Consumer acceptance ofinternet banking: the influence

of internet trustSonja Grabner-Krauter

Department of Marketing and International Management,University of Klagenfurt, Klagenfurt, Austria, and

Rita FaullantDepartment of Innovation Management and Entrepreneurship,

University of Klagenfurt, Klagenfurt, Austria

Abstract

Purpose – This study seeks to investigate the role of internet trust as a specific form of technologytrust in the context of internet banking. Furthermore, the integration of propensity to trust within thehierarchical structure of personality and its applicability to technological systems are investigated.

Design/methodology/approach – The approach takes the form of an empirical study with 381bank customers in Austria (adopters and non-adopters) and the use of a basic model of the adoption ofinternet banking with structural equation modelling (SEM).

Findings – The results confirm the influence of internet trust on risk perception and consumerattitudes towards internet banking. Propensity to trust is a determinant not only for interpersonalrelationships but also for trust in technological systems.

Research limitations/implications – This is not a representative study. Future research isencouraged to systematically investigate further facets of the personality structure in trust andadoption research, as well as to test interaction effects of psychological determinants (from the study)and external stimuli (web site characteristics).

Practical implications – Making the internet banking interface for the customer more attractiveand easier to navigate is not enough to increase the adoption rate of internet banking. Trust-creatingactivities to increase internet trust and to diminish perceived risk must be continuously pursued.Propensity to trust is an important determinant in the fruitfulness of these actions.

Originality/value – The paper presents the conceptualization of internet trust as a specific form oftechnology trust, and its pivotal role in the adoption process of internet banking, together with theextension of the propensity to trust concept to technological systems.

Keywords Virtual banking, Trust, Risk assessment, Personality

Paper type Research paper

1. IntroductionIn recent years, developments in information technology and the subsequent evolutionof internet banking have fundamentally changed the ways in which banks implementtheir business and consumers conduct their everyday banking activities (Erikssonet al., 2008; Sayar and Wolfe, 2007). internet banking allows customers to conduct awide range of banking transactions electronically via the bank’s web site – anytimeand anywhere, faster, and with lower fees compared to using traditional, real-worldbank branches. However, despite the continuing increase in the number of internetusers and despite all the apparent advantages of internet banking for customers, inmany countries the growth rate of internet users who adopt internet banking has not

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International Journal of BankMarketing

Vol. 26 No. 7, 2008pp. 483-504

q Emerald Group Publishing Limited0265-2323

DOI 10.1108/02652320810913855

risen as strongly as expected (White and Nteli, 2004). Across Europe, internet bankingadoption rates are markedly different. For example, in Norway and Finland 70-80 percent of internet users adopt online banking, in Austria and Germany about 40 per cent,whereas in Greece and Romania less than 10 per cent of the internet users make use ofonline banking or brokerage (Meyer, 2006). On the other hand, in Brazil the internetbanking growth rate over the past years has exceeded that of the internet itself(Hernandez and Mazzon, 2007).

These differences raise questions about the determinants of consumers’ acceptanceof internet banking. Using numerous different theoretical approaches and modelsseveral researchers have investigated the factors that impact the decisions ofcostumers to adopt internet banking (for recent reviews see, e.g. (Hernandez andMazzon, 2007; Sayar and Wolfe, 2007). Compared to face-to-face transactions, internetbanking transactions have some unique characteristics, such as the extensive use oftechnologies, the distant and impersonal nature of the online environment, and theimplicit uncertainty of using an open technological infrastructure for financialtransactions (Gan et al., 2006; Yousafzai et al., 2003). These particular features ofinternet banking render a unique environment, in which trust is of crucial importance.Recent literature on internet banking indeed shows that the lacking of trust has to beconsidered to be one of the main reasons why consumers are still reluctant to conducttheir financial transactions online (Flavian et al., 2006; Luarn and Lin, 2005; Mukherjeeand Nath, 2003; Rotchanakitumnuai and Speece, 2003).

Consumer trust is an important factor in practically all business-to-consumerinteractions and a crucial aspect of electronic commerce. Most empirical studies onconsumer online trust focus on interpersonal trust, where the object of trust is theinternet vendor (e.g. (Gefen, 2000; Gefen et al., 2003; Koufaris and Hampton-Sosa, 2004;Lee and Turban, 2001; Pavlou, 2003; Suh and Han, 2003), whereas the influence oftechnology or system trust on online consumer behaviour is largely neglected(Grabner-Krauter and Kaluscha, 2003). This paper adds both to technology adoptionresearch and to trust research in marketing by examining the role that different typesof online trust play in the adoption of internet banking. We focus on the concept ofinternet trust, analyzing if it is a distinct type of trust that influences the consumer’sperceived risk of internet banking and the consumer’s attitude toward internetbanking. Assuming that the lack of internet trust is an important reason for consumersnot using the internet for conducting their financial transactions, we collected datafrom both adopters and non-adopters of internet banking.

