Factors affecting the decision of using internet banking services of individual customers in Ho Chi Minh City: Bachelor thesis of Banking and Finance / Nguyen Huynh Duc ; Tran Kim Long supervisor

Instructor: MSc. Tran Kim Long Author: Nguyen Huynh Duc MINISTRY OF EDUCATION

AND TRAINING

STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

BACHELOR’S THESIS

FACTORS AFFECTING THE DECISION OF

USING INTERNET BANKING SERVICES

OF INDIVIDUAL CUSTOMERS

IN HO CHI MINH CITY

Author: Nguyen Huynh Duc

Class: HQ2 – GE03

Student code: 030630141727

Instructor: MSc. Tran Kim Long

HO CHI MINH CITY, 01/2020

Instructor: MSc. Tran Kim Long Author: Nguyen Huynh Duc

MINISTRY OF EDUCATION

AND TRAINING

STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

BACHELOR’S THESIS

FACTORS AFFECTING THE DECISION OF

USING INTERNET BANKING SERVICES

OF INDIVIDUAL CUSTOMERS

IN HO CHI MINH CITY

Author: Nguyen Huynh Duc

Class: HQ2 – GE03

Student code: 030630141727

Instructor: MSc. Tran Kim Long

HO CHI MINH CITY, 01/2020

Instructor: MSc. Tran Kim Long Author: Nguyen Huynh Duc

i

ABSTRACT

The explosion of information technology 4.0 has created a miraculous

breakthrough for the global financial industry. Particularly in Vietnam, the

technological element is the focal point for the banking industry to move to a new site

- more flexible and modern. From the traditional banking model, commercial banks

have now been gradually changing to the digital banking model to better suit human

civilization in each period, typically the introduction of online banking services - also

known as Internet Banking.

The e-payment system was born and developed in the context of e-commerce,

helping to narrow the gap between banks and customers, providing more opportunities

and means to make transactions and payment activities become quick and effective.

Individual financial services have become diverse such as money transfer, automatic

withdrawal, card payment, online payment... Thanks to this, banks have been able to

strengthen its competitive position and strength on financial - currency market.

As can be seen, in recent years, commercial banks in Vietnam have gradually

developed Internet Banking services, but the main transaction channel is still system

of bank branches which only a small number of customer use. In addition to the

advantages and utilities of Internet Banking, the reliability of users is not high when

inadequacies are still present, especially in the current period when the crime of "high￾tech fraud” is increasing day by day, such as: poor information security system, poor

service quality, computer viruses, hacked accounts, etc... the way between customers

and technology services of banks.

Although internet banking services in Vietnam are not yet very popular, it has

significantly changed the form and way of providing services of banks today.

Commercial banks are actively developing an online banking system to improve

efficiency and save their operational costs. And facing the challenge to survive and

develop, the completion and expansion of this service are essential for Vietnamese

commercial banks. Modernizing banking services, applying new technologies,

typically Internet Banking is the key to helping commercial banks succeed in the

future.

Instructor: MSc. Tran Kim Long Author: Nguyen Huynh Duc

ii

Recognizing the importance of the e-banking system and the desire to

encourage more customers to pay attention and use, the author chose the topic:

“Factors affecting the decision of using Internet Banking services of individual

customers in Ho Chi Minh City”. The study focuses on clarifying the benefits of

using internet banking services and the factors affecting customers' use of electronic

services, then giving solutions to improve the intention to accept the use of customers

in Ho Chi Minh City.

The Internet Banking is also known as online banking, e-banking or virtual

banking which helps people to easily get information about their bank account, check

the balance provide convenient tools to make the transactions more quickly, easily and

safely. Additionally, it not only controls finance efficiently but also saves time, effort

and cost.

On the side of the banks, the increasing number of Internet users has created

opportunities for the banking industry to develop Internet Banking. It becomes an

indispensable strategy which commercial banks need to deploy as soon as possible not

only to create efficiency in business operations and satisfy diverse customer needs but

to catch up the pace of development and the trend in time as well, thereby

strengthening the position of the bank in the market.

It is undeniable that Internet Banking is one of utility services these days, but it

also faces to many difficulties and challenges. Particularly in Vietnam, although

commercial banks are now making efforts to enhance and try to perfect it day by day,

the number of people accepting to use Internet Banking is still limited, the frequency

is still low. There are many reasons explaining why customers are not trust and

unfaithful to use Internet Banking in long term such as concerns about safety, security

of online services, not believing on service quality or they just simply have no

information about how to use it. Thus, there should be recognition about which factors

affect to the decision of using Internet Banking of an individual in order that

commercial banks would make a strategy easier to reach their target customers and

lead them to accept to use it. There have been many studies all over the world to

identify which basic factors affecting to actual customer decision, but human factors

Instructor: MSc. Tran Kim Long Author: Nguyen Huynh Duc

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vary from country to country and Ho Chi Minh city residents have it own

characteristics.

The study was conducted at banks in Ho Chi Minh City, with all surveyed

people who are from 18 to 60 years old and already using the bank's Internet Banking

service. With the sample of 199 surveys collected to carry out the study by the method

of reliability assessment by Cronbach's Alpha test, the obtained coefficients are

eligible to conduct EFA analysis to draw out the main factor, finally evaluate the

hypothesis by the multiple regression model.

