanian et al. (2003) propose that the virtual attributes of the e-banking web
site create the situational normality which one uses to create trust in the online
environment. They add that attributes such as a well-designed customer interface
provide the cognitive cues for a sense of order. Past studies in this area have classified
online attributes into four factors: perceived security, perceived privacy, perceived
usefulness and perceived ease of use (Koufaris and Hampton-Sosa, 2004;
Hampton-Sosa and Koufaris, 2005; Casalo et al., 2007; Vatanasombut et al., 2008). In
the current study, the authors propose that these four factors influence trust for
e-banking.
 IJBM In order for a customer to have trust in the online context, including e-banking, a
28,1 customer must be made to believe that the transactional medium is secure, and that
any information provided to those web sites are not being intercepted or given to a
third party (Suh and Han, 2003). Studies have found that perceptions of privacy and
security can be influenced by the use of third party assurances, privacy policies and
other security tools (Suh and Han, 2003), and it is these attributes which create
30 consumers’ perceptions of security and privacy. Such perceptions reinforce the
customer’s views that actions being performed online are the norm and build trust for
the online environment (Jarvenpaa et al., 2000; Koufaris and Hampton-Sosa, 2004; Liu
et al., 2005; Casalo et al., 2007; Chen and Barnes, 2007; Vatanasombut et al., 2008).
The “usability” – or the effort required to use a computer system as defined by
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Casalo et al. (2007) – of the e-banking web site can also influence a customer’s
confidence in it. It has been found that increased usability reduces the likelihood of
error, increases predictability of the web site’s behaviour, and creates a comfortable
environment which would positively influence customer disposition towards the web
site. Other studies have also purported that the factors of usefulness and ease of use of
a web site function in the same way as a salesperson’s personal attributes in the
creation of trust traditional retailing (Koufaris and Hampton-Sosa, 2004;
Hampton-Sosa and Koufaris, 2005).
Hence, the authors of this study put forward the following hypotheses:
H1a-d. Attributes of the e-banking web site – (a) perceived security, (b) perceived
privacy, (c) perceived usefulness, and (d) perceived ease of use – have a
positive effect on trust in e-banking.

Traditional attributes of the bank

A significant proposition forwarded in this study is that trust in e-banking is derived
from structural assurances that a customer infers from the size and reputation of the
bank concerned. The size of an organisation is often regarded as a proxy for security
and trustworthiness. Doney and Cannon (1997) and Jarvenpaa et al. (2000) purport that
if a firm is large, it must have performed well in order to have grown to such a size.
They go further to suggest that customers making an initial decision to engage in any
transaction would expect that larger firms would have more impetus to deliver, having
more to lose if they were to engage in untrustworthy behaviour. Chen and Dhillon
(2003) argue that in the online environment where the physical cues which consumers
can draw trust from are absent, the size of a firm behind the web site is one of the few
ways in which a customer can base their decision to trust the firm in an e-commerce
setting. Moreover, a customer must be able to believe that the seller has the capacity to
deliver the goods or services and firm size is one of the proxy indicators.
Several studies have established the relationship between firm size and trust for the
firm (Doney and Cannon, 1997; Jarvenpaa et al., 2000; Koufaris and Hampton-Sosa,
2004); nonetheless, a literature review has not uncovered any study that has examined
the relationship between the size of a bank and trust for its e-banking web site. The
literature on size and trust lead the authors of this study to propose that:
H2a. The perceived size of a bank has a positive effect on trust in e-banking.
Apart from size, a bank’s reputation is indicative of its trustworthiness. The bank’s
reputation is particularly relevant in the online context because unlike the
 brick-and-mortar environment where physical cues such as the appearance of the Offline and
bank’s branch can be called upon, structural assurance in e-banking is inferred online banking
primarily from intangible cues (Reichheld and Schefter, 2000). Similar to the creation of
interpersonal trust, a bank with a reputation of being trustworthy would have a greater
incentive to institute measures to avoid losing such a reputation (Casalo et al., 2007).
This implies that a bank with a trustworthy reputation would want to ensure that
every facet of its online offering is designed to create and maintain customers’ beliefs in 31
the structural assurance of e-banking.
Past research in the area of e-banking has found that perceived reputation is indeed
a factor in the creation of trust in e-banking (Casalo et al., 2007; Mukherjee and Nath,
2003); however, the relationship between perceived reputation and structural
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assurance has not been empirically tested so far. Similar to the hypothesised effect
of size, the authors of this study propose that:
H2b. The perceived reputation of a bank has a positive effect on trust in e-banking.
The perceived size and reputation of a bank may have an effect on trust in e-banking;
however, the extent of its influence may vary with cues that emanate from encounters
with the bank of a more personal nature. The authors of this research study argue that
even though a large and reputable bank may be endowed with a greater propensity for
its customers to trust its e-banking service, that level of trust is only has high as the
quality of traditional service it provides.