Moreover, the implications of one’s individual disposition or propensity to trust ononline consumer behaviour have not yet been examined in depth (McKnight et al.,2004). On a more general level, in a recent paper the lack of research on the role ofdispositional factors in internet use was pointed out (McElroy et al., 2007). Dispositionto trust is an individual difference variable that refers to the propensity or generaltendency to be willing to depend on or become vulnerable to other persons. Previousresearch has shown that dispositional trust is of special importance in the initial stagesof building new relationships (Chau et al., 2006; McKnight et al., 1998). In severalstudies the consumer’s general disposition to trust was found to have an impact on theconsumer’s initial trust in an online vendor (Gefen, 2000; McKnight et al., 2002; Teo andLiu, 2007). However, little research has addressed the question if an individual’spropensity to trust other people also has a major influence on his/her trust in technicalsystems (Kaluscha, 2004; McKnight et al., 2002; McKnight and Chervany, 2002). Hence,

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another aim of our study is to shed light on the potential influence of dispositional truston trust and risk perception in the context of internet banking.

The paper proceeds as follows: The subsequent review of current literature ononline trust and perceived risk provides the theoretical foundation for the hypothesesregarding the impact of dispositional trust on internet trust and the influence ofinternet trust on perceived risk and attitude towards internet banking. Then,methodology, results, and hypotheses testing are presented. The final section discussesthe study’s findings, contribution, and theoretical and managerial implications.

2. Online trustTrust in general, is an important factor in many social interactions, involvinguncertainty and dependency. From a functional point of view trust can be seen as amechanism that reduces the complexity of human conduct in situations of uncertainty(Luhmann, 1989). Trust is central to any economic transaction, whether conducted in aretail outlet in the real offline world or over the internet, by means of a web site.However, trust is even more important in an online situation (Gefen et al., 2003; Gefenand Straub, 2004; Harridge-March, 2006; Pavlou and Fygenson, 2006; Riegelsbergeret al., 2005; Walczuch and Lundgren, 2004). One important reason for the importance oftrust in e-commerce is the fact that in a virtual environment the degree of uncertaintyof economic transactions is higher than in traditional settings. internet-basedcommercial transactions can bring about several risks that either are caused by theimplicit uncertainty of using open technological infrastructures for the exchange ofinformation (system-dependent uncertainty) or can be explained by the conduct ofactors who are involved in the online transaction (transaction-specific uncertainty)(Grabner-Krauter, 2002).

The importance of initiating, building, and maintaining trust between buyers andsellers as key facilitators of successful e-commerce is increasingly being recognized inacademic as well as in practitioner communities. Meanwhile a number of studies haveinvestigated the role of trust in the specific context of business-to-consumer electroniccommerce, having their roots in different scholarly disciplines and focusing ondifferent aspects of this multi-dimensional construct (see the overview in (Chang et al.,2005; Grabner-Krauter and Kaluscha, 2003). The concept of trust has been defined byresearchers in many different ways, which often reflect the paradigms of the particularacademic discipline of the researcher. Some definitions overlap, but more often eachdefinition offers an explanation of a different aspect of trust. Thus there are literallydozens of definitions of trust, which many researchers find contradictory andconfusing (Gulati and Sytch, 2008). These problems particularly apply to thee-commerce domain research (McKnight and Chervany, 2002).

In the organizational trust literature trust is mostly defined as a belief or expectationabout the other (trusted) party, or as a behavioural intention or willingness to dependor rely on another party, coupled with a sense of vulnerability or risk if the trust isviolated (e.g. (Mayer et al., 1995; Rousseau et al., 1998). Accordingly, online trust ismost often defined as a belief or expectation about the web site, the web vendor and/or(less frequently) the internet as the trusted party or object of trust or as a behaviouralintention or willingness to depend or rely on the trusted party (McKnight andChervany, 1996; McKnight et al., 2002; McKnight and Chervany, 2002). In the context ofinternet banking, the trustor is typically a consumer who has to decide whether to

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adopt internet banking or stay with more traditional ways to undertake her/hisfinancial transactions.

Especially within the research disciplines of relationship marketing andorganizational theory several scholars have offered trust definitions that highlighttrust related attributes of the trusted party. Researchers have defined trust as amulti-dimensional construct and included specific characteristics of the trusted partyin their trust definitions such as ability, integrity, benevolence, predictability,credibility or dependability (e.g. (Mayer et al., 1995; Palmer and Bejou, 1994; Selnes,1998). These characteristics or attributes of the trusted party are often referred tointerchangeably as elements, antecedents, underlying dimensions or determinants ofonline trust (Wang and Emurian, 2005). Fundamentally, these attributes of the trusteereflect different components of trustworthiness, a concept that again is defineddifferently by a number of researchers (e.g. Riegelsberger et al., 2005). In line with amulti-dimensional idea of trust more commonly found in the marketing andorganization theory literature (e.g. Morgan and Hunt, 1994) we propose to includespecific characteristics of the trusted party in the definition of online trust. Basically,two broad dimensions of online trust can be distinguished. The “hard dimension” ofonline trust has a functionality-based nature, involving the ability, competence, andpredictability of the trusted object. The trustor’s judgement of the hard dimensionprimarily is based on cognition. This dimension is relevant for all objects of trust in thecontext of e-commerce: the e-commerce web site, the merchant that the web siterepresents, and the underlying technology. The “soft dimension” of trust comprisescharacteristics or attributes such as honesty, integrity, benevolence and credibility thatrefer to the intrinsic, value-based motivation of the trustee to act in the interest of thetrustor. The trustor’s perception of the soft dimension mainly is affect-based. Theoperationalization of this trust dimension respectively of its sub-dimensions makessense only in interpersonal trust relationships, or more specifically, when the trustedparty is another individual person.

