2.0 Overview
Based on previous chapter, this study examines the factor influencing undergraduate student adoption of internet banking. In order to gain a clearer better understanding, it is meaningful to explore the related literature regarding adoption internet banking. Section 2.1 will discuss about the basic of electronic banking. Section 2.2 understanding about internet banking, section 2.3 conception of internet banking, section 2.4 traditional banking versus internet banking, section 2.5 will discuss the characteristics of internet banking, section 2.6 Technology Acceptance Model, section 2.7 in Malaysia’s internet banking and section 2.8 factor influencing undergraduate adoption of internet banking.
2.1 Basic of Electronic Banking
The term of electronic banking is almost generic in its nature and therefore it is mostly used without any further definition or explanation. Electronic banking is not equal to the term of internet banking although the latter is most widespread type of it. Electronic banking is a construct, which consists of several distribution channels.
Electronic banking is a bigger platform than just banking via internet. Although, most general type of electronic banking in our times is banking through internet or internet banking. Electronic banking this term can defines in many ways. Most simple form is mean the provision of information or service via a bank to its customers by a computer, television, telephone, or mobile phone.
Electronic banking includes several traditional services like telephone banking, credit cards, debit cards, ATMs. Burr (1996), for example, describe of an electronic connection between bank and customers in order to manage, prepare and control financial transactions. Internet banking also allows their customer access bank accounts for doing their banking transactions.
At another progression level internet banking called transactional online banking, because of it involves the provision of facilities such as transfer of funds, view account balances and transaction, buying financial products or service online.
Now a day internet is the main channel of electronic banking. Electronic banking is also known as electronic fund transfer (FET) and basically is simple the use of electronic means to transfer fund directly from one account to another account.
        In addition, electronic banking is said to have three different mean of delivery: PC, telephone and the internet. From Daniel (1999) there, he already introduces four types of channels for electronic banking: PC banking, internet banking, managed network and also TV-based banking.
        The most important is to know that internet banking is dissimilar from PC Home banking. The apparent difference is that internet banking is browser-based, whereas PC Home banking requires customers to install the software package assigned by the bank on their PC. Furthermore, PC Home banking allows customers to do their banking services only on PCs that have been installed the assigned software package.
        Telephone banking, TV-based banking and managed network do not play such role in banking today. However, in the future delivery platform is expected to shift from wired internet connection to wireless mobile technologies.
2.2 Internet banking
Internet banking defines as banking services such as transfer of fund, loan application, account balance inquiry, fixed deposit placement and view transaction histories provided by bank via internet.
(Pikkarainen, Pikkarainen, Karjaluoto, and Pahnila, 2004, p.224) defines internet banking as an ‘internet portal, through which customers can use different kind of banking services ranging from bill payment to making investment’. Now a day, banking services really give many types of service through internet; it is also another stage for banking industry goes to higher levels.
Beside that cash withdrawal, internet banking gives undergraduate customers many types of banking transaction can be done through at the click of mouse only. Undergraduate student using mouse to click already can be done several banking transaction compare to traditional banking.
To be sure, use of new alternative channel for distribution of financial services has become a competitive necessity instead of just a way to achieve competitive advantage with the advent of globalization and fiercer competition. All banks using internet as an additional channel or a bank using only the internet as the delivery channel are now equal footing to offer their banking services on the internet and to complete for customer around the world.
        Internet banking has the advantage for bank to maintain competition, to save costs, to enhance mass customization, marketing and communication activities, and to maintain and attract consumer.
The primary advantage of internet banking is to save time and cost. Indicated that internet banking allows the consumer easier access to their bank accounts with lower services changes and also time saving. Moreover, showed that internet banking had a low transaction cost and a high speed of service when compared to other banking services.
2.3 Conception of internet banking
        Internet banking is conducting banking transaction via internet, such as fund transfer, account balance inquiry, history transaction, loan application and so forth. In terms of banks ideals are as below:

Provided with ICT equipment such as notebooks and internet connection, the user can access anywhere anytime. (e.g. home, hotspots zone, workplace and so forth)
It required basic software from PC such as Internet explorer which allows users to sign-in into their e-banking services from the websites. All transactions done through website will store in banker server from internet.
Banking services are ready can anytime. Users can print the bank statement or check the transaction history or observe the incoming fund anytime.

Meanwhile we should alert that the differences among internet banking and PC Home banking. Internet banking is through browser-based, but PC Home Banking needed to install a software package assigned by the bank.
2.4 Internet banking versus Traditional banking
        Many years ago, when a user wanted to open a bank account, he or she must be presented to bank branches. And, the business transaction, automatic teller machine (ATMs) and customer services also provided by face to face basis which so called traditional banking. Traditional banking offer real life people to people interaction. Fixed schedule, inconvenient locations and limited financial products offer are caused some of users’ drawback from traditional banks.