Traditional service quality

The concept of service quality revolves around a disconfirmation of expectations about
a service received. Parasuraman et al. (1988) provide a conceptualisation of service that
is useful for this research study. Their conceptualisation outlines five dimensions by
which service quality can be evaluated: reliability, responsiveness, assurance,
empathy, and tangibles. Service quality and SERVQUAL has been featured
extensively in the financial services marketing literature; hence, the author of this
study will omit any lengthy discussion of its historical and theoretical development.
However, they do draw the reader’s attention to the relevance of service quality in the
model proposed in this study.
Recent research into the area of service quality for electronic commerce and
e-banking has largely revolved around how electronic service quality can be measured
or managed (Alzola and Robaina, 2005; Parasuraman et al., 2005; Ibrahim et al., 2006;
Fassnacht and Kose, 2007; Shamdasani et al., 2008). Electronic service quality may be a
useful concept in e-banking research; however, electronic service quality cannot be
assessed if a customer has not yet adopted any e-banking services. Authors of the
present study argue that trust for e-banking precedes its adoption and service quality
has a role in influencing trust. Unfortunately, the relationship between trust and
traditional and/or electronic service quality remains unexplored.
There is good reason to argue that traditional service quality has a role in
influencing trust for e-banking. The quality of service delivered through traditional
channels is what most bank customers are familiar with and accustomed to; hence,
in-person service quality is effectively a de facto indication of the quality of other
services, including e-banking. This notion is particularly credible when e-banking is
less tangible than counter service at the bank. It could also be argued that service that
 IJBM exceeds customer expectations gives rise to a level of trust that can be harnessed to
28,1 cross-sell other products (Fassnacht and Kose, 2007; Liu and Wu, 2007). The
multiplicity of plausible explanations warrants further investigation in this area.
The authors of this study pose to the reader a hypothetical scenario: a customer is
more likely to trust the e-banking web site if the bank offering it was large and
reputable. A customer is also less likely to trust the e-banking web site of a small bank
32 with a lesser reputation. Ideally, the customer would have more confidence if the bank
already provides good counter service; however, what if the large bank provided poor
counter service? The authors reason that the large size and favourable reputation of the
bank lend structural assurance to the e-banking service; however, poor counter service
would negate the impact of the bank’s large size and reputation. Consequently, this
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inconsistency raises doubts about e-banking. Naturally, a large and reputable bank
that provides good counter service can garner enough customer confidence for them to
trust any of its alternative services. In this case, the structural assurance for e-banking
that size and reputation provides is augmented by high service quality at the bank’s
branch. Findings by Fassnacht and Kose (2007) and Liu and Wu (2007) provide the
rationale for this claim. Hence:
H3a. Service quality positively moderates the relationship between perceived size
of a bank and trust in e-banking
H3b. Service quality positively moderates the relationship between perceived
reputation of a bank and trust in e-banking

Willingness to adopt e-banking

Trust is essential in situations where risk, uncertainty and interdependence exist
(Mayer et al., 1995), and the online environment certainly encapsulates those factors.
Increased trust will mean that a person’s attitudes towards a particular behaviour (in
this case, using e-banking) are positive, which will likely increase a person’s intent to
perform that behaviour. Jarvenpaa et al. (2000) demonstrated that trust leads to
purchase intentions; while, Liu et al. (2005) found that to be also true in e-banking.
Hence, the authors of this study purport that:
H4. Trust in e-banking has a positive effect on the willingness to adopt e-banking
The model tested in the study is thus summarised in Figure 1.

