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Contents

Introduction

1. Internet banking

1.1 Definition, creation and development of Internet banking

1.2 Risks associated with Internet banking usage

2. The adoption problem of Internet banking

2.1 Data on Internet banking in Russia

2.2 Trends and opportunities of Internet banking in the Russian Federation

2.3 The main approaches of Internet banking adoption

3. Model of Internet banking adoption: the case of Moscow

Conclusion



Introduction

Nowadays the Internet has taken a key role in our lives. It is being used in most activities and the role of it is increasing every day. More and more people start using different online services because it's easy, fast and convenient. The same happened to banking services: the introduction of Internet banking (IB) can be considered as a gradual and inevitable step in the development of banks, as the result of competition in the banking sphere and rising need of people to save their time and simplify their lives.

During the last 30 years many researches on the topic of Technology and Internet banking adoption appeared (FD Davis, 1985; YS Wang, 2003; Pikkarainen, 2004; Cheng et al., 2006; Ming-Chi Lee, 2009; Martins, 2014). Nevertheless, there are virtually no papers on this topic about Russian banking system. The idea of this paper is to fill this gap and to test an econometric model for customers in Moscow.

We have to remember that not every innovation is necessarily good for the society or adopted by people. The essential question here is how people adopt the innovation. It has to be introduced to people's lives so they would be interested in the invention and ready to use it. The research question of this work is how people adopt the Internet banking services in Moscow. Although they seem to feel very convenient, we can see that not everybody uses these services, preferring to use traditional banking services such as visiting the bank directly and talking face to face to the bank representatives. The aim of this work is to understand what influences people's decision whether to use IB or not by testing an econometric model of Internet banking adoption in Moscow.

To learn more about the IB adoption, we have to define the determinants, influencing it. In this project the focus is made on two main models and their integration. The first model is the Technology Acceptance Model where the key determinant is Attitude Toward Using, which affects the decision of people to use the innovation. The second model is taken from the Theory of planned Behavior where the dependent variable is Intention. Finally, it seems necessary to consider the integration of these two models since they have been widely used to predict the IB adoption. After considering these models, a new model is developed in order to test the adoption of IB for Russian banks.

Based on the Technology acceptance model, the Theory of planned behavior and risk factors, after analyzing various approaches and models on this topic, the explanatory variables we chose are: perceived usefulness, perceived ease of use, attitude, perceived benefit, perceived behavior control, subjective norm, and four types of risks - performance, time, financial and security risks. Three hypotheses are defined to be tested in order to find out what factors are more influential in the decision of customers on the Internet banking adoption.

The paper is structured as follows: in the first chapter, we give the information about the creation and the development of Internet banking, define main features of this kind of banking services and focus on different risks of its implementation; in the second chapter, we discuss the trends and opportunities of Internet banking, adduce statistic data and also consider different approaches to the adoption of Internet banking by customers; in the third chapter, an econometric model is tested where Intention to use Internet banking is considered as the dependent variable and positive and negative explanatory factors are chosen.



1. Internet banking

1.1 Definition, creation and development of Internet banking

With the development of electronic technologies and the creation of the Internet, people's lives started changing fast and headily. The Internet allowed people to receive and share the information without any serious efforts. Almost in every area of human's activities the Internet found its usage - buying tickets online, choosing a car or completing stitching online-courses. Banks are also interested in providing their customers with online services. People become busier and busier and are aiming to control every minute in order to optimize their time. There is no doubt that such tendencies confirm the usefulness and the need of online banking services. internet banking russian

Internet banking is a type of banking services, which “allows customers to perform a wide range of banking transactions electronically via the bank's Web site” [15, p.213]. This service makes it possible for customers to control their banking accounts anytime from anywhere. It's a relatively new innovation, which is pretty understandable, because, to provide customers with online services, there must be the Internet - fast and popular among people.

Stages of Internet usage by banks can be divided as follows:

1) Passive condition - when the bank has a web-site.

2) Internet banking implementation for a particular segment of customers who are interested in new technologies. In this case, innovation is implemented to focus on some limited group of customers and still is not widely accessible.

3) Internet banking for all customers as services, which are accessible at the same level as traditional banking services.

