Customer Perception Towards Mobile Banking

Customer Perception Towards Mobile Banking


Purpose: The objective of this paper is to study customer perception towards mobile banking and finding important factors in India.

Design/Methodology/Approach: The research methodology is largely based on extensive literature review and is based on exploratory research followed by descriptive analysis. The data collected thorough questionnaire, which is based on both open ended and closed ended questions. The questionnaire is based on Likert scale. The data is analyzed through Factor analysis.

Findings: The important factors that affect the perception of customers towards mobile banking are convenience, security, faith on traditional banking and awareness. Research limitation/implications: This study is based on the data collected form major metro cities of India. The study is based on customers availing the mobile banking services. The findings of the paper cannot be generalized, as the sampling technique is non-probability sampling. Practical implications: The results of this paper will encourage mobile banking service providers to strengthen the security policy and provide augmented services to attract new customers.

Paper Type: Research Paper Key Words: Mobile Banking; Customer Perception; Factor Analysis; India INTRODUCTION In recent years, the technological developments in information technology have lead to the evolution of a new concept in Banking Industry i. e. Mobile banking. Mobile banking is defined as the “type of execution of financial services in the course of which – within an electronic procedure – the customer uses mobile communication techniques in conjunction with mobile devices” (Pousttchi and Schurig 2004). Moreover, it is defined as “a channel hereby the customer interacts with a bank via a mobile device, such as a mobile phone or personal digital assistant” (Barnes and Corbitt 2003, Scornavacca and Barnes 2004). The evolution of Mobile banking has fundamentally transformed the way banks traditionally conduct their businesses and the ways consumers perform their banking However the success of Mobile banking is not going smoothly, its full of problems. Firstly the adoption of Mobile banking has not kept pace with that of mobile devices like mobile phones, PDA’S etc.

This gap is attributed to the lack of trust among bank customers, particularly between Internet and mobile device users in the age group of 45 and greater than 55. Secondly, customers still have faith on face-to-face interaction while concerned with their money due to reasons such as fear of the online environment and lack of trust in the Internet and mobile devices systems. Recent literature on Mobile banking showed that the formation of trust can help reduce the impact of key inhibiting factors such as fears about using the online service among non Mobile banking customers.

The customer perception towards Mobile banking is controlled by variety of factors, few within the firm’s control and few beyond the control of the firm. These days Mobile banking has facilitated the customers to avail any services just by the click of the buttons of mobile phones or PDA’S. But at the same time the customers are concerned about the security of their transactions and other personal information. As more and more customers are making increasing use of Mobile banking services it becomes imperative to examine the factors that affect customer expectation and satisfaction.


Electronic banking is regarded as on of the most successful business to consumer applications in electronic commerce (Pousttchi and Schuring, 2004). The mobile phone is one of the most integral parts of customers’ lives and its use is growing in the world. The mobile banking offers various kind of services like to request the account balance, latest transactions of the account, transfer fund between accounts, to make buy and sell orders for the stock exchange and to receive portfolio and price information.

Various studies indicate that perceived financial cost (Luarn and Lin, 2005) and perceived complexity (Lee et al. , 2003) inhibits he use and adoption of mobile banking services. Security aspects are argued as an important concerns in the adoption of mobile banking (Brown et al. , 2003, Luarn and Lin, 2005). Contrary to previous findings, some studies have argued that security issues are not perceived by customer to be major obstacles in mobile banking transactions (Sournata, 2003; Laukkanen and Lauronen, 2005). These studies state that, mobile baking was found a secure way to conduct banking transactions by the users.

However, Suranta (2003) found that mobile services were nit used since they were perceived as impractical and not sufficiently diversified. Gonzalez (2008) stated that M-commerce has many advantages over conventional banking system as it has reduced geographical boundaries and has enabled the customers to avail the services 24*7 hours just by clicking the buttons of their mobile phones and other mobile devices. It enables the users to access their account, get their account information, do transactions and avail other facilities without much delay and efforts.

As per prediction of Broadie (2007) the Mobile banking is leading to a paradigm shift in marketing practices resulting in high performance in the banking industry. Delivery of service in banking can be provided efficiently only when the background operations are efficient. An efficient background operation can be conducted only when it is integrated by an electronic system. The components like data, hardware, software, network and people are the essential elements of the system. Banking customers get satisfied with the system when it provides them maximum convenience and comfort while transacting with the bank.

Internet enabled electronic system facilitate the operation to fetch these result. But it is very important to maintain the security aspect while customers avail services via mobile devices or wireless network because the customers are very sensitive with their personal information’s and other transaction details, hence the service provider must ensure effective security checks to ensure error free service and safe transactions.


The objective of this paper is to study the customer perception towards Mobile banking and finding important factors affecting customer perception in India.


Demographic analysis is done to know the perception of mobile banking various age group of people with different occupation (Refer Table. 1). This analysis shows that there is significance difference in the usage of mobile banking between male and female. Age group of 35-45 uses this service quite often. The KMO and Bartlett’s Test indicates the suitability of the data for factor analysis. Kaiser-Meyer-Olkin Measure of Sampling Adequacy’s value (Refer Table. 2) is 0. 755 which is greater than 0. 5. This indicates that a factor analysis will be useful with our data.

