A Study on Impact of Perceived Risk and Online Trust on Attitude towards Internet Banking Usage in India

Abstract

Purpose:The purpose of this paper is to analyse how online trust and perceived risk influences attitude toward internet banking usage.This study seeks to investigate the role of online trust and perceived risk in the context of internet banking. Design/Methodology/Approach: Psychometric properties for each perceived risks of adopting internet banking were measured using Cronbach alpha and first order confirmatory factor analysis (CFA). Next, second order CFA was performed to measure the relative importance of each risk facets. Further structure equation modeling using AMOS software was performed to understand the impact of perceived risk and online trust on attitude toward internet banking usage. The sample consists of 200 internet banking adopters and nonadopters. Findings: Five facets of risk involved in internet banking were identified and these facets were: security risk, financial risk, privacy risk, time loss risk and performance risk and it was also found that respondents did not perceive social risk in internet banking adoption. The results confirm that perceived risk has negative impact while online trust has positive impact on attitude towards internet banking adoption. Practical implimentation: Indian banking industry needs some advertisement campaign to increse online trust and reduce perceived risk related to internet banking adoption. It is important for bank managers to understand how to create online trust for internet banking. Main influencing risks to internet banking adoption are financial risk and time loss risk. Bank managers should communicate with their target audience that internet banking is financially safe and it will save your time.