For the banks using Internet banking means increasing the number of customers, decreasing costs on banking transactions and operations, no need to work with a lot of cash, the increase in the level of competitiveness among other banks, an opportunity to work online and 24 hours a day, automatic monitoring of risks, which may arise during the transactions. So, by developing Internet banking, the banks are aiming to increase their profits, become more competitive and to attract new categories of customers.

Internet banking is also advantageous for the bank's customers. With Internet banking they can easily and quickly open an account at any bank, manage their accounts any time and any day, manage different accounts at different banks, get the information about made transactions with their credit or debit cards, transfer money from one account to another. And this list is not completed. But the main thing here is that people can safe their time, which is, nowadays, very important for customers.

But there is a very essential problem with the Russian legislation in the area of Internet banking services. So, to improve the quality of Internet banking services, to increase its popularity, it's necessary for the Central Bank of Russia (the Bank of Russia) to develop some recommendations for commercial banks and also to develop the ways and strategies of Internet banking usage and development regulations (Korobeynikova, 2011).

Although first Internet banking systems (“Home Banking”) were introduced in the middle of 1980s, their efficiency and comfort for customers were pretty low: the Internet connection was weak because modems were used in order to connect the customer's computer with the bank. But, with the development of high-speed Internet, banks started to actively invest in Internet banking.

“Home Banking” systems first appeared in the USA. The main reason of their appearance was banks' intention to turn aside the laws restricting the expansion of banks' branches in several States. The next decade signalized by going development of Internet banking services and in 1995 the first entirely online bank was founded. It was called “Security First Network Bank” (Clark and Lee, 1998) and it didn't have a wide outspread because there was lack of trust among its customers. People were probably not ready for such changes, preferring a gradual increase in the role of Internet banking and a simultaneous availability of traditional banking services.

The first successful bank with IB was the Bank of America. By 2001 about 20% of customers were using online banking. The same year in Japan Sony Corporation also implemented IB and more than 20000 customers were using it in one month after the implementation.

Speaking about Russia, the first bank in the national history that implemented Internet banking was Avtobank in 1998. But the development of IB in Russia was fairly slow, by 2003 only 17% of Russian banks were providing their customers with IB. But after 2003 there was a significant increase in the development of Internet banking and by 2007 about 55% of Russian banks had Internet banking services. In 2006 Alpha Bank became the first Russian bank with more than 100000 customers using Internet banking services [20].

Usually Internet banking services include such services as

1) Reception of information about the bank's services (operations, currency rates, deposit rates etc.)

2) Account statements

3) Provision of information on bank's products (mortgage loans, deposits, account opening)

4) Applications for loans/deposits

5) Internal transactions from one account to another

6) Transactions to the accounts at other banks

7) FX services

8) Payment transactions

Costs of the banks on Internet banking, first of all, include the monthly Internet costs. But there are two main methods of implementation of Internet banking. The first one is to use the bank's own software, which ensures the operations made by the customers online in the bank. The other one is to use different software provided as a service from a processing company. Both options have their advantages and disadvantages. Talking about the second option, it's obviously understandable, that it's extremely important for the bank to find the best intermediary with good programmers and the best references from his clients. It also will be almost impossible to use services from different companies so the choice must be made with accuracy. If we mention the first option, the bank has to spend a lot of money on the programmers who will devise and monitor the developed software.

There are different opinions on the Internet banking services. Many people are hostile to the opportunity of Internet usage for banking transaction execution. Others, however, believe that Internet banking is a very perspective direction of banking development.

1.2 Risks associated with Internet banking usage

The analysis of the development of Internet Banking in Russia demonstrates a high speed of the Internet technology diffusion. Overall tendency can be evaluated as positive: Internet banking allows banks to decrease their costs connected with the services provision and with the expansion in the number of customers (TCE Chang, 2006). But, at the same time, we can say that Russian and international experience proved the increase of risks linked with the Internet technologies usage. First of all, we should mention here the risk of IT system failure, operational risk and legal risk. That's why new banking technologies attract the attention of banking control institutions all over the world, including Russia.

Considering the relative novelty of Internet banking, the Bank of Russia is trying to take part in forming the approaches to the area of Internet banking services regulation. To do that, the Bank of Russia is gathering the information from the commercial banks in order to take their opinions into consideration. A special questionnaire was developed to understand the level of Internet Banking diffusion in the market, to define, which online services are presented, which of them are more popular, what software banks are using, what the main problems of Internet technology usage are.