Methodology
To test the conceptual model, a cross-sectional survey was administered using an
instrument containing 89 items. The 89 items used were adapted from established
scales from past studies measuring respondents’ expectations, perceptions and
attitudes regarding the service quality of their primary bank, perceptions of the size
and reputation of their primary bank, perceptions of the bank’s e-banking web site
attributes, their trust in their primary bank’s e-banking web site, and their willingness
to it. Great care was taken when adapting the scales to ensure that the original
concepts being measured by the scale had theoretical congruence and relevance to this
study. Each item is measured on a seven-point Likert scale with “0” denoting the low
end and “6” the high end. The questionnaire was then pre-tested on a convenience
sample of university staff. Refinements to the questionnaire were made based on
 Offline and
online banking

33
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Figure 1.
Proposed model

feedback from the pre-test. All items in the final instrument were then reviewed by
marketing academics for content validity.

Measures
The traditional service quality measures are based on the 22-item SERVQUAL scale
published in the Parasuraman et al. (1985) study. The continued usefulness of this scale
as a measure of traditional service quality in the current e-banking context has been
confirmed by Wong et al. (2008), where it was found that the importance ranking of the
five SERVQUAL dimensions have not changed dramatically over the years.
Respondents were asked about their service expectations of banks in general before
they were asked to record their perceptions of service quality of their primary bank.
Nine of the items are negatively worded and responses were subsequently
reverse-scored prior to data analysis.
The measures for perception of bank size and reputation are adapted from Doney
and Cannon’s (1997) seminal work in the area of trust in buyer-seller relationships.
Their measurement scales have been used in different contexts to investigate trust (e.g.
Jarvenpaa et al., 2000; Pavlou, 2003, Kim and Ahn, 2006). However, additional items
were added to this scale, using the work of Jarvenpaa et al. (2000) and Pavlou (2003), for
the clarity and definition they gave to this dimension. Respondents were asked about
perceptions of the size and reputation of their primary bank.
The set of questions about the online attributes of the e-banking web site was
derived from several sources. Items relating to perceived security were adapted from
the entire Perception of Authentication of Data and Data Integrity scale published by
Suh and Han (2003) with the exception of one item, which was replaced with an item
from Kim and Ahn’s (2006) scale relating to web site security. The item substitution
improved the clarity of the scale during the pre-test. To measure perceived privacy, the
authors of this study used two items from Suh and Han’s (2003) Perception of Privacy
Protection scale which were most relevant to the present study. These items, which
measured confidentiality, were picked for its theoretical congruence to the study. To
measure perceived usefulness and perceived ease of use, items were drawn from work
by Pavlou (2003), Kim and Ahn (2006), and Pavlou and Fygenson (2006). The items
 IJBM taken from each of these scales were chosen because it required the least altering of
28,1 wording, so as to maintain the integrity of the measure, as well as, the similarity of
contexts in which these measures are used.
The set of questions used to measure trust in e-banking is a composite of items
adapted from works of Doney and Cannon (1997), Jarvenpaa et al. (2000), and Suh and
Han (2002). These items were chosen for its wording, which directly related to trust in
34 the service of e-banking, and a belief in the benefits and trustworthiness of e-banking.
The final section of the survey measured the willingness to use e-banking by using
items that measure attitudes and intentions towards using e-banking. Items in the scale
were sourced from scales published by Pavlou (2003), Kim and Ahn (2006), and
Verhagen et al. (2006). Demographic data were also collected for the purpose of
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classification and determining the generalisability of the results.

Sample and data collection

A non-probability judgement convenience sample of university faculty and
administrative staff was selected. University staff is deemed to be educated and
informed about a range of issues, and so it was concluded that they would likely have a
higher chance of responding to the survey, with more accuracy and honesty in their
replies. The survey was self-administered and data collection took place over two
weeks. A mix of paper and online questionnaires were distributed across ten faculties
in the university in two waves. The data collection process yielded a total of 218
returned questionnaires, of which 202 passed manipulation checks and were usable.
The response rate was 34.8 per cent.