The final results of the research shows that there are seven factors affecting the

"intention to use Internet Banking services" of people, including: Attitude, Subjective

Norms, Perceived Usefulness, Perceived Ease of Use, Perceived Risk, Perceived

Trust, Perceived Behavioral Control. In particularly, Perceived Behavioral Control is

the factor that has the highest impact on the intention to use Internet Banking in Ho

Chi Minh City. Next is the influence level of factors such as: Perceived Ease of Use,

Perceived Risk, Subjective Norms, Perceived Trust, Perceived Usefulness and

Attitude.

Based on the proposed research model, the author built a scale, made

hypotheses and tested the scale. The research results show that the factors that have a

direct impact on the decision of using Internet Banking services and influential

demographic variables make the difference of the target groups.

The thesis studies the factors affecting the use of Internet Banking services by

individual customers at banks in Ho Chi Minh City with the goal of identifying

demographic characteristics and perceived factors affecting the decision of using

online banking services. Thereby, the author gives some suggestions for commercial

banks in the future development of Internet Banking services in Ho Chi Minh City.

To accomplish the research objectives, the author implemented through 02

stages according to the following steps: Stage one overview of research, developing

questionnaires, building research models, building scales; The second phase

conducted hypothesis testing and analysis using the reliability coefficient tool

Instructor: MSc. Tran Kim Long Author: Nguyen Huynh Duc

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(Cronbach’s Alpha), exploratory factor analysis (EFA), and multivariate regression

analysis.

From the research results, the author proposes some suggestions for banks in

Ho Chi Minh City on the development of Internet Banking services in the coming

time. Theoretically, the study has built a research model, scales, research hypotheses

and scales test, identify factors affecting the use of Internet Banking services by

individual customers. at banks in HCMC. In practical terms, the author has some

suggestions for banks in Ho Chi Minh City on the development of Internet Banking

services in the future, such as:

Firstly, Banks should update clear and detailed user manual information to the

target customer by introducing extensive services on media such as newspapers, social

networking sites, main banks and partners' websites. On the Internet Banking website,

there should be specific, clear and vivid information in words and illustrations with

answers to questions and difficulties of customers during the use of this online

service; Website interface should be attractively designed and refined. Clear and

simple transaction items could bring easy and quick experiences to customers. The

friendly interface and the way to use it easily for the first time will make customers

happy and will continue to experience the next time. Banks should diversify services

and products online, maximally support the diverse needs of customers. There may be

more promotions, attractive incentives and practical for all customers. Banks should

update information regularly and notice changes to customers to help banks quickly

capture the interests of customers and maintain relationships. Especially, for

customers who have not used the services, they should have a service experience

program for them to try the service for free for a certain period of time (one month)

for them to approach and become familiar with manipulating the utilities of the

services. For customers who are already using, banks have to regularly maintain

relationships, regularly notify utilities via mail or phone number... to create concerns

about their needs.

Secondly, Banks should enhance the convenience of Internet Banking services.

They need to invest in building a good and modern network infrastructure such as:

upgrading and expanding the transmission line, broadband, large city, high speed... in

Instructor: MSc. Tran Kim Long Author: Nguyen Huynh Duc

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order to limit possible transaction errors, such as congestion, slow processing, no

notification of information... especially need to handle quickly on the occasion of high

demand for payment. Besides, Banks could deploy more features of batch transfer,

periodical transfer for e-banking services. For the periodical transfer feature,

customers do not need to go to the counter directly, but the bank will actively support

quick transactions according to the customers' specific spending plans. For batch

transfer, just one click, the transfer order can be paid to many beneficiaries at the same

time, instead of making money transfers each time, it takes a lot of time for customers.

Thirdly, Bank have to ensure the safety and information security for customers,

which is an extremely important point for an online service that requires authenticity

and high security, typically Internet Banking. This means:

Banks should focus on investing in database systems so as to ensure safety and

high security by accessing and learning advanced technical technologies from

developed countries in the world, also take advantage of the investment support of

strategic partners, invite foreign experts to consult at the same time...

The bank can choose and apply many methods to solve the problems of

authentication and secure transaction security such as: Two Factor Authentication;

One Time Password; Use Virtual Keyboard; Hardware Token, Smart Card with

Digital Signature... Compared to other solutions, the security solution using electronic

signatures solves 04 important issues of electronic transactions: (i) User

authentication, (ii) Confidentiality of transaction information, (iii) Data integrity, (iv)

Anti-disclaimer.

Banks need to comply with the regulations on security and safety in Internet

Banking transactions in accordance with the regulations of the State Bank,

Department of Banking Information Technology.

Banks should requently give recommendations and warnings to customers

clearly and in detail through the bank's official website, annual meetings, social

networking sites, newspapers... Encourage customers to change passwords (every two

months), provide free anti-virus software, always have a supervisor (24/7) of unusual

transactions and quickly notify customers goods for timely handling to avoid

unfortunate incidents that may occur.