The bank of Russia is aiming at the creation of the recommendation documents for the commercial banks so they could find, analyze and monitor the banks' risks connected with the Internet Banking implementation. But, at the same time, banks should work on the risk problems by themselves. So the main task of the Bank of Russia is to evaluate the internal banks' systems of risk controlling and propose the ways of their improvement.

Talking about the definite examples of illegal activities, frauds, we should mention that during the past decade there was a significant increase in the number of computing attacks on sites and servers of different credit organizations in the Russian Federation and also illegal attempts to get the personal information about the customer bank accounts (passwords, security codes, card numbers etc.) in order to get an access to the online banking serives.

There is the table with the statistics of losses from frauds with banking cards for the Russian banking sector from 2009 to 2013.

Table 1 Statistics of frauds with banking cards

Year	2009	2010	2011	2012	2013
Losses	Official statistics from the MIA (the Ministry of Internal Affairs), mln rubbles	77,2	38,6	3, 221	140	150
	Unofficial statistics from banks, mlrd rubbles	3	2, 782	5,36	11	12

As can be seen from the table, there is a significant difference in the losses from frauds presented by Russian banks and by the Ministry of Internal Affairs. And there was a large increase of losses from 2009 to 2013. According to the data from the Russian MIA, the amount of losses doubled during this period of time. According to the information from the banks, the amount of losses increased about 4 times from 3 to 12 milliard rubbles. The main problem, which is obvious from this statistics, is that there definitely are problems in the Russian Internet banking serives and the Bank of Russia should do something about the problem.

It should be said that this statistics can't be observed as an absolutely reliable. First of all, banks are not interested to provide Media with the information about frauds because it can harm their image among the customers. Second, not all the customers do inform the bank or the police about frauds - they can consider their loss as insignificant or they can believe that it's pointless to go to the police.

One of the examples of such activities as frauds is the attack on the site of a bank when a lot of requests are sent to the site in order to violate or block its functioning. In this situation, the bank's representatives can't reinstate the system without the interference of the Internet provider. The duration of such attacks can be several days, which means the inability of banks to support their customers online. This situation can lead to the decrease of trust to the chosen bank from its customers, significant losses can occure if frauds get the private information about customers' accounts (A Dal Pozzolo, 2014; JTS Quah, 2008; Klerx, 2014; Sujith, 2014).

That's why the Bank of Russia recommends the commercial banks to make contracts with the Internet providers, including their mutual responsibilities in the situation of network attacks, so the immediate actions could be taken and the system would be redeemed as soon as possible with the least losses for the customers and the bank itself. Such contracts should also include the sanctions for any delays in the actions on the system stabilization.

Frauds aimed at receiving private information from bank's customers may include sending messages to these customers with the request to change/check their passwords, banking details, card security codes and so on. The site may look as a copy of the bank's site; that's why people very often can be deceived. At the same time, harmful programs and viruses can be sent to the customer's computer in order to get the needed information illegally, without informing the customer (A Dal Pozzolo, 2014).It should be mentioned that nowadays special fraud detection techniques are being developed in order to prevent the customers from losses. Such techniques are trying to remember the behavior of a customer and make a pattern of his general transactions. The protection is stronger with using address verification, personal identification number and so on (JTS Quah, 2008).

Other examples of frauds are sending messages to bank's customers with the information about some fake offers the bank is having or automatic calls from the bank with the request to confirm the commitment of the operation. By these actions, the bank's customers are provoked to communicate with the fake bank's representatives and are exposed to risks of losing their money and risks of unclassification of their private account information.

There are many other ways to illegally get the information about the bank accounts, even without any messages or calls. Frauds can put fake attachments on the ATMs in order to get an access to the credit or debit card of a customer by getting the card security code. It can be done with some real ATM by putting a fake attachment/keyboard on it or it can be done by installing a fake ATM, which is a copy of a real one. Nowadays there is also an opportunity to make fake cards, based on the bank details of other, real cards, which frauds received by deceiving customers.

There also are researches on the topic of ATM frauds. For example, the paper of Klerx (2014) is devoted to the detection of frauds. The authors defined two main types of frauds - sequence-based (not on a permanent basis) and time-based (which are repeated from time to time). The idea of the paper was to propose the way of fraud detection by making a model of their remembering and making a pattern of ATM frauds. Another similar example is the paper of Sujith (2014) with the algorithm of fraud prevention.