Results
Factor analysis
The data collected were subjected to exploratory factor analysis using principal
components extraction with varimax rotation. The items in each factor were then
tested for scale reliability using standard Cronbach alpha indices. The results of the
exploratory factor analysis on service quality items yielded five factors, identical to the
dimensions found in Parasuraman et al.’s (1991) analysis. Each dimension is also
characterised by a high alpha score, the lowest of which is 0.625. A composite score
was computed for each dimension by totalling scores for the items in a dimension and
dividing it by the number of items. This procedure was carried out for both
expectations and perceptions of service quality. Paired sample t-test showed that
perceived service quality fall significantly short of expectations. Subsequently,
difference scores (perceptions from expectations of service quality) were calculated to
represent overall service quality scores.
Items measuring traditional attributes of the bank formed two factors as expected:
perceived size (alpha ¼ 0.894) and perceived reputation (alpha ¼ 0.828). Four
dimensions were extracted for online attributes of the e-banking web site but the
proposed classification of perceived security, perceived privacy, perceived usefulness,
and perceived ease of use was not replicated. The four dimensions comprised of a
variety items, all of which had factor loadings of 0.500 and higher. Each dimension, in
turn, had a coefficient alpha of 0.857 or higher. Based on the nature of items, the four
dimensions were subsequently re-themed to represent Clarity, Control, Confidence, and
Confidentiality. Trust for e-banking and willingness to use e-banking also proved to be
 single-factor constructs with alphas of 0.964 and 0.957, respectively. For all of the Offline and
dimensions discussed above, a composite score was also generated by using the online banking
average of summed item scores (Table I).

Regression analysis
To test H1, which is the relationship between attributes of the e-banking web site and
trust in e-banking, a simultaneous regression analysis was conducted. Only 35
Confidence-related attributes of the e-banking web site had a significant influence
on trust for e-banking (Beta ¼ 0.381, t ¼ 3.524). The Confidence factor is comprised of
items that give the customer a sense of confidence in dealing with the e-banking web
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site. These items include “The transactions I send are transmitted to the real site which
I want to transmit to” and “All communications with my bank’s web site are restricted
to the web site and me”. The coefficients for other factors were not significant; thus, H1
received only partial support.
To test the relationship between traditional bank attributes and trust in-banking
(H2), as well as, the moderating effect of service quality (H3), hierarchical moderated
regression was conducted. This method was proposed by Baron and Kenny (1986) to
examine moderating effects. In conducting hierarchical moderated regression analysis,
a series of regressions were performed. The first involved regressing the dependent
variable on the independent variable, then the dependent to the independent and the
moderating variable, and finally the dependent to the independent, the moderator and a
cross-product of the dependent and the moderator. The results of the analysis are
displayed in Table II.
The analysis yielded results quite different to what was hypothesised. The model in
which bank size is the only independent variable was tested and results show that the
coefficient for bank size was not significant. This model was then tested for explanatory
power against five models, each of which had bank size and a service quality dimension
as the independent variables. Result of these comparisons showed that the models with
bank size and service quality had significantly improved R-squared values from the
model with bank size alone. For all five models, none the coefficients for bank size were
significant and all of the coefficients for service quality were. The results of hierarchical
moderated regression suggest that it is not bank size that has a positive influence on
trust in e-banking, but rather traditional service quality.
The five models with bank size and service quality as independent variables were
re-tested for its explanatory power by including the cross-product of both variables to
each model. A significant increase in the R-squared value would indicate that a
moderating effect exists. Results in Table II show that only the model containing the
reliability dimension of service quality had the presence of a moderating effect. The
coefficient of the cross-product (between bank size and reliability) is significant and is
2 0.775, as listed in Table II. This result suggests that service reliability has a direct
effect on trust in e-banking while bank size had a significant negative moderating
effect.
The hierarchical moderated regression analysis was repeated for the effect of bank
reputation on trust in e-banking and the results were mixed. Results summarised in
Table III below indicate that bank reputation had a direct positive influence on trust in
e-banking. When tested against Model 2 (bank reputation and service quality as
independent variables), only models with reliability, tangibles and assurance
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36
28,1

