Abstract
This research-based chapter investigates impact of various innovation technology factors on digital banking customers' usage intention. The selected factors are online banking, mobile payment, artificial intelligence-based robot advisors, and cloud-based services. The study develops conceptual model against theoretical background of the innovation diffusion theory, technology acceptance model, and unified theory of acceptance and use of technology. Empirical data was collected through online survey using a self-administered questionnaire. Quantitative research method was employed with a total sample size of 302 respondents using snowball sampling technique. Normality and reliability tests were performed followed by confirmatory factory analysis, validity assessment, and structural equation modelling using AMOS 24. The findings confirm positive significant impact of artificial intelligence-based robot advisor and cloud-based services on usage intention. Theoretical contribution and managerial implications are then discussed along with limitations of the current study and future research avenues.
TopIntroduction
The rapid evolution of technology has transformed the way people perform banking by first enabling them to execute multiple banking transactions electronically by using a personal computer; and subsequently by enabling the same on a smartphone or a tablet whenever needed. As a result of such evolution, the banking services moved from physical branches to web-based, from the human interaction to the E-customer service activities, chatbots, and virtual assistants using the computerised communication platforms (Bergström, Svenningsson, & Thoresson, 2018; Jünger & Mietzner, 202). Banking industry had to react to several changes including but not limited to customer preferences, increasing competition from non-bank players such as fintech, shifting in social trends, change in the regulation of financial service industry, and technological innovation and advancement (Jünger & Mietzner, 2020). The financial service industry, particularly banking players, has responded to such dynamic market changes by adopting different types of delivery channel strategies. In addition, the growing competition forced banking players to rely heavily and invest a substantial capital on the use of technological innovations to gain the competitive advantage and make their operations more efficient (Ogedengbe & Abdul-Talib, 2020).
The adoption of innovation and technology in Malaysian banking sector started in the 1980s, with the introduction of credit cards, automated teller machine (ATM) networks, followed by electronic banking using phone and internet in the late 1990s. Over the past 10 years, banking sector in Malaysia has progressed rapidly to the digital world due to the unprecedented proliferation of wide range of smart devices (BNM, 2018). This success is also attributed to high internet penetration rates in the country. The volume of internet banking transactions by individuals in Malaysia increased during over the time, from 449 million transactions in 2016, to 1.16 billion transactions in 2020. In other words, digital consumers represent a large population of the entire Malaysian banking ecosystem, with indications that population of using digital channels will continue to rise. This belief or expectation is further supported with only a minor segment of banking customers have yet to try OB (11%) and mobile banking (14%), as reported by AIF (2016). Over one-third of all banking customers are regularly using online and mobile banking on a monthly basis. Presently, the Malaysian banking sector rely heavily on the use of technology to create a nimble environment that is responsive to the new business requirement and arrive at the virtual banking using the digital and artificial intelligence (Belanche et al., 2019). Some of the major players in the Malaysian banking sector have taken steps to enhance and expand their banking experience through technological innovations.
Key Terms in this Chapter
Robo-Advisor: Robo-Advisor combines the word “Robo”, originating from robot, and “Advisor”. It refers to the automated process without interference of a human being, utilising mathematical computations algorithms to support investment and financial decisions. Putting these terms together, it can be defined as “automated financial advisory interactive personalised customer services that minimise human interaction”. As opposed to traditional human advisory services, robo-advisor can reduce the costs of human labour while still offering personalised advices and can be accessed as long as one has an internet connectivity.
Cloud-Based Services: Services based on cloud computing are termed as cloud-based services. According to the NIST definition, cloud computing enables ubiquitous, convenient, on-demand network access to a common pool of configurable computing resources under a minimal service provider interaction and management effort. It offers secure deployment platform where the bank can leverage on to enhance new customer experiences, expand rapidity to market and increasing IT efficiency.
Online Banking: Online banking, specifically internet and mobile banking refer to the customer interaction with bank facilities and services using a computer or smartphone with an internet connection to perform financial and non-financial transactions without the direct interacts with bank employees.
Innovation and Technology: Innovation refers to the new mind set or idea generation beyond the present experiences and into the future. Through the innovation, it enhances and creates the new product, process, concept, strategy, service and organisation. Technology is derived from two Greek words, ‘techne’ and ‘logos’ and can be interpreted as the principle of how something is produced based on the skill.
Mobile Payment: Mobile devices have transformed from just a means of communication to a multi-function device that enables users to engage in various financial transactions such as bill payment, account transfers, person to person transfers, proximity payments at the point of sale and remote payments channel, without the need for a physical card or wallet.