The Bank of Russia is trying to persuade the commercial banks and other credit organizations to spread the information about such actions of frauds so the customers would be warned. Commercial banks should send messages to their customers, which include the warning information, examples of some frauds and also the list of official contacts or possible ways to communicate with the bank without any threat to be deceived. People must know what information and where they can share without any hazard. So, to sum up, let's define the main measures the credit organizations should recommend their customers to follow (Pospelov, 2009):

1) First of all, people should not share their private account information with other people who are not their relatives or can't be trusted.

2) It's safer to use the ATMs, which are installed at public institutions, big companies, bank's branches, hotels, airports etc.

3) It's better not to use the ATMs at places, cafes, small shops you do not know or do not trust.

4) While using your credit/ debit card, you should be attentive and do not lose the sight of it.

5) Do not use your security code anywhere but the ATMs. There is no building, machine or any other appliance, which can request your security code.

6) If ordering online, also never give your security code - it's illegal and there is no seller who has a right to have an access to it.

7) If you have a chance, it's better to use a one-time-use card in order to protect your account from the frauds.

For example, there is a special security system, which can randomly generate “fake” credit card numbers, so the potential hackers wouldn't get a chance to get your money. It's a service called “MaskMe”, which generates a fake “masked” credit card number, name, expiration date and security code. It was developed by the American company called Abine. After you pay and the transaction is made, this card will be annulled. This type of card is a good way to avoid any frauds with your bank account in the future.

The only question here that people can ask is about the situation if hackers attack the Abine system. But, if it happens, nothing is going to happen with the customers' account because even Abine does not have any personal information about the customers' accounts. All the information about them is encrypted at another company.

There is also an opportunity to use such kind of a card at some banks. But the banks still use a customer's real name and the real address.

8) To use the SMS notification service in order to receive the information about all made transactions.

9) To communicate with the bank only through the checked and confirmed by this bank sources.

In some cases, it was found out that the bank's employees from beginners to chief positions were responsible for frauds. They were opening and monitoring accounts for fake organizations, which were interested in using Internet banking services. There also were situations when these employees did not have rights and competency to make the operations with the bank's accounts so they were exceeding their authority.

That's why the Bank of Russia is trying to make recommendations for commercial banks in order to improve the Internet banking services and control the process of provision of banks' customers with the efficient and safe online services. For example, there were several regulations of the Bank of Russia about the Internet banking services and IT security starting from 2004 [17].



2. The adoption problem of Internet banking

2.1 Data on Internet banking in Russia

Now let's turn to statistics. An interesting review was made to evaluate the development of Internet banking in Russia. The research is called “Internet banking rank 2014” [27] and was made by an independent analytical agency Markswebb Rank & Report. The aim of it was to find the ways for improvements in the area of Internet banking in Russia. There were selected 32 systems of Internet banking services in Russia, the methodology of the research included desk research (gathering the information from official sources such as call-center, the bank site etc.), a number of system tests and, finally, a questionnaire for the workers of the banks.

The results showed that nowadays in Russian cities more that 50% of the customers use Internet banking:

Precisely speaking, as much as 15,4 million of people (from 18 to 64 years old) used IB in 2014, which was equal to about 55% of all active Internet users in Russia. The level of IB was higher in Moscow and accounted for 63%. It's interesting, but, according to the research, 53% of Internet banking users were women, and the median age of users was 35. The adoption of IB also depends on the income of customers:

As can be seen from the last chart, the adoption of IB is higher by people with a higher monthly income.

This research also gives the top of banks, which have most customers of Internet banking. These banks are - Sberbank of Russia, Alpha-Bank, VTB24, Russian Standart, TCS Bank, Svyaznoy Bank, HomeCredit Bank, Raiffeisen Bank, Promsvyazbank and Uralsib. First 5 banks rang over about 90% of all IB customers. But the results of the efficiency of Internet banking showed that the banks with the most efficient Internet banking services were: first, TCS bank (with AAA ranking); second, Moscow Credit Bank (with A+ ranking); third, Promsvyazbank (with AA+ ranking). Sberbank of Russia, which is an absolute leader in the number of customers using its IB services, took only the 10^th place with BBB+ ranking [23].