loading
IJBM

Table I.
Constructs and item
Factor Items Loading Cronbach’s a

Empathy The five service quality dimensions in this study are identical to 0.756a; 0.873b
Reliability factor structure in Parasuraman et al.’s (1991) study. No items were 0.847a; 0.918b
Tangibles dropped from the SERVQUAL battery 0.804a; 0.874b
Assurance 0.821a; 0.845b
Responsiveness 0.625a; 0.827b
Perceived size of bank (My main bank is . . .) A very large company 0.924 0.894
One of the largest in the industry 0.898
Is well known 0.846
One of the smallest players in the market (reverse-coded) 0.828
Perceived reputation of bank (My main bank . . .) Has a reputation for being honest 0.860 0.828
Is known to be concerned about its customers 0.833
Will do its job right even if not monitored 0.821
Has a bad reputation in the market (reverse-coded) 0.701
Is known to be dependable 0.665
Learning how to use e-banking from my main bank’s web site
Clarity would be easy 0.894 0.954
I find my main bank’s web site easy to use 0.879
My interaction with my main bank’s web site is clear and
understandable 0.876
E-banking on my main bank’s web site would be easy 0.859
Interacting with my main bank’s web site does not require a lot of
mental effort 0.832
The content of my main bank’s web site is useful to me 0.793
My main bank’s web site is useful in carrying out transactions 0.568
Control (My main bank’s web site . . .) Ascertains my identity before sending any messages to me 0.801 0.867
Ascertains my identity before processing any transactions
received from me 0.776
Devotes time and effort to prevent unauthorized access to my
information 0.668
Uses security controls for the confidentiality of transactions 0.658
Checks all communications between the site and me for protection
from wiretapping or eavesdropping 0.652
(continued)
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Factor Items Loading Cronbach’s a

Implements security measures to protect its online customer’s

information 0.593
The messages I receive are transmitted from the real site from
Confidence which I want to receive from 0.823 0.858
The transactions I send are transmitted to the real site which I
want to transmit to 0.819
My main bank’s web site would enhance my effectiveness in
carrying out transactions 0.625
All communications with my main bank’s web site are restricted to
the web site and me 0.564
My main bank’s web site never sells my personal information in
Confidentiality their computer databases to other companies 0.866 0.857
My main bank’s web site will not use my personal information for
any purpose unless I authorize it to do so 0.820
I am convinced that my main bank’s web site respects the
confidentiality of the transactions received by me 0.531
Trust in e-banking E-banking is trustworthy 0.927 0.964
I trust in the benefits of e-banking 0.923
I trust e-banking 0.917
Willingness to use e-banking I think it is a good idea to use e-banking 0.960 0.957
I intend to use e-banking in the future 0.958
The thought of e-banking is appealing to me 0.947
I will recommend to others that they use e-banking 0.892
I expect my use of e-banking to increase in the future 0.878
Notes: a Expectations of service quality; b Perceptions of service quality
online banking
Offline and

37

Table I.
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38
28,1
IJBM

Table II.

dimensions
and service quality
Results of moderated

analyses for bank size

hierarchical regression
Predicting Trust in e-bankinga
Model Model Model Model Model Model Model Model Model Model Model Model Model Model Model
Variables entered 1 2 3 1 2 3 1 2 3 1 2 3 1 2 3

Bank size 0.078

Empathy 0.164 *
Bank size £
empathy
Bank size 2 0.126
Reliability 0.982 *
Bank size £
Reliability 2 0.775 *
Bank size 0.028
Tangibles 0.173 * *
Bank size £
Tangibles
Bank size 0.078
Assurance 0.242 *
Bank size £
Assurance
Bank size 0.046
Responsiveness 0.154 *
Bank size £
Responsiveness
DR 2 0.003 0.026 * 0.000 0.002 0.061 0.024 * 0.001 0.030 * 0.001 0.006 0.058 * 0.007 0.002 0.024 * 0.003
Total R 2 0.003 0.029 0.029 0.002 0.063 0.086 0.001 0.031 0.032 0.006 0.065 0.071 0.002 0.025 0.028
DF 0.530 5.061 0.029 0.321 12.387 4.906 0.178 5.902 0.176 1.133 11.382 1.286 0.323 4.570 0.542
d.f. 188 187 186 191 190 189 193 192 191 183 182 181 190 189 188

Notes: a Standardized regression coefficients are shown only for models where the change in R 2 is significant; * p , 0.05
 Downloaded by UNIVERSITAS TRISAKTI, User Usakti At 00:49 05 February 2016 (PT)