From the above table, we can interpret that there is no error in 75. 5% of the sample and in the remaining 24. 5%, there may occur some sort of error. The value of significance level is 0. 000 that is less than 0. 05. So there is a significant relationship among the variables. About 66. 185% of the total variance in the 16 variables is attributable to the first four components. (Refer Table. 3). It can be seen that Component 1 explains a variance of 6. 230, which is 38. 934% of total variance; Component 2 explains a variance of 1. 718, which is 10. 735% of total variance; Component 3 explains a variance of 1. 23, which is 8. 894% of total variance and Component 4 explains a variance of 1. 220, which is 7. 622% of total variance. From this table we can make the following factor matrix. The rotated component matrix helps to determine what the components represent (Refer Table. 4). The first factor i. e.

CONVENIENCE is most highly correlated with V1, V6, V8, V10, V11, V12 and V15. The second factor i. e.

SECURITY is most highly correlated with V3, V7, V14 and V15. The third factor i. e.

TRADITIONAL BANKINGS is most highly correlated with V2and V16. The fourth factor i. e. AWARENESS is most highly correlated with V4, V5 and V9.

Factor Matrix |Factor No. | |Eigen Value | | | | |Factor Name | |Items |Items Loading | | | |Total |% of Variance | | | |1 |CONVENIENCE |6. 230 |38. 934 |Easy to Use |0. 93 | | | | | |Location Free Access to services |0. 785 | | | | | |Real Time Excess to Information |0. 776 | | | | | |Save Time |0. 764 | | | | | |Save Transaction Cost |0. 79 | | | | | |Easy Third Party Transactions |0. 651 | | | | | |Online Bill Payments |0. 489 | |2 |SECURITY |1. 718 |10. 735 |Personal Information Safe |0. 803 | | | | | |Reliable Services |0. 95 | | | | | |Error Free Transactions |0. 644 | | | | | |Cashless Banking |0. 519 | |3 |TRADITIONAL BANKING |1. 220 |8. 894 |On sight Transaction |0. 555 | | | | | |Availability of Mobile banking Services |0. 19 | |4 |AWARENESS |1. 423 |7. 622 |Point Of Presence |0. 874 | | | | | |Advertisements By Banks |0. 772 | | | | | |SMS/Messages Related Mobile banking Services |0. 671 | The above four factors have been explained as under: FACTOR-1: CONVENIENCE | |V10- Easy to Use. | |V8- Location Free Access to services. | |V6- Real Time Excess to Information. | |V1- Save Time. | |V11- Save Transaction Cost. | |V12- Easy Third Party Transactions. | |V13- Online Bill Payments. | |FACTOR-2: SECURITY | |V3- Personal Information Safe. | |V7- Reliable Services. | |V14- Error Free Transaction. | |V15- Cashless Banking. |FACTOR-3: TRADITONAL BANKING | |V2- On sight Transaction. | |V16- Availability of Mobile banking Services. | |FACTOR-4: AWARENESS | |V4- Point Of Presence. | |V5- Advertisements By Banks. | |V9- SMS/Messages Related Mobile banking Services. | CONCLUSION This study was undertaken to know the perception of mobile banking in India. Mobile banking is in very nascent stage in India and very few banks are providing this kind of facility to the customer.

The detailed research and field study was carried out with usage of SPSS 16 software. A confirmatory factor analysis was performed on this software. Convenience, security, traditional banking and awareness are factors that measure the perception of mobile banking. The demographic study indicates that the people of greater than 45 years age are not comfortable with the mobile banking this is because of either their faith on onsite transaction and not easily accept the newer technology because of lack of awareness and its advantages.

The results of this study suggest that there would be greater challenges for banks and mobile manufacturers to gain the trust among the all age of the people. Proper integration between banks and mobile manufacturers would gain trust by ensuring excellent security through advance reliable technology. This would augment the usage of the mobile banking in India In order to get maximum advantage of the mobile banking following suggestions can utilize to attract bank customers to use mobile banking in the future:

  • First banks should realize the advantage of the mobile banking and provide this services to the customer. The positive belief can be made in the mind of customers by providing sufficient information on the benefits of mobile banking. In order to achieve this objective, banks should provide user manual that contains details on mobile banking, including usefulness and ease of use. This can also be achieved by establishing counter for mobile banking that gives all the information regarding mobile banking. This will influence customers’ decision to use mobile banking.
  • Banks should ensure greater safety by adopting advance newer technology and should give more importance of confidentiality of personal identification number. Banks can organize workshops on mobile commerce applications to increase customers’ familiarity and understanding of mobile banking.


This study cannot be generalized as the sample has been taken form the major metro cities of India. Mobile banking user’s perception is measured in this paper. So further research can be carried out considering mobile baking user and non-user to get better picture of perception towards mobile banking in India.


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ANNEXURE I Table:1 Percentage of Respondents on the basis of Age and Occupation |Age —-> |18-25 |25-35 |35-45 |45-55 |