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        For internet banking, the easiest way to open a saving account or internet checking is by linking to an existing account. Business transactions can be carrying out by just a “click”. Without any verbal communications and no long queue at the counter, the users still can manage any accounts by staying at home. Internet banking is more convenience; 24 hours in 7days of banking service and flexibility are the main advantages of internet banking. It can provide the undergraduate students on all banking services convenience anywhere. Thus, internet banking is probably our benefits.
2.5 Characteristics of internet banking
Internet banking is beneficial for both the provider and the customer. Stated that rationales of bank’s usage of the internet banking technology from the bank perspective are mainly to saving cost. Banks use internet banking is because it is the cheapest delivery channel for banking products. This kind of services can save time and money of the bank with an added benefit of minimizing the likelihood of committing errors by bank tellers. Internet banking offer services to their customers to use at their conveniences. Mostly, undergraduate students are like conveniences, easy and fast, somehow internet banking usage for undergraduate still not so much. From the figure is show that age 16-24 is lower compare to age 25 onward. While younger peoples continue to make up the greater part of online users, due to internet banking users greater proportion of new internet banker is age 55.
(Karjaluoto et al. 2002, p.261) argued that ‘banking is no longer bounce to time and geography. Customers over the world have relatively easy access to their account, 24 hours per day and seven days a week’. This author argue that, with internet banking services, customers branch banking took too much time and effort are now able to make the transaction using click of their fingers.
Competition is yet another important rationale with increasing competitive pressures from existing firms and new entrants in the market. At the same time, internet banking strategy has been an interesting way to retain existing customers and attract more new customers. The use of internet banking become an alternative channel has also been allowing banks to target different demographic segment more effectively.
(Robinson, 2000) believe that supply of internet banking services enable bank to establish and extend relationship with customers. Benefit for the users are numerous as well and include convenience of the services, lower cost of transaction and more frequent monitoring of accounts among others.
        The basic characteristics of internet banking are:

To help bank perspective to save costs.
To save time and money.
To minimize the likelihood committing errors.
To fulfill undergraduate students convenience.
To lower the transaction costs.

2.6 Technology Acceptance Model
        Technology Acceptance Model (TAM), are introduced by Davis 1989. Goal of Technology Acceptance Model (TAM) is determinants of able of defining user behavior across a wide range of end-user computing technologies and computer acceptance. A key intent of Technology Acceptance Model (TAM) provides a basic of trace the affect of external factor on attitudes and intention.
        Technology Acceptance Model (TAM) which has been extend and applied to different information technologies and end users. In TAM, Davis proposes that the influence of other variables on technology acceptance in mediated by two individual’s belief: perceived ease of use (PEU) and perceived useful (PU). Technology Acceptance Model (TAM), suggest that a prospective user’s overall feelings or attitudes toward using a given technology based on system or procedures represent major determinants to use the system.
Technology acceptance model (TAM) proposes that attitudes predict intention, and intention predict behavior. Adoption behavior is determined by the intention to use a particular system and intention is determined by attitude, which in turn is determined by the perceived usefulness and perceived ease of use of the system.
        Perceived usefulness is defined as using a particular system will improve on job performance. Perceived ease of use defined as using a particular system will be free of effort. Offer instance of external variable may affect an individual’s perceived usefulness.
Two computer programs are given, which are equally to use and will produce better quality or improve users’ productivity will have a higher affect on an individual’s perceived usefulness ,regardless of ease of use equality.
2.7 In Malaysia
        All banking services and financial services in Malaysia is regulated by Central Bank; Bank Negara Malaysia (BNM). June 2000, internet banking was introduces in Malaysia when Bank Negara Malaysia (BNM) allow local banks to offer internet banking service in Malaysia. This facility was extended to foreign owned banks during 2002. Until Jan 2008, there were 23 banks offering internet banking in addition to their traditional services.
Bank Negara Malaysia (BNM) provided ‘Minimum Guidelines on the Provision of Internet Banking Services by Licensed Banking Institution’ (MGIB) 2000 after the BCBS recommendations. Bank Negara Malaysia (BNM) defines internet banking as ‘product and services offered by licensed institution on the internet through access devices, including personal computer and other intelligent devices’.
        Banking institution are legal entities licensed under the Banking and Financial Institution Act (BAFIA) 1989. The aim for ‘Minimum Guideline on the Provision of Internet Banking Service by Licensed Banking Institution’ (MGIB) is main purpose is to protect both consumer and the bank themselves from the risk associated with such banking.
2.8 Factor influence Internet Banking
2.8.1 Security
        According to the main factors that determining the decision of undergraduate students using internet banking is security. (ABF, 1997) shows that undergraduate student and banker will keep away from internet banking are security concern. More undergraduate students and households will be willing to conduct their banking transaction via the internet, unless improvement of security.