The analysis of online trust in the context of internet banking should not focusexclusively on interpersonal relationships but has to consider impersonal forms oftrust as well. The technology itself – serving as a transmission medium for conductingfinancial transactions and including security services and technical solutionsembedded in e-commerce technologies – has to be considered as an object of trust(Corritore et al., 2003; Pennington et al., 2003/2004; Ratnasingam, 2005;Rotchanakitumnuai and Speece, 2003; Shankar et al., 2002). Ratnasingham (1999)proposes the term technology trust and suggests that dimensions of security servicessuch as confidentiality mechanisms, authentication mechanisms, and access controlmechanisms contribute to the enhancement of technology trust from a capabilityprocess that serves to support the privacy, accuracy, authenticity of authorized parties,and accountability of e-commerce transactions. (Mukherjee and Nath, 2003) view thecustomers’ orientation towards e-commerce technology and the extent to which theytrust the electronic system as a proxy for their trust in internet banking.

When investigating the influence of technology trust on online consumer behaviourit makes sense to define this construct as a belief, for example about the reliability andsecurity of the e-commerce infrastructure, combined with a willingness to rely on theinternet as a medium for economic transactions. Trust in technical systems mainly isbased on the perceived functionality (e.g. reliability, capability, correctness andavailability) of a system (Lee and Turban, 2001; Thatcher et al., 2007). Therefore, we

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argue that only the “hard dimension” of trust is relevant for the conceptualization andoperationalization of internet trust. We conceptualize internet trust as trusting beliefsin the reliability and predictability of the internet and the willingness of the consumerto depend on the internet with regard to economic transactions.

The dependent variable in our research model is attitude towards internet banking.The concept of attitude can be considered a key factor in most consumer behaviourmodels. Attitude has long been shown to influence behavioural intentions and actualbehaviour (Ajzen, 1991). Based on Venkatesh’s definition of attitude toward usingtechnology (Venkatesh et al., 2003), attitude toward internet banking is defined as anindividual’s overall affective reaction to using the internet for his/her bankingactivities. The prevailing view of consumer trust in the e-commerce literature contendsthat trust has a direct positive effect on attitudes and behaviour (Jarvenpaa et al., 2004;Pavlou, 2002; Suh and Han, 2003; Teo and Liu, 2007). The consumer’s trusting beliefsabout the trusted party or trusted object affect their attitude toward the trustingbehaviour. The relationship between trust and attitude draws on the notion ofperceived consequences (Pavlou and Fygenson, 2006). internet trust enables favourableexpectations that the internet is reliable and predictable and that no harmfulconsequences will occur if the online consumer uses the internet as a transactionmedium for his/her financial transactions. Therefore, we propose that:

H1. Internet trust positively influences the consumer’s attitude toward internetbanking.

3. Perceived risk of internet bankingThe concept of consumer-perceived risk has been widely dealt with in the marketingliterature and has been shown to influence consumer behaviour to varying degrees andin varying contexts (Cunningham et al., 2005; Mitchell, 1998). Consumer behaviourresearchers most often define perceived risk in terms of the consumer’s perceptions ofthe uncertainty and potential adverse consequences of buying a product or service(Littler and Melanthiou, 2006). Many studies have shown that consumers perceivedifferent facets or components of risk and that their predictive value for total risk andrisk-reducing behaviour depends very much on the product class (Gemunden, 1985).Distinct facets of risk (e.g. social, financial, security, and performance risk) may beperceived independently of one another as they can arise from different kinds ofsources. The influence of risk perception on consumer attitudes and behaviour may bedifferent in situations that are dominated by different types of risks, e.g. either by highsocial risk or high financial risk (Mandrik and Bao, 2005).

Previous research suggests to include perceived risk as an important factorinfluencing online consumer behaviour (Cunningham et al., 2005; Pavlou, 2003; Salamet al., 2003; Schlosser et al., 2006). To process economic transactions on the internetpresents numerous risks for consumers, over and above the transaction process itselfbeing perceived as risky (Einwiller and Will, 2001). In the online environment criminalacts can be performed with extremely high speed, and without any physical contact(Cheung and Lee, 2006). If an unauthorized individual is able to get access to the onlinebanking portfolio of a user, a considerable amount of financial information may bejeopardised and there might be considerable financial losses. Hence, the mostimportant categories of perceived risk associated with internet banking are likely to befinancial risk and security risk related to the potential loss because of deficiencies in

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the operating system or misappropriation of funds through illegal external access(Awamleh and Fernandes, 2006; Littler and Melanthiou, 2006; Rotchanakitumnuai andSpeece, 2003; Sarel and Marmorstein, 2003).

