Effect of Perceived Security and Perceived Privacy towards Trust and the Influence on Internet Banking Usage among Malaysians

Abstract

Internet banking security is a critical issue over the world. But the traditional protection mechnisms are
not sufficient to secure the online banking systems that hold information about clients, and banks. The
objective of the present study was to identify the impact of perceived security and privacy factors on
customer trust and its influence on intention to continue using Internet banking in Malaysia. The
participants for this study were individual Internet banking users in Peninsular Malaysia. Data was
collected through self-administered questionnaires distributed using the drop-off and pick-up (DOPU)
technique to bank branch managers who then passed the questionnaires to their customers. A total of 413
respondents completed the questionnaires. The SPSS statistical analysis software package and Partial
Least Squares statistical method were used for data analysis and hypothesis testing. The results show that
perceived security significantly influences customer trust and consequently intention to continue using
Internet banking. Moreover, trust plays a critical role in influencing intention to continue using Internet
banking in Malaysia while perceived privacy does not. An understanding of the factors identified in this
study will enable Internet banking providers to effectively and efficiently enhance the security of services
and thereby promote continued usage of Internet banking among customers. The findings of this study are
thus expected to be of great use to Internet banking providers as improvements in Internet banking
security will increase business in the long run.