Predicting Trust in e-bankinga

Model Model Model Model Model Model Model Model Model Model Model Model Model Model Model
Variables entered 1 2 3 1 2 3 1 2 3 1 2 3 1 2 3

Bank reputation 0.260 *

Empathy
Bank reputation £
Empathy
Bank reputation 0.157
Reliability 0.170 *
Bank reputation £
Reliability
Bank reputation 0.224 *
Tangibles 0.147 *
Bank reputation £
Tangibles
Bank reputation 0.135
Assurance 0.185 *
Bank reputation £
Assurance
Bank reputation 0.273 *
Responsiveness
Bank reputation £
Responsiveness
DR 2 0.068 * 0.003 0.018 0.061 0.021 * 0.009 0.064 0.021 * 0.000 0.051 0.026 * 0.000 0.075 * 0.004 0.012
Total R 2 0.068 0.071 0.089 0.061 0.081 0.090 0.064 0.084 0.085 0.051 0.077 0.077 0.075 0.079 0.091
DF 13.312 0.562 3.541 12.002 4.200 1.725 12.689 4.251 0.018 9.632 4.923 0.022 14.865 0.752 2.477
d.f. 183 182 181 186 185 184 187 186 185 178 177 176 184 183 182

Notes: a Standardized regression coefficients are shown only for models where the change in R 2 is significant; * p , 0.05
online banking

quality dimensions
Results of moderated

reputation and service

hierarchical regression
Offline and

analyses for bank

Table III.
39
 IJBM dimensions of service quality had a significantly higher R-squared value. Explanatory
28,1 power of these models did not improve with the inclusion of the cross-product. The
coefficients for independent variables are also displayed in Table III. Results indicate
that the influence of traditional service quality and trust in e-banking vary with the
service quality dimension.
A regression analysis was conducted to test the relationship between trust in
40 e-banking and willingness to adopt it (H4). The R-squared for the model is 0.385 and
the regression coefficient of 0.741 is significant. This result supports the hypothesis
that trust in e-banking has a positive influence on the willingness to adopt e-banking.
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Discussion and implications

The results of this study suggest that traditional service quality plays a more
important role in influencing trust in e-banking than does the size of the bank. This
finding adds some depth to the e-banking literature because past studies examining
attitudes and behaviours towards online banking have confined their investigation to
antecedents and cues emanating from the same medium of service delivery (Alzola and
Robaina, 2005). The association between traditional service quality and attitudes and
behaviours towards traditional counter service banking has been well established
(Zeithaml et al., 1996; Fassnacht and Kose, 2007; Yap and Sweeney, 2007); nonetheless,
the customer experience goes beyond traditional counter service and now encompasses
alternative media of service delivery. It is timely to consider the influence of traditional
service quality on online service offerings and the findings from this study has taken
the important first step in this direction.
While the proposition of e-banking is to provide banking services at the convenience
of the customer’s desktop; e-banking is not independent of traditional service. For
customers who are new to e-banking, they often rely on bank counter staff to explain
the features of e-banking, help set up the e-banking account and password, resolve
problems with the e-banking web site, and provide clarification, follow-up, or
supplementary services to e-banking transactions. Such services provided at the
counter become more salient if a customer lacks the level of knowledge or trust
required to adopt e-banking. The finding that traditional service quality has a direct
influence on trust in e-banking is consistent with such anecdotal examples. Moreover,
this finding is parallel to the work of Semijin et al. (2005), which found that in
e-commerce, offline fulfilment was just as important as online service quality.
The lack of a significant relationship between bank size and trust in e-banking is a
result that whilst not expected does not directly contradict the literature. Past findings
regarding size and trust have been with the view of size and its effect on the dimension
of interpersonal trust (Doney and Cannon, 1997), and not the institutional trust that is
defined in this study. The authors of this study aptly propose that the confidence that
customers derive from receiving good service at the bank’s branch will outweigh any
potential structural assurance that customers infer from dealing with a large bank.
Results also show that bank size only comes into play when customers assess the
reliability of the service before trusting the e-banking web site. A negative moderating
effect on the reliability-trust relationship implies that a larger bank has to work harder
to provide a reliable service in order to build sufficient trust in e-banking. It also
implies that for smaller banks, service reliability takes on an even greater importance
in building customer trust for its e-banking service. The authors of this study propose
 that if service at the branch is poor, the size of bank cannot be relied upon to build trust. Offline and
It is plausible that customers have even higher service reliability expectations of a online banking
larger bank and if it fails to deliver, customers will tend not to trust its e-banking
service. This finding reiterates the notion that size does not matter.
Findings on the influence of a bank’s reputation are mixed and suggest that there is
some hierarchy to which service quality dimensions have a greater influence on trust in
e-banking. Wong et al. (2008) reported the expectations ranking of service quality 41
dimensions in the following order: Reliability (highest expectations), Assurance,
Responsiveness, Tangibles, and Empathy (lowest expectations). The result of this
study point to the possibility that lower-order traditional service quality dimensions,
such as empathy and responsiveness, are not applicable in building trust. In these
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circumstances, bank reputation has a direct influence on trust. Higher-order service