2.2 Trends and opportunities of Internet banking in the Russian Federation

Russian banking system is developing and there is no doubt that this development must go hand in hand with modern tendencies and needs of people. The banks are looking for new ways to improve their performance and increase their profits. Internet banking is becoming essential for banks to maintain their competitiveness. That is why it seems important to explore the topic of IB adoption so the bank could predict the needs of investing in IB and its future profit from IB implementation.

Internet banking is aiming to increase the quality of services and has many advantages, such as the speed of transactions (time saving), no delays while making online payments, a 24-hour access to different accounts from anywhere with the opportunity to monitor made transactions and payments, an opportunity to open an account at any bank and so on.

By using the system of Internet banking, commercial banks are providing their customers with new opportunities of operating with the banking account online, which simplifies the transaction making (Lyamin, 2014).

Internet banking in Russia is developing very fast, there is a constant increase in the number and the quality of services. We can say that Russian banks are successful in Internet banking implementation. But there also are some problems, which prevent the development of Internet banking. First of all, these problems are connected with the banking specificity in the Russian Federation. Second, they are connected with the Internet issues. Until last years, commercial banks could ignore the small level of demand for Internet banking services among customers and this situation couldn't really affect the position of a bank. But the situation has been recently changed, people increased their demand for different categories of products so they increased their demand for paid services. It became a stimulus for people to spend their time not on going to the bank but on other activities and to use Internet banking as a good way to save their time [18]. Every day there is the increase in the financial results of banks implementing and developing Internet banking services. But this implementation and developing requires many organizational efforts. Banks usually believe that their online system is simple enough for customers, but customers disagree. A very important direction of banks' activities is aiming to fill this gap and simplify the Internet banking usage, improve the quality of the instructions on service use.

The facts say that the presence of instructions for use or recommendations from the bank doesn't always mean that customers will understand how to use Internet banking and that they will start doing that. There are a lot of forums where people share their disgruntled opinions about Internet banking services development such as bankir.ru, mmgp.ru, banki.ru and others. But there are, indeed, banks, which are concerned with the education of their customers on Internet banking usage. For example, these banks are Sberbank of Russia, VTB24 and Alpha-Bank. Named banks are leading in the number of customers using Internet banking services (Chernyshova, 2013).

Sberbank of Russia has the longest instruction for Internet banking usage, which includes various information on Internet banking services and the answers on frequently asked questions. The education system of Alpha-Bank is based on the reception of questions from customers who have any problems with Internet banking. There is a list of popular questions and usually customers find the answers there. VTB24 doesn't have a book of instructions, so the customer gets the information from the “frequently asked questions” heading. But people on forums say that the answers there are very difficult for understanding [27].

These problems and customers who do not understand innovations and are confused, but too shy to ask for help, are the reasons, which restrain Internet banking services from the development (Chernyshova, 2013). Another problem, slowing down the Internet banking development, is the lack of qualified workers. Without them it is impossible to provide customers with the needed support [19].

Internet banking showed its success in other countries and now it's time of Russia. To understand whether the Internet banking implementation is a positive step for Russian banks or not, we need to create a model so we could understand how the intention of customers to use IB is affected. To do that, we need to define appropriate explanatory variables, which influence people's decision whether to use Internet banking or not. That's why it's necessary to learn about different approaches and papers on this topic in order to create a complete model, which will help us make the best predictions.

Talking precisely about the trends of Internet banking in Russia, we should define the main areas where the banks should make some improvements:

1) The banks should work on the development of interfaces, which could respond on people's needs and meet their expectations. There is no need to save the samplers of paid fines because every time there is a violation, the number of it is changing.

2) Systematization of payment services so people could find the appropriate service with the least time losses.

3) Development of services helping the customers to analyze and plan their expenditures.

4) Active integration with the state and municipal services such as payments for housing and communal services and so on.

5) Improvements in the informational support. Education of workers, development of new guides, recommendations and instructions for customers in order to simplify their use of IB.

