Benevolence, Integrity and Competence: Dimensions of Trust in Internet Banking

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1 Benevolence, Integrity and Competence: Dimensions of Trust in Internet Banking Kate McInnes, Xiaoli Lin, Central Queensland University Huaxuan Li, The University of Queensland Abstract Consumer trust plays a vital role in the development of long- term relationships between an organisation and its customers. Despite a plethora of research on trust in a general retailing context, the concept has been somewhat overlooked in the area of internet banking. This paper aims to fill the gaps in the literature by determining whether previously identified dimensions of trust, including benevolence, integrity, and competence, are applicable in an internet banking environment. The paper also examines how a better understanding of these dimensions may aid marketers in the development of a trustworthy website. The study proposes, and concludes, that a higher consumer perception of benevolence, integrity, and competence is positively related to a higher level of consumer trust. The article also suggests that there are a number of other factors that may moderate this relationship. The findings imply that those involved in the marketing of internet banking services must aim to enhance the consumer s perception of benevolence, integrity, and competence, in order to gain trust and engage in meaningful customer relationship programs. Introduction The commercialisation of the Internet has had a huge impact on the way that society operates, including the way we work, shop, play, and even the way we conduct our banking activities. While millions of businesses have attempted to take advantage of the cost savings that the Internet offers, not all of these e-commerce activities have proved as successful and as popular as online banking. According to Floh & Treiblmaier (2006, p98) online banking now boasts the title of the fastest growing Internet activity in the past five years, and has almost 53 million users in the U.S alone. Despite the benefits of internet banking, the use of an electronic medium makes it harder for banks to gain consumer trust (Meuter, Ostrom, Roundtree & Bitner, 2000). Because trust has a huge influence on a consumer s commitment to an online provider (Floh & Triebllmaier, 2006), banks should attempt to understand the determinants of trust and use this to develop stronger, more meaningful relationships with their customers, and consequently achieve greater profits. Although there is a plethora of research on consumer trust, there is little material that focuses on the concept in an online context, and particularly, in online banking (McCole, 2002). The issue of trust in online banking, and specifically, how trust is manifested and maintained, warrants further research (McCole, 2002). This paper aims to fill the gaps in current literature by determining whether previously proposed dimensions of trust (benevolence, integrity and competence) apply specifically to internet banking, and if so, how an understanding of these dimensions may aid banks in the development of trustworthy websites and long- term customer relationships. 2990

2 Literature Review As one of the most attention-attracting facotors in relationship literature that has been investigated widely (e.g. Sahay, 2003; Coulter & Coulter, 2002; Heikkila, 2002; Jap, 1999; Doney & Cannon, 1997; Morgan & Hunt, 1994; Moorman et al., 1993; Ring & Van de Ven, 1992; Anderson & Narus, 1990; Gronroos, 1990; Crosby et al., 1990; Parasuraman et al., 1988, 1985), trust has been defined in various ways. Morgan & Hunt (1994, p.23) proposed trust as existing when one party has confidence in an exchange partner s reliability and integrity, while Chen & Dhillon (2003, p.303) labelled trust as the reliability and dependability of the vendor offering products or services. Rousseau et al. (1998, p.395) proposed a definition that would apply to all disciplines describing trust as a psychological state comprising the intention to accept vulnerability based upon positive expectations or behaviour of another under conditions of risk and interdependence. Trust is a multi-dimensional construct (Chen & Dillon, 2003; Mukherjee & Nath, 2003; McCole, 2002; Wing & Angie, 2006; Papadopoulou, Kanellis & Martakos, 2003) with integrity, competence and benevolence being the focus of several studies (Wing & Angie, 2006; Jarvenpaa, 1998; Papadopoulou, Kanellis & Martakos, (2003) and have formed the basis of numerous conceptual models (Chen & Dhillon 2003, Wing & Angie, 2006). While literature on trust and the dimensions of trust is relatively abundant, studies relating trust to internet banking are relatively scarce (Mukherjje & Nath, 2003). Much research in internet banking is focussed on the adoption of internet banking. Hence, it is the purpose of this study to fill the gap by looking at how the consumer perceptions of integrity, benevolence, and competence will have an effect on consumer trust in an internet bank. We make the following hypothesis: H1: a higher consumer perception of banks benevolence is positively related to a higher level of online bank trust. H2: a higher consumer perception of banks integrity is positively related to a higher level of online bank trust. H3: a higher consumer perception of banks competence is positively related to a higher level of online bank trust. 2991