US banks believe that security concern is main barrier for internet banking is concluding by the banks. Main reason for slow growth of internet banking were discover by the security concern, this is conducted by study in Australia.
New innovation of the level of the security or risk associated will influence the acceptance and adoption. Where internet banking has been long set up, the main significant factors that will slow down the progress of this new innovation is the main concern for security over the financial transaction via internet. Most of peoples including undergraduate student, they will first considered secure and safe of the internet banking.
        Initially, as an undergraduate student they will think whether this banking transaction through internet isn’t secure enough for doing the transaction. Lack of security and reliability of transaction via internet is the main reason for they agree to refuse to use the internet banking. Security and privacy issues are concern by individual because they are still reluctant to use.
        (Sathye 1999), concern about the security and safety of the banking transaction via the internet, Australian consumer are reject to adopt internet banking. Due to also found out that substantial reason that influence internet banking in Malaysia security anxiety. Security failure at a banking institution may cause large losses could generate lack of confidence in banking innovation.
        Tan and Teo (2000) establish that risk will be the main factor, Ndubisi et.al. (2004) also agree the importance of adequate of security in order to raise the confidence of public to utilize the system.
        Bank’s ability is to manage internet-based transaction through undergraduate’s confidence. Poor security is inadequate to protect customer’s personal data. Computer privacy and security issues are those undergraduate students concern about. Internet banking service must be more responsive security requirements only can attract more and more undergraduate users.
2.8.2 Trust
        (Mayer, Davis & Schoorman, 1995) Trust is defined as a willingness to be susceptible to the action of the others. Define trust as an necessary components in a relationship especially whenever risk and uncertainty exist. Say that when an individual trust a person, will expect in that person will not take advantage of reliance upon him or her.
        Context of internet banking, trust has been suggested to be the one of the barrier that will hinder individuals from adopt the technology say by. Security issues will indirectly have further influence undergraduate student’s trust level of internet banking.
        (Moorman et.al, 1992) Defined “trust as a willingness to rely on an exchange partner in whom one has confidence” and “perception of confidence in the exchange partner’s reliability and integrity” say by. These both directly underline in the exchange partner’s reliability in the conception of trust. Normally undergraduate student do not trust Internet Technology for these three reasons, first is security of the system, second is distrust of the provider and third is reliability of internet service.
        Trust in the internet increase long term internet usage in the adoption decision. Trust will give undergraduate student guarantee safety for using internet banking. Undergraduate student attitude toward internet banking system may be related with trust on judgment on the security and privacy also.
One of the important reasons is lack of trust make undergraduate student do not using internet banking, so must improve application security and privacy only can give undergraduate student confidence for using internet banking.
Trust is an antecedent of perceived usefulness, also perceived ease of use is an antecedent of trust. Trust has a directly and indirectly effect on behavior intention to use. Determinants of perceived usefulness is trust, particularly in an online environment, part of guarantee that undergraduate student will sense the expected usefulness from the website. Trust will have a positive effect on perceived usefulness, while trust allow undergraduate to ensure they gain the expected useful services.
2.8.3 Privacy protection
Defined privacy as the protection of personal information so it is not reveal to or used by others. Undergraduate normally aware of the privacy issues, including whether personal information would be used by the banks or third parties to market new services to them. Privacy has been an important factor in the choice not to use internet banking. Effective privacy protection laws will consider the internet environment will help to build trust and confidence.
To improve privacy issues, first banks must provide consumer reassurance and information, ensure consumer information would not disclose to other or third parties. Banks need to improve the application security and privacy and ensure bank information security and privacy. To assist consumer in development secure internet banking practice and risk management procedures.
2.8.4 Attitude
Define attitude as person positive and negative feeling about internet banking adoption. Age will affect the attitude of individual toward internet banking. Attitude toward adoption and use of internet banking might give undergraduate student a positively image assuming security of internet transaction is safety enough. Positive technology attitude enable faster diffusion of internet based services.
        Attitude build received its first serious attention from Darwin 1872. Darwin defined attitudes as a physical expression of an emotion or motor concept. According to defined attitudes as an individual’s positive and negative feeling to perform a target behavior. defined as “a person’s general feeling of favorableness and unfavorable for that recommends that different dimension of attitudinal belief toward innovation appraise by five perceived attributes. Five attributes are relative advantage, complexity, compatibility, observability, and trialability. At the same time behavior intention to use internet banking is highly related to attitude. Personal banking experiences will affect attitude toward internet banking.