Numerous researchers have recognized the importance of risk to understand trust(Yousafzai et al., 2003), but at the same time have emphasized that the relationshipbetween risk and trust is complex. Across disciplines there is agreement that trust onlyexists in an uncertain and risky environment. “The need for trust only arises in a riskysituation” (Mayer et al., 1995), p. 711). Trust would not be needed if actions could beundertaken with complete certainty and no risk. The trustor must lack informationregarding the behaviour or characteristics of the trusted party or object of trust (i.e.uncertainty and there must be something that the trustor could lose if the trust isviolated (i.e. risk). However, the relationship between risk and trust is reciprocal: riskcreates an opportunity for trust, which reduces the perceived risk and leads to risktaking (Rousseau et al. 1998).

Drawing on the work of (Luhmann, 1989) trust can be seen as a mechanism toreduce the complexity of human conduct in situations where people have to cope withuncertainty. In this perspective trust bears important functions for the consumer – itreduces information complexity and lowers the perceived risk of a transaction. Hence,internet trust can be seen as a mechanism that reduces the uncertainty of using opentechnological infrastructures for the exchange of information, i.e. system-dependentuncertainty. With regard to internet banking or online shopping system-dependent orexogenous uncertainty primarily relates to potential technological sources of errorsand security gaps or to put it economically to technology-dependent risks that can notbe avoided by an agreement or a contract with another actor who is involved in thetransaction (Grabner-Krauter, 2002). In the context of online shopping, several studieshave confirmed the expected risk reducing impact of trust (Chang et al. 2005; Gefenet al. 2003; Jarvenpaa et al. 2000; Pavlou, 2003). Hence, we conclude that internet trust isa mechanism that reduces the perceived system-dependent risks of economictransactions on the internet. We propose that:

H2. Internet trust is negatively related to perceived risk of internet banking.

Without solving the existing problems of conceptualization and measurement ofperceived risk (Mitchell, 1998) the impact of risk factors on attitudes, intentions or actualusage of online-shopping has been investigated in a number of studies (see the overviewin (Chang et al. 2005). Several researchers refer to Ajzen’s theory of planned behaviour(TPB) (Ajzen, 1991) or to the theory of reasoned action (TRA) (Ajzen and Fishbein, 1980)as a theoretical framework (e.g. (Jarvenpaa et al. 2000; Pavlou, 2003; Teo and Liu, 2007;Teo and Liu, 2002). Similar to trust, perceived risk can also be regarded as a situationalbelief about the likelihood of gains and losses (Mayer et al. 1995; Teo and Liu, 2007). Inseveral studies a significant negative impact of risk perception on the attitude towardsonline shopping or likelihood to purchase online was found (Jarvenpaa et al. 2000;Kuhlmeier and Knight, 2005; Laforet and Li, 2005; Teo and Liu, 2007; Van der Heijdenet al. 2003). Drawing on these findings we posit that:

H3. Perceived risk of internet banking is negatively related to the consumer’sattitude toward internet banking.

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4. Situational and dispositional antecedents of internet trust4.1 Familiarity with the internetIn consumer research familiarity traditionally has been defined as the number ofproduct-related experiences that have been accumulated by the consumer (Alba andHutchinson, 1987). Familiarity thus reflects the direct and indirect knowledge about acertain product or object available to the individual. Several researchers emphasizethat consumers’ level of experience or familiarity with the internet should beconsidered as a key situational variable in determining both beliefs about this mediumand online consumer behaviour (for an overview see (Martinez-Lopez et al., 2005). Bothtrusting beliefs and the willingness to depend are context-dependent. Thereforeunderstanding the given context involved (i.e. familiarity) is often an importantantecedent of trust (Gefen, 2000). Familiarity allows customers to accumulatetrust-relevant knowledge about the trusted object and provides a framework for futureexpectations (Doney and Cannon, 1997; Komiak and Benbasat, 2004). According to(Gefen, 2000) familiarity can help to reduce uncertainty in online transactions andrelationships. Prior experience with and knowledge about the internet should alleviatesome of the complexity people encounter on commercial web sites and thus increaseinternet trust. Hence, we propose that:

H4. Familiarity with the internet will increase internet trust.

4.2 Propensity to trust in the hierarchical structure of personalityPropensity to trust or dispositional trust is the extent to which a person displays atendency to be willing or depend on others across a broad spectrum of situations andpersons (McKnight et al. 2002). This type of trust has its roots in personalitypsychology (e.g. (Rotter, 1967) and can be seen as a stable intra-individualcharacteristic which influences interpersonal interaction with others. (Mayer et al.1995, p. 715) define the propensity to trust as a stable within-party factor which can bethought of as the general willingness to trust others. Perceiving it as a generalized andenduring predisposition, propensity to trust is not focused on specific situations orspecific others. Despite its wide use in literature and also in empirical studies theconcept of dispositional trust has mostly been conceptualized as a stand-alone traitwithout relation to the theoretical understanding of the personality structure which hasemerged in recent years in psychology. (Brown et al. 2004) strongly claimed for relatingthis concept to established personality theories, and proposed the interpersonalcircumplex model as an integrative framework. (Mooradian et al. 2006) among the firstempirically related propensity to trust to the hierarchical structure of the Five FactorModel, and investigated the relationship between trait and state trust in the context ofknowledge sharing. We share the perspective that the concept of dispositional trustneeds to be related to recent findings in personality research, and therefore give anoverview of the hierarchical structure of the Five Factor Model and the position ofpropensity to trust in this framework.