3 Benevolence Integrity TRUST of internet banking Competence Methodology The dataset used was obtained from an earlier study on Internet banking. Some of the items in that questionnaire are relevant to this current topic and hence were used to test the hypothesis of this study. The data was originally collected from 106 users of internet banking through a self-administrated online survey. Ten (10) items were useful for this study. The integrity construct was operationalized using three items measured on a five-point likert scale, adopted from Chen & Dhillon (2003) s work. Two items of McCole & Palmer (2002) s work were used to measure competence and two items of Mukherjee & Nath (2003) s work to measure benevolence. One item was used to measure respondents overall trust level towards their online bank. Demographic questions including gender and age were also asked. Data Analysis and Results Factor analysis, using principal components extraction and varimax rotation, was performed on the three items that were used to measure integrity, the two items on competence and the other two items on benevolence and successfully yielded a single factor on all three constructs. Reliability test on the items revealed Cronbach s Alpha coefficient of 0.52, 0.56 and 0.61 respectively which is acceptable for exploratory research (Nunnally, 1967). By averaging the three items on integrity, the two items on competence and the other two items on benevolence, an overall score for each of the three constructs were obtained. A regression analysis was then performed using overall bank trust level as dependent variable while integrity, competence, benevolence and demographic factors (age and gender) as independent variables. The coefficients for integrity, competence and benevolence were 0.82, 0.76 and 2992

4 0.65 respectively (all at 5% level) while age and gender are not significant. The result hence supports all the three hypothesis proposed. Conclusion This paper presents a study on the influence of the combined dimensions of benevolence, integrity, and competence on trust in an online banking context. Through a thorough review of literature, the authors determined that benevolence, integrity, and competence were recurrent themes in trust literature, and hypothesised that a higher consumer perception of their banks benevolence, integrity, and competence is positively related to a higher overall trust in the bank by that consumer. An analysis of 106 surveys proved a significant relationship between benevolence, integrity, and competence and trust in an online banking environment, and suggested that a higher overall perception of these dimensions resulted in a higher overall trust. The findings of this study have a number of important implications for academics and marketing practitioners alike. For scholars, the research helps to expand the current literature and understanding on the topic, and also provides a number of angles for future research. For marketing practitioners, the results have more practical applications in the realm of website design. Marketers must realise the importance of the dimensions benevolence, integrity, and competence, and should attempt to provide banking services in a way that enhances the customers perception of the banks benevolence, integrity, and competence. Competence relates to the making and the fulfilment of a promise (Chen & Dhillon 2003). In an online banking context, competence may be displayed through providing search facilities and recommendations about new banking services and offers, which enable a promise to be made. The bank should then fulfil the promise by executing the requests of the customer with promptness and correctness (Papadopoulou, Kanellis & Martakos, 2003). Online banks may enhance the perception of their benevolence through regular communications with customers, and through the provision of timely information regarding privacy and security risks. Any activities that show the bank as placing the interests of the customer before their own will be highly regarded by customers. In addition, open, honest communication with customers and a demonstrated consistency in behaviour will increase the perception of an online banks integrity. Organization culture, top management support and collaboration between marketing and IT teams can also enhance integration (O Leary, Rao & Perry, 2004). Overall, those involved in marketing electronic banking sites should place significant emphasis on qualities such as benevolence, integrity, and competence in order to develop and maintain meaningful, long- term relationships. Limitations and Future Research While this study is one of the first to assess the application of previously proposed dimensions of trust in an internet banking environment, it is an exploratory study and suffers limitation. The study didn t take into consideration the role of a number of important consumer characteristics, firm characteristics, and website characteristics in the development of consumer perceptions of benevolence, integrity, and trust. As suggested by Bramall, Schoefer & McKechnie (2004), firm characteristics such as the size and reputation are expected to have an influence on consumer trust, as are the professionalism of the website and the use of third- 2993

5 party trust seals such as TRUSTe and BBBOnline. In addition, consumer related characteristics including their cognitive abilities, their attitude towards computers and the Internet, their previous banking experiences, and their perceived risk of internet banking in general are expected to influence their perceptions of benevolence, integrity, and competence, and therefore overall trust. These characteristics mentioned were not reflected due to the exploratory nature of the study. While this study has identified three dimensions involved in developing trust in online banking, it does not pinpoint specific sources of these dimensions. Further research may need to be carried out to determine what specific sources a customer may look to in order to formulated their perceptions of benevolence, integrity, and competence. i.e. where and how does a customer formulate their perceptions of an online bank s benevolence/integrity/competence? Furthermore, research could be carried out to determine how benevolence, integrity, and competence individually influence a consumers overall trust. i.e. Is any one of these characteristics more important than the others in generating trust? Can a positive perception of one dimension override a negative perception of another to develop a high level of trust? Finally, the generalizability of this study can be determined by researching into different countries and cultures. 2994

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