        Internet to user’s banking needs to relate to the advantage the mount up to the user of the technology. show that relative advantage is very important factor to influence adoption of new innovation. Commonly, perceived relative advantage is positively connected to the rate of adoption. According to defined complexity as degree to which an innovation is measured comparatively is hard to understand, found and use it to negatively affect the adoption of internet.
Shows that complexity is view the accurate opposite of ease of use, that have been establish to directly crash the adoption of internet. Stated that, system requires less operational effort and technical skills will more probable to adopt it.
Found that an innovation was more possible to be adopting when it was compatible with individual’s value system and job responsibilities. Privacy is an important view to performing internet banking and therefore observing individual performing internet banking is not only hard also hard to unacceptable. found out observation and description analysis of undergraduate internet banking users, the problem such as slowness and so forth.
Stated that trialability got the potential adopter of new technology, and who will allow to test it, whether will comfortable to be more likely to adopt it. Attitudes combine with these five innovations, these five innovations will directly and indirectly affect undergraduate student to adopt internet banking as well.
2.8.5 Perceived ease of use
        Defined perceived ease of use as degree to which person believes that adopt internet banking would be free of effort. Define “ease of use” as one of important characteristics from undergraduate’s perspective for adoption of innovation services. A study has been conducted by a company called Cyber Dialogue has revealed that as many as 3.1 million USA adult have discontinued their use of internet banking because of they feel the services was too complicated or were dissatisfied with the level of customer services.
Propose that it is essential for the internet to be ease of use to increase the adoption rate of internet banking. Function of internet banking ease of use, it will be attract more undergraduate students adopt it.
Now a day, undergraduate student really got the potential to help grow the rate of adopt internet banking rate. To help success implementation internet banking, banks must make sure that the service of the system are simple, ease and of sufficiently high quality to confirm undergraduate level satisfaction in order to maintain undergraduate usage.
        Show that general computer self efficiency considerably influence the perceived ease of use at all the time, while the usability of system will directly influence undergraduate users’ perception after they have experience with the system
2.8.6 Awareness
        Explanation of Awareness can be the acceptance and continued to use the service, product or idea. show that undergraduate go via “a series of process in knowledge, decision, conviction and confirmation” before they are ready to adopt new service or products. The adoption or rejection of an internet banking start when the undergraduate becomes aware of the internet banking. Consumer must become aware of new service or new product is emphasizing by. Normally when come out one new services or new product consumer will not dare to try or buy it.
        Lack of awareness is the most common and important factor that negatively influence adoption of internet banking stated by. This is situation; we are able to argue that if the undergraduate student not adopting internet banking service due to the unawareness of the availability of such a service. Lack of awareness of internet banking and its benefit, here some recommendation suggest by.
To attract more undergraduate student attention to internet services through a better marketing, let undergraduate better understand the process. Try to inform the undergraduate student about the features, advantage and the benefit of internet banking, for undergraduate student they normally are more prefer everything’s conveniences. Reduce the undergraduate concern about technology and support.
        Lack of internet awareness is due to the internet banking services are still unaccepted. It is believe that undergraduate are not fully confidence with using internet banking. Greater awareness could show them the benefit and also encourage them to adopt internet banking services provided from banker. Awareness of internet banking services is necessary in the early adoption stages, as internet banking services is consider new in Malaysia.
2.8.7 Cost and Accessibility
        Stated that cost as a characteristics of internet banking. Price or cost is one of the important factors that will affect the undergraduate adoption of innovation. Two types of costs are involved in the internet banking, first is bank charge and cost, second is the normal cost that associated with the internet activities. Before adopting internet banking, undergraduate will concern about the cost, to help in increase the rate of adoption of internet banking. Banks must lower the transaction cost, to help undergraduate student save costs.
        If want to attract more undergraduate student to use new technologies, then first the technologies must be reasonable priced relative to alternatives. All price charged must be reasonable, with a reasonable price undergraduate just willing to adopt internet banking or else the acceptance of the new technology may not be viable from the point of view of the undergraduate. Being on the internet has allowed banks to cut costs on transaction, by the way banks also can improve their image on the market.
        Point out that internet banking is very beneficial to undergraduate because of the savings in cots, time and space it offers; and also it is quick feedback to all the complaints. It also can build undergraduate identification of internet banking to emphasize the benefit of internet banking services; such as low cost service, conveniences, information availability and time saving. Saving transaction cost can improve customer service, increasing market reach and reducing costs are now basic expectation of internet banking services.
        Availability of access to computer or internet is a precondition for adoption of internet banking. Show that the more widespread the access to computer or internet then the greater possibility of use of internet banking adoption. found that lack of access to computer as one of the reason for slow adoption of internet banking.
        Show that accessibility to computer or internet will affect the decision to adopt internet banking. Relationship between the accessibility and internet banking is important and the outcome show that accessibility has a positively relationship with internet banking adoption intentions.