The concept of personality and its relationship to consumer behaviour have longbeen of vital interest to consumer researchers (Sojka and Giese, 2001). For decades thestructure of personality has been hotly debated without being able to grant consistentresults. As in the early 60s five fundamental traits had been identified (Tupes andChristal, 1992), growing consensus was emerging that these were the fundamental

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dimensions of personality (Costa and McCrae, 1992; Goldberg, 1990). Five broad factorsof higher order constitute the pattern of traits across individuals:

(1) neuroticism;

(2) extraversion;

(3) agreeableness;

(4) openness; and

(5) conscientiousness.

Numerous scholars from many traditions were able to replicate the findings, therebysustaining the theory of five basic dimensions of personality. The Big Five taxonomyreceived considerable evidence over the last decades across different theoreticalframeworks, measures, occupations, cultures, and sources of ratings (DeRaad andKokkonen, 2000; Liao and Chuang, 2004). In cosequence the concept of the Big five hasbeen employed in and linked to essential areas of applied psychology and socialscience, e.g. emotions and well-being (Larsen and Ketelaar, 1991; Watson and Clark,1984), life satisfaction (Costa and McCrae, 1992), clinical research, counselling centresand job selection (Semit and Ryan, 1993), to marketing and consumer behaviour(Mooradian and Olver, 1997), motives and values (Roccas et al. 2002).

However, the Five Factor Model has not been without its critique. In many studiespersonality traits failed to predict concrete behaviour. Among others, theperson-situation debate challenges the view that consistencies in individuals’behaviour are pervasive or broad enough to be meaningfully described in terms ofpersonality traits (Funder, 2001). Also in the online trust literature scholarsinvestigating the impact of the Big Five on trust in electronic retail settings did not findany supporting evidence that personality-related factors influence the dependent trustvariable (Walzuch and Lundgren, 2004). In most studies, in order to assess personality,the relative parsimonious NEO-Five Factor Inventory (NEO-FFI) (Costa and McCrae,1992), is used, which might constitute one reason for the lacking significance of thepersonality-behaviour-relationship, as this raster is too coarse meshed. By splitting upthe five dimensions into 30 narrower facets, additional information is thought to begathered about individuals over and above what could be obtained from the fivecommon factors (McCrae and Costa, 1992). Costa and McCrae (1995, p. 23) define thebroad five factors as “collections of specific cognitive, affective, and behaviouraltendencies that might be grouped in many different ways”, and facets designate thelower level traits which correspond to these groupings. The lower-level facets mighttherefore be more closely related to overt and observable behaviours (Paunonen et al.2003).

In the Big Five personality framework propensity to trust (which is simply labeled“trust”) is a facet of the Agreeableness dimension. It can be defined as the tendency toattribute benevolent intent to others, assuming that most people are fair, honest andhave good intentions. Contrarily, distrust delineates suspicion that others are dishonestor dangerous (Costa et al. 1991). Low scorers on the trust dimension are furtherdescribed as being cynical, pessimistic, and sceptical. We propose the trust facet of theFive Factor Model to adequately reflect the stand-alone perceptions of the propensity totrust concept, while relating this important construct to recent developments inpersonality research.

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Previous research examining propensity to trust has mainly focused on its impacton interpersonal situations. (Payne and Clark, 2003) for example investigateddispositional and situational determinants of trust in two types of managers. In onlinesettings the internet vendor or the web site are often investigated as trusted objects orparties. (Lee and Turban, 2001) have seen dispositional trust mainly as moderator forconsumer trust in internet shopping, and (McKnight et al. 2004) integrate dispositionsto trust as determinants for the trusting intention towards a web site. We propose thatthe concept of propensity to trust is not exclusively applicable for interpersonalsituations but is extendable towards technical systems. First evidence in this regardcan be found in (Siegrist et al. 2005) who found that general trust (as disposition) mightinfluence perceptions of new technologies. In their study they investigated the impactof propensity to trust on various technological and non-technological hazards andfound a weak significant correlation. Although the internet has not been among theinvestigated technologies we posit that propensity to trust influences both internettrust and the perceived risk of internet banking.

H5a. People with high/low scores on the trust-scale display higher/lower levels ofinternet trust.

H5b. People with high/low scores on the trust-scale display lower/higher levels ofperceived internet banking risk.

5. Study5.1. SampleTo test the proposed relationships, data from customers from different Austrian bankswho also are internet users (both adopters and non-adopters of internet banking) werecollected. Subjects for the study were randomly selected people that have beenapproached in different places (airport, park, shopping streets) in bigger and smallercities more or less all over Austria. Data collection took place in August 2007. Theinterviewers randomly selected airport passengers and passers-by, asked them toparticipate in the study (if they used the internet and had a bank account) and tocomplete the standardized, self-administered questionnaire. In most cases respondentsdid not need any help to answer the questions. As an incentive, interviewees received asoft drink. 381 usable questionnaires were collected. Table I displays thecharacteristics of the sample.

