International Perceptions of Online Banking Security Concerns

INTRODUCTION For nearly two decades the banking industry has been evolving in tandem with e-commerce capabilities. During this time, the ability to conduct business online has frequently been viewed as a strategic opportunity for banks, who could save transaction costs, expand their customer market, and improve customer service and cross-selling opportunities (Nath, Schrick, & Parzinger, 2001). In its short history, research activity in the field of Internet banking has directed much effort into understanding the phenomenon of consumer adoption of the new banking channel (Kolodinsky, Hogarth, & Hilgert, 2004; Tan & Teo, 2000; Xue, Hitt, & Chen, 2011). At a time when Internet connectivity was new and uncertain for many people, research findings aided banks in their quest for the best way to ease the market into a new medium for banking transactions. In addition to the expected technology acceptance variables (Lee, 2008) and the growing knowledge of what aspects make Web sites successful (Jarvenpaa & Todd, 1997), studies have, historically, overwhelmingly suggested that in banking in particular, trust of the banking medium and perceived security of the transactions play major roles in customers' decisions of whether or not to adopt Internet banking (Pavlou, 2003; Yousafzai, Pallister, & Foxall, 2009). While information security practices are crucial to ensure continuity of any business, online banks have approached it with an additional focus. Due to the sensitive nature of their transactions and continuous media reports of security breaches of financial systems (including the recent events at Global Payments (Sidel & Johnson, 2012)), banks are aware that their users' perception of transaction security is of equal importance to the security measures themselves as it is a major factor in users' willingness to participate in online banking. To that end, a bank's online strategy ideally includes a full evaluation of its perceived trustworthiness in the eyes of its potential consumers (Yousafzai, Pallister, & Foxall, 2005). Logically, in order to help customers convert to online banking from traditional banking, the bank must actively manage the customers' perception of the security of doing so. Today, online banking has gained explosive popularity in the United States (American Bankers Association, 2010 & 2011) and other parts of the world (Anderson, 2010). Statistics reported indicate that the banking landscape has shifted and, for example, in the United States, online banking is practiced by the majority (Zickuhr & Smith, 2012), rapidly becoming the norm. Yet, interestingly, as the banking industry continues to increase its investment in now widely accepted online capabilities (BusinessWire, 2011), security doubts still remain at the forefront of research inquiries (Jain & Kohli, 2009) and banks continue to investigate users' perception of them (Hanzaee & Alinejad, 2012; Yousafzai et al., 2005). Furthermore, some banks are still trying to convince users to participate in online banking - at least in some parts of the world, such as India (Sharma, 2011). Although security is and always has been a major area of concern for online banking customers, the nature of those concerns is not widely discussed. (For exceptions see (Moscato & Moscato, 2004 & 2007)). Therefore, we cannot fully understand the connection between security concerns and banks' attempts to alleviate them. Furthermore, it is not well understood if these concerns have been the same throughout the world and over the history of online banking. One tool that online banks commonly use to manage their customers' perceptions of security is the "security policy". The security policy is an explicit description on the bank's Web site of the security measures taken by the bank to protect the personal information of its customers, such as encryption, firewalls, server authentication, and password protection. …