Nigerian Retail Customers' Adoption of Online Banking in an Islamic Bank

Paper Type: Research Paper Introduction Online system of banking is a type of bank services offered by banks for conducting transactions over the internet through secured bank website such as bills payment, view account balance, statement of account and so forth (Amin, 2007). The introduction of online banking in an Islamic bank started in Malaysia at the end of 2001 (Vijayan and Shanmugam, 2003). The banking industry is arguably one of the most prominent adopters of online system of banking, enhanced serviced delivery in their operation may not be unconnected to the numerous benefits it brings to them. For instance, online banking offers a new opportunity to both Islamic and conventional banks to improve their services to customers and gain competitive advantage. It provides an interactive banking transaction for customers, more quality services offered and is more flexible than the traditional banking (Amin, 2007). In the specific case of the developments occurring in the Nigeria banking industry, the introduction of Islamic banking is notable. Recently, the ever growing Islamic Banking system has also remained an area of attraction in Nigeria. The bank right from inception has been involved in enhancing the development of online banking services to its customers (Olalekan, 2011). Though there are many studies which have been conducted on online banking adoption in Nigerian conventional banks (e.g., Aghaunor and Fotoh, 2006; Agboola, 2006; Izogo, Nnaemeka, Onuoha and Ezema, 2012; Auta, 2010; Mbarika, Okoli, Byrd and Datta, 2005), none of these studies explored retail customers' adoption of online banking in an Islamic banking perspective. This limitation has motivated this study on Nigerian retail customers' adoption of online services in an Islamic bank. In this study the author highlighted some of the previous study on online banking adoption. Then the research framework with the hypotheses was also stated. Finally the result of validity and reliability of pilot study are presented with conclusions. Research purpose and problem The aim of this paper is to furnish the result of preliminary survey conducted on Nigerians retail customers' adoption of online services in an Islamic bank and apply extended Technology Acceptance Model (TAM). TAM as a research framework for the study was extended with three additional external variables in order to accommodate peculiarities in the research context and content. TAM is widely acknowledged model for the study of online banking adoption behavior (Sundarraj and Manochehri, 2011). The framework for this study is extended TAM. Due to differences in technology advancement and adoption rate between developed countries where new technology is innovated and developing countries like Nigeria there is a need to extend TAM with awareness, trust and technology quality. Additionally both Islamic and online banking is a recent development in Nigeria banking system (Maiyaki and Mokhtar, 2010). Hence, there is a need to know the level of awareness, trust and technology quality of Nigerian retail customers of an Islamic bank. Hence the author proposed awareness, trust and technology quality in this paper in order to accommodate peculiarities in the study context and content. Literature Review and Theoretical Foundation Numerous studies have been conducted on online banking field from various countries. Some reviews from previous researches are: influencing factors for the adoption of online banking services and adoption rate of online banking services from Palestine, Oman, Iran, Nigeria and Bahrain. In addition to that customers' perception in adopting the online banking in the context of Malaysia comprises of Al-Fahim, (2012). An important study was conducted by Sabri, Abu Laban, and Hanyia (2012) in Palestine in order to investigate online banking awareness. Their sample consists of bank managers, treasurers and customers of both traditional and online banking of twelve commercial banks in Gaza in Palestine. …