5.2. MeasuresA standardized questionnaire with closed-response questions using seven-point-ratingscales was developed. All measurement items were drawn from the literature, and theywere adapted using standard psychometric scale development procedures. internettrust was measured with four items, two items measuring the perceived reliability andpredictability of the internet, and two items measuring the willingness to depend on theinternet.

(1) Internet trust:. With adequate safety measures on a web site I do not hesitate to enter my

credit card information (willingness to depend on the internet).. I trust the internet (willingness to depend on the internet).

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. When performing a transaction on the internet I know exactly what willhappen (trusting beliefs – predictability).

. Internet transactions (e.g. online shopping or online hotel reservations)always function as expected (trusting beliefs – reliability).

(2) Perceived risk of internet banking:. I am afraid that other people might get access to information about my

internet banking transactions.. I believe it can rather easily happen that money is stolen if using internet

banking.. I am afraid that the confidentiality of my financial transactions might get

lost when using internet banking.. I think that privacy is not guaranteed when using internet banking.

(3) Attitude toward internet banking:. In my opinion it is desirable to use internet banking.. I think it is good for me to use internet banking.. Overall, my attitude toward internet banking is favourable.

(4) Familiarity with internet:. How long have you used the internet?. How often do you use the internet?

(5) (Propensity to) trust:. My first reaction is to trust people.. I tend to assume the best about people.. I have a good deal of faith in human nature.

Characteristic %

Gender Male 48.6Female 51.4

Age Less than 20 years 10.520-29 years 23.130-39 years 20.540-49 years 23.450-59 years 13.660-69 years 5.5More than 70 years 3.4

Education Primary 4.7High school 36.7Vocational school or apprenticeship 29.7University 26.5Other 2.4

Internet banking Adopters 59.1Non-adopters 40.9

Table I.Characteristics of thesample

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The items were adapted from (McKnight et al. 2002; McKnight and Chervany, 2002)and the brand trust scale developed by (Chaudhuri and Holbrook, 2001). Perceivedrisk of internet banking was adapted from (Awamleh and Fernandes, 2006) and(Meuter et al. 2005). Attitude toward online banking was based on scales developedby (Lai and Li, 2005), (Wu and Chen, 2005) and (Chau and Lai, 2003). The measurefor propensity to trust was taken from Costa and McCrae’s (1992)NEO-Personality-Inventory-Revised (NEO-PI-R). The scale for the trust facet wasadopted from the translated and validated German version of (Ostendorf andAngleitner, 2004).

5.3 Results5.3.1 Reliability and validity. Structural equation modeling was used to analyze thedata (AMOS 6.0). Confirmatory factor analysis (CFA) was conducted to test themeasurement model and establish convergent and discriminant validity of theconstructs. The initial measurement model had a mediocre model fit, and five itemsfrom the personality facet scale were eliminated in order to improve the fit of themeasurement model. As a result of the refinements and purification, the initialmeasurement instrument of 21 items was reduced down to 16 items for the final,refined measurement model. To evaluate the fit of the proposed structural model,several goodness-of-fit indicators were used. The chi-square value is 194,38 (df ¼ 112,p ¼ 0.000; x2/d.f. ¼ 1,736). Chi-square as a test statistic, however, is onlyrecommended with moderate sample sizes (Hu and Bentler, 1999), e.g. 100 to 200,as with larger sample sizes as in this case, trivial differences become significant.Hence, other global fit indices are used to test model fit. The final measurement modelreached or succeeded all recommended thresholds, with a goodness-of-fit index (GFI)of 0.945, an adjusted goodness-of-fit index (AGFI) of 0.925; the root mean square errorof approximation (RMSEA) is 0.044, the Tucker-Lewis index (TLI) is 0.979 and thecomparative fit index (CFI) is 0.983. Thus, it can be concluded that the model fits thedata reasonably well. In order to evaluate the local fit of the structural components,reliability and validity of the measures were tested calculating the compositereliability (CR) of the constructs, the average variance extracted (AVE) and theFornell-Larcker-Ratio (Fornell and Larcker, 1981) to test discriminant validity. Theresults are reported in Table II, showing good psychometric properties of themeasures. For the endogenous constructs internet trust, perceived risk of internetbanking and attitude toward internet banking, and the exogenous constructfamiliarity all indices clearly exceed their respective common acceptance levelsrecommended by previous researchers (indicator loading . 0.4, t-value significant,composite reliability . 0.6, average variance extracted . 0.5, Fornell-Larcker-Ratio,1). One indicator loading of the exogenous construct propensity to trust is lowerthan the recommended threshold.

5.3.2 Hypothesis testing results. Figure 1 displays the results of the basic model withthe main effects, the explained variance of endogenous latent constructs and thestrength of structural relationships.

R 2 values of the endogenous constructs are 0.37 (internet trust), 0.36 (perceived riskof internet banking), and 0.58 (attitude toward internet banking). Hence, the personalityfacet propensity to trust and familiarity with the internet influence internet trust,explaining 37 per cent of its variance. Both propensity to trust and internet trustinfluence perceived risk of internet banking, explaining 36 per cent of its variance.