quality dimensions such as reliability and assurance then become more salient than the
bank’s reputation in building trust. It is plausible that customers look for service
reliability and assurance cues in particular to provide the structural assurance required
to trust e-banking. After all, the customer would like to know that the bank can at least
consistently deliver on its promises and can do so dependably.
Reliability and assurance cues of service at the branch are most pertinent to
e-banking because it is the necessary requirement of an effective e-banking service. As
customers migrate to e-banking, the bank can no longer provide the kind of empathetic,
responsive, and tangible service that staff at a branch can provide. These cues then
become so important in forming structural assurance that the reputation of a bank
becomes no longer relevant. The extent to which a bank’s reputation provides
structural assurance only goes so far as certain expectations of service quality are
fulfilled. This finding is consistent with the proposition that traditional service quality
is critical in building trust in e-banking, particularly in areas of service reliability and
assurance.
The examination of the influence of e-banking web site attributes on trust revealed
that only the attributes that give customers a sense of confidence are salient. This
finding is consistent with the findings relating to service quality. Customers want to be
given a sense of security or reliability before trusting this technology, which is a notion
supported by Suh and Han (2003). Given that the items which coalesced into the
Confidence dimension primarily relate to a consumer’s confidence in communicating
with the web site, the results imply that banks should ensure that users are given clear
indications of the actions of what the web site is doing at all times, with clear
indications as to the timing and security of actions performed on the web site, so as to
ensure customer confidence with the e-banking web site.
Finally, the relationship between trust in e-banking and willingness to adopt it are
not surprising as it concurs with findings by Liu et al. (2005). Customers who are
willing to trust e-banking can then adopt it with less apprehension about reliability and
security concerns that may relate to the web site. Researchers and managers should
view trust as a predisposition to behaviour or behavioural intentions towards
e-banking and perhaps other technological service offerings.

Managerial implications
It is important for bank managers to understand that trust in e-banking is earned by
providing high traditional service quality at the retail branch level. They should not
 IJBM rely on the size and reputation of the bank to lend credence to e-banking because
28,1 customers are more likely to make inferences about e-banking from the level of service
they currently receive at the branch, rather than factors that bank managers think
might give them the capacity or legitimacy to offer e-banking. Bank managers need to
recognise that the customer experience with the bank’s service is integrated and
seamless; moreover, good service at the branch may give rise to a halo effect.
42 Customers probably reason that good service they receive at the counter is indicative of
good service they are about to receive online (Patricio et al., 2003).
Bank managers have to pay more attention to how and when e-banking might be
promoted to the customer. Delightful service encounters at the branch represent
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cross-selling opportunities for other products. A satisfied customer repays the service
provider by trusting it and giving it other opportunities to provide a service. This
opportunity can be used to promote the attributes of the e-banking web site,
particularly the web site features that give customers the perception of confidence. It is
important for bank managers to realise that the promotion of e-banking does not reside
just with the marketing department and their advertising campaigns. Rather, the entire
bank branch and how well traditional service is delivered over the counter are
promotional tools in themselves, giving the customer confidence that they will receive
the same level of service online.
Managers of larger banks should not presume that the size and reputation of their
bank are de facto indicators of trustworthiness. The bank that excels in providing a
reliable service is the one that will be most successful in earning the trust of its
customers to try e-banking. It appears that good counter service outweighs the
potential structural assurance that a large bank can provide. Larger banks have to earn
their keep and not rely on its size as a cue for structural assurance, particularly if
service at the branch is poor. For managers of smaller banks, a focus on providing a
highly reliable counter service will pay dividends even in the online environment.
Advertising and personal promotion of e-banking should emphasise the
trustworthiness of the web site in its message. It should highlight the security
features of the e-banking web site that will allow customers to use it with confidence.
The promotional message should also assure customers that if they are happy with the
service at the branch, they can then expect the same level of high quality service from
e-banking. Bank managers should also consider e-banking customer testimonials as a
promotional tool. Customer testimonials that convey a message of trust for e-banking
will be particularly effective in generating trial and adoption.

