DefinePK

Abstract

Internet banking risks continue to intensify as accessibility to banking transactions around the world expands. Banks in Malaysia are faced with among the largest number of cyber-threats in the world. Considering these factors, the understanding of internet banking risks is important to enable banks to develop appropriate counter-measures. However, studies on internet banking in Malaysia have not examined risk factors in a comprehensive manner. Therefore, the purpose of this study was to test a measurement model for perceived risk in Internet banking using structural equation modeling analysis. This study extends the Technology Acceptance Model by incorporating seven risk constructs into the model to understand the impact of risks on intention to use internet banking in Malaysia. The survey method was used in the study and the data collection instruments were questionnaires, which were distributed through the drop-off and pick-up (DOPU) technique, to bank branch managers. The purposive sampling technique was employed to determine the respondents, individuals using Internet banking services in Peninsular Malaysia. A total of 413 questionnaires were analyzed using Structural Equation Modeling (SEM) with the Analysis of Moment Structures (AMOS) software. The results clearly indicate that perceived risk dimensions are strong determinants of intention to use internet banking. Furthermore, the seven dimensional measure of perceived risk is supported by acceptable fit indices. All dimensions showed modest but not high intercorrelations, as such, a second order measure of risk was ruled out. The distinctiveness of different risk measures were confirmed by the satisfactory discriminant validity assessment. This research draws together the key risk factors that need to be addressed by internet banking providers in Malaysia to ensure effective adoption and highlights the need to use risk as a multi-dimensional measure in future internet banking studies.