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ItemIndicatorloading

t-value factorloading

Compositereliability

Average varianceextracted

Fornell-Larcker-Ratio

Internet trustITRUST2 0.683 16.633* 0.88 0.65 0.86ITRUST3 0.639 16.020*ITRUST4 0.673 16.489*ITRUST5 0.585 –

Perceived risk internet bankingRISK_IB3 0.654 20.357* 0.92 0.74 0.49RISK_IB4 0.679 19.783*RISK_IB5 0.848 24.562*RISK_IB6 0.784 –

Attitude toward internet bankingATT1 0.836 – 0.95 0.87 0.65ATT2 0.890 32.611*ATT3 0.879 32.109*

Familiarity with internetDauer_I 0.757 15.546* 0.89 0.81 0.43FREQ_I 0.836 –

Trust propensityAgree1_6 0.602 9.916* 0.80 0.59 0.07Agree1_7 0.879 9.120*Agree1_8 0.267 –

Note: * p , 0.001

Table II.Psychometric propertiesof the scales in the maineffect model

Figure 1.Relationships in the maineffect model

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internet trust has a strong positive effect and perceived risk of internet banking has amedium negative effect on the attitude toward internet banking, and together thesevariables explain 58 per cent of the variance of attitude. The results of the main effectmodel provided support for H1 to H5b. Familiarity with the internet has a strongpositive effect impact on internet trust (ß ¼ 0.59; p ¼ 0.000). internet trust has a strongand positive impact on attitude toward internet banking (ß ¼ 0.66, p ¼ 0.000) and astrong and negative impact on perceived risk of internet banking (ß ¼ 20.57,p ¼ 0.004). Perceived risk of internet banking has a negative impact on attitude towardinternet banking (ß ¼ 20.16, p ¼ 0.002). In support of H5a and H5b, propensity totrust has a significant positive impact on internet trust (ß ¼ 0.16, p ¼ 0.002) and asignificant negative impact on perceived risk, (ß ¼ 20.11, p ¼ 0.025).

6. DiscussionAs yet, most studies on consumer online trust have focused on trust-relatedcharacteristics of the internet firm or the web site interface. In order to deriveeffective implications for enhancing consumer trust in e-commerce a number ofempirical studies have attempted to identify the elements that are pertinent to theformation of online trust. Because the willingness to buy online or adopt internetbanking depend both on the consumer’s trust in a specific party (web site or onlinemerchant) and in the internet as underlying transaction medium, not onlycharacteristics of the merchant but also characteristics of the web site and theunderlying technology infrastructure are factors that affect online trust. The resultsof this study provide strong support for the proposed influence of internet trust onrisk perception and consumer attitudes toward internet banking. We conceptualizedinternet trust as trusting beliefs in the reliability and predictability of the internet andthe willingness of the consumer to depend on the internet with regard to economictransactions and thus did not include any characteristics of the bank or the bank’sweb site in our definition.

In the original survey, the variable bank trust also was included, as we expected itto influence the adoption of internet banking as well. The results of a discriminantanalysis between the two groups of adopters and non-adopters of internet banking didnot show any significant differences for bank trust (Wilks Lambda ¼ 0.988,p ¼ 0.731). However, for internet trust as independent variable, the analysis ofdiscriminance found a statistical significant difference between adopters andnon-adopters (Wilks’ Lambda ¼ 0.673; p ¼ 0.000). In a rival structural model (theresults are not reported in this paper) trust in the bank was included as anotherantecedent of the attitude toward internet banking. Bank trust did not show anyimpact on the attitude toward internet banking and there only was a smallintercorrelation between bank trust and internet trust. Thus it can be concluded thattrust toward the bank or the internet vendor in a broader sense and trust toward theinternet must not be confounded or treated as different dimensions of the sameconstruct “online trust”, but have to be regarded as two distinct constructs thatinfluence online consumer behaviour in different ways.

Another contribution of this study to the trust literature is the confirmation of thehypothesized impact of propensity to trust on internet trust as a specific form oftechnology trust. The question if the psychological concept of dispositional trust orpropensity to trust is extendable towards technical systems is controversiallydiscussed in the literature (Kaluscha, 2004; McKnight et al., 2002; McKnight and

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Chervany, 2002). Our findings assert that not only people may be the object ofdispositional trust, but trust propensity might be a generalized tendency both acrossdifferent situations and different objects of trust.

In addition, this study has shown that the adoption process of internet banking isnot a mere question of web design, or actions dedicated to diminish perceived internetrisk, but that it is a complex psychological process in which predispositions in thepersonality structure of potential internet users play a significant role. Thus, even ifbank managers might devote valuable efforts to design web site interfaces withimproved usability and security in order to enhance internet trust and reduce theperceived risk, these steps are likely to have diverging success among internet bankcustomers, depending on their personal predisposition. In practice however it is quitedifficult for bank managers to assess the personality scores on the trust facet of theircustomer base as a whole. Therefore, in the long run in order to enhance trust ininternet banking and to reduce the perceived risk there might be no other means thanactions in communicating the reliability and predictability of the internet bankingsystem. This contains detailed information about the use of security features alreadyin the instruction phase for the internet banking user, furthermore regularinformation up-dates for customers about security improvements, and alsohigh-publicity events such as public lectures, research grants, etc. Negativeheadlines concerning internet banking, as lately happened in Austria, wherephishing-attacks with misuse intentions have caused high uncertainty among internetbanking users, have to be counterbalanced by overt efforts to improve security and tore-gain customer trust.