Limitations and directions for future research

The results of this research should be taken in light of the limitations discussed below.
First, there are a number of factors that are beyond the scope of this study – constructs
such as a consumer’s level of awareness of e-banking benefits, its cost, existing
consumer habits, and perceived risk of the internet in general – which may also
influence the willingness to adopt e-banking. Specifically, trust in the internet has been
shown to reduce perceptions of risk in particular facets of the internet, such as
perceptions of risk in e-commerce (Pavlou, 2003). There is still a lack of empirical
research in this area; thus, future studies should incorporate these variables to make
the model of e-banking adoption more comprehensive.
 Secondly, the scope of this study is limited to Australia, where the internet is a Offline and
mature technology (Lichtenstein and Williamson, 2006), and as such, these results may online banking
not be entirely generalisable to other contexts where technological maturity of the
internet has not been reached. Replications of this study in underdeveloped countries
or mature or elderly consumers are opportunities for further research. Studies in
different countries with varying levels of technological development are recommended,
as different expectations of service quality and requirements for trust may result. 43
Thirdly, the factor analysis for e-banking web site attributes failed to replicate the
structure in past studies from which items were sourced (Pavlou, 2003, Suh and Han,
2003; Kim and Ahn, 2006; Pavlou and Fygenson, 2006). Research in this area will
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benefit from a consolidation of scales measuring attributes of the web site. Finally, this
study conceptualised trust as institutional trust. Given the importance of traditional
service quality as cues of structural assurance and situational normality, future studies
will benefit to consider interpersonal trust as a potential mediating moderating factor.
This study has highlighted the importance of traditional or offline factors in
influencing attitudes and behaviours relating to online services. The examination of
traditional service quality in this study yielded significant results; however, further
investigation may be required to fully identify the host of brick-and-mortar factors that
play a role in the adoption of e-banking. This study, along with that of Patricio et al.
(2003) and Flavian et al. (2006), are a good point of departure for further research in this
area. The direct effect of traditional service quality on trust in e-banking has been
established, but the role of bank size and reputation as moderators need to be
confirmed by further research.

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46
About the authors
Kenneth B. Yap is a Doctoral Candidate in Marketing at the University of Western Australia. His
research interests are in macromarketing and services marketing, particularly banking. Kenneth
has experience as a marketing consultant in New York, working with several of the Fortune 500
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companies. He has recently published in the Journal of Services Marketing. Kenneth B. Yap is the
corresponding author and can be contacted at: kyap@biz.uwa.edu.au
David H. Wong is a Lecturer in Marketing at Curtin University of Technology, Australia. His
research revolves around topics in innovation and the diffusion of technology, service quality,
and electronic modes of delivery in banking and higher education sectors. Dr Wong has been
invited as a reviewer for many journals and conferences, and is keenly sought as a reviewer for
texts in marketing research. He has consulted in a large number of commercial market research
projects for both the profit and not-for-profit sectors, and is an Associate of the Australian
Marketing Institute and a Fellow of The Academy of Marketing Science.
Claire Loh is a member of the academic staff at Curtin University of Technology, Australia.
Her research interests are in the adoption and diffusion of technology in the banking and higher
education sectors, services marketing and tourism and hospitality marketing. Claire has
experience in consultancy having worked on several projects for both profit and not-for-profit
sectors.
Randall Bak is a Research Student at Curtin University of Technology, Australia. His
ongoing research interests revolve around the banking industry and how new forms of
bank-customer interactions impact on traditional relational constructs.

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