7. Implications, conclusion and limitationsResearchers propose a number of different instruments and measures internetretailers can use to influence trusting beliefs, intentions and behaviours of onlineconsumers (see the overview in Grabner-Krauter and Kaluscha, 2003). Basically,these instruments and measures can be seen as potential signals of trustworthinessas they aim at increasing the perceived trustworthiness of the web site and theonline vendor (Bart et al., 2005). Implications for the design of trust-inducing websites mainly are presented in the growing body of literature in the field of humancomputer interaction that focuses on how to implement graphical e-commerceinterfaces that are perceived as trustworthy by online consumers (Wang andEmurian, 2005). However, these recommendations might not be sufficient toovercome consumers’ reluctancy to conduct their financial and other economictransactions on the internet, as consumers might refrain from visiting web sitesdesigned for e-commerce or internet banking because they do not consider theinternet infrastructure as reliable and secure. Fuelled by media reports, there is agrowing perception that the internet is insecure and unsafe (Gorman, 2007). Toattract more internet banking customers and increase the acceptance of onlinebanking services in Austria, it is definitely not enough to make the internet bankingsystem convenient and easy to interact with. Rather it is of paramount importance,to address the issue of security in order to improve the rate of internet bankingadoption (see also (Laforet and Li, 2005; Mukherjee and Nath, 2003). To ensure thesecurity of their online banking systems banks use security features such asfirewalls, filtering routers, callback modems, encryption biometrics, smart cards, anddigital certification and authentication (Mukherjee and Nath, 2003). However, for the

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majority of consumers it is beyond the scope of their technological understanding tofully comprehend the meaning and functionality of these security features.Therefore the attention of bank managers might be fruitfully focused on trainingand promotion approaches with the aim to influence their customers’ perception ofonline security and to improve their customers’ knowledge about privacy andsecurity mechanisms and concepts such as encryption methods.

In the previous sections we have already mentioned some of the limitations of ourstudy, among others the combined analysis of adopters and non-adopters (even if therewere no significant differences concerning bank trust). One important limitation mightbe seen in the lacking representativeness of the sample, even if we have a balanceddistribution concerning the age groups, the sample is not a true random sample fromthe whole population wherefore a selection bias can not be fully excluded. And finally,due to space restrictions on the questionnaire we have not included usability,usefulness, other perceived characteristics of online banking and web site-relatedquestions, although there might be interaction effects with the psychologicalconstructs investigated in the present study. This could be a valuable research goal forfuture studies, as the relative importance of internet trust in the adoption process ofinternet banking might be related to external stimuli provided by the web siteinterface.

Research focusing on the investigation of the dimensionality of online trustposes another fruitful avenue for trust researchers. Scholars either view trust asbeing one-dimensional or multi-dimensional, but clear empirical evidence is lackingthat would help to favour one of these views. In line with the theoretical reasoningof (Gefen and Straub, 2004) and the findings of their empirical study we believethat the dimensions that constitute trust are context-specific and that the meaningand consequences of trust can be better analyzed and understood when differenttrust dimensions are viewed separately. Thus the relevant trusting beliefs orexpectations that determine trust-related behaviour depend on the circumstances ofthe interaction. In the case of internet trust, the relevant trusting beliefsdimensions are predictability and reliability, whereas benevolence and integrity aredimensions of trustworthiness that are relevant only for interpersonal orinterorganizational trust concepts.

The findings of our study showed that Austrian consumers tend to have low trust inthe internet as a medium to conduct their personal banking activities. As mentionedabove, across Europe, internet banking adoption rates are markedly different (Meyer,2006). Factors influencing the adoption of internet banking have been investigated innumerous different countries (e.g. (Akinci et al. 2004; Eriksson et al. 2008; Karjaluotoet al. 2002; Kuisma et al. 2007; Laforet and Li, 2005; Mukherjee and Nath, 2003;Rotchanakitumnuai and Speece, 2003; Sukkar and Hasan, 2005; Wan et al. 2005).Consequently, cross-cultural effects on consumers’ online trust may prove to beanother fruitful topic for future research. One of the ways in which culture affects trustis through dispositional trust. But culture can also affect the perception of differenttrust dimensions and the importance given to each of these dimensions (Schoormanet al. 2007). In any case, we conclude in line with several other researchers that therelationship between (online) trust and culture needs to be further investigated (Gefen,2000; Lee and Turban, 2001; Schoorman et al. 2007; Shankar et al. 2002; Teo and Liu,2007).

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About the authorsSonja Grabner-Krauter is Associate Professor of Marketing and International Management at theUniversity of Klagenfurt, Austria. Her research focus is on business ethics, consumer trust, andelectronic commerce. She is the corresponding author and can be contacted at: sonja.grabner@uni-klu.ac.at

Rita Faullant is senior research fellow at the Department of Innovation Management andEntrepreneurship at the University of Klagenfurt. Her research interests centre on the interfacesbetween psychology and marketing, leadership and innovation.

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