6) Development of an opportunity to use IB as an e-Wallet.[19]

2.3 The main approaches of Internet banking adoption

Technology acceptance model

Researches on the Internet issues are relatively new in economic literature. One of the fundamental papers on this topic was written in 1985 by Fred D. Davis in his PhD work “A technology acceptance model for empirically testing new end-user information systems: Theory and results” (FD Davis, 1985). The achievement of the research was the development and testing a model, which was called the Technology Acceptance Model (TAM). There were a lot of expansions of this model from other authors and it is still being used by different scientists to predict the adoption of Internet banking and some of these models will be further considered (D Straub, 1997; PA Pavlou, 2003; Cheng et. al, 2006; Amin, 2007). The model had two main aims: first, to broaden our understanding of acceptance of computer-based information systems by users; second, to help companies test the system implementation and evaluate the motivation of users to use an alternative system. The models of other authors on the expansion of the TAM usually also use the Theory of Planned Behavior (Ajzen, 1986), which is discussed below.

The key questions in the paper were about finding and examining the correlation between variables, which could be related to system characteristics and influence the motivation of people to use new services. Another idea was to understand how to measure user motivation in order to make predictions whether the model is adopted by people or not.

To talk more specifically about the model, the main factor influencing the decision of customers to use the innovative system was called an “Attitude toward using”. This attitude is influenced by two other factors - perceived ease of use and perceived usefulness. And, at the same time, perceived usefulness depends on perceived ease of use. There is the model:

The TAM model was widely used for predicting the acceptance of different IT systems such as, for example, WWW. This model is also useful for evaluating the adoption of Internet Banking. Future authors used the TAM model as the basic model to predict whether IB would be popular among users and why. For example, Cheng et. al (2006) used the expanded TAM model (they added a new variable influencing the attitude - Perceived Web Security; they supposed that there was also the Intention to use internet banking influenced by the Attitude Toward Using). So the dependent variable here was intention to use IB. The authors emphasize the fact that using Intention as the dependent variable is more appropriate than using Actual Usage because it's a survey-based study and dependent variable is measured simultaneously with beliefs. Several hypotheses were assumed in the current research. The first one was about the positive effect of Attitude of the users on their Intention to use IB services. Other hypotheses were about direct positive relationship of Perceived Usefulness and Perceived Ease of Use with Intention and Attitude and indirect positive effect of Perceived Ease of Use on Intention and Attitude via influencing Perceived Usefulness.

To predict the customers intention to use IB and to collect needed data, the authors developed a questionnaire for 1000 randomly chosen people with the goal to get 19% effective responses (193 out of 1000) by using a 7-point Likert scale (where 1 is “strongly disagree”, 7 - “strongly agree”). In fact, they even received 203 effective responses.

To mention about the results of the research, they provided support to the extended TAM model. The results showed that Perceived Ease of Use and Perceived Usefulness have a significant effect on Intention of customers. Perceived Usefulness is less significant, which can be easily explained by the role of Perceived Ease of Use (which, at the same time, influences the Perceived Usefulness).

Another example of expanded TAM model is the model of H. Amin, who tested the adoption of Internet banking among undergraduate students in Malaysia. He expanded the TAM model by adding two additional variables. Computer Self-Efficacy has shown to have a positive influence on standard explanatory variables (perceived usefulness and perceived ease of use) and a negative influence on perceived credibility (which includes privacy and security factors) (Amin, 2007).

Theory of planned behavior

To get further in the development of the TAM model and, more specifically, the model of IB adoption, it's important to mention about another approach - the Theory of Planned Behavior (Azjen, 1985). This approach is universal and wasn't designed exactly to predict the adoption of Internet services. This theory is helpful in the attempts to predict people's decisions in broad terms:

The main determinant of this theory is the Intention of an individual to choose a behavior pattern. This Intention defines the Behavior itself. There also are three interdependent factors influencing the intention - Attitude Toward the Behavior, Subjective Norm and Perceived Behavioral Control. Moreover, the last determinant influences directly not only the Intention, but also the Behavior. The author of the article also raises a question about past behavior. He claims that as long as all determinants do not change over the time, past behavior will be the main and the best factor to predict the behavior in the future.

In conclusion to this model, although it is not directly related to the topic because it doesn't say a word about the Internet and its usage, it's still an overall model of prediction of people's actions. That's why it can be and was used in the area of Internet banking (Ajzen, 1986).

Integration of the technology acceptance model with the theory of planned behavior.

An important research was made on this topic by Ming-Chi Lee, 2009. In his paper he used both TAM and TPB models in order to make a more comprehensive model of IB adoption. This model includes positive and negative factors, influencing Intention simultaneously. Negative are risk factors and positive are benefit factors.

The aim of the paper is, first, to examine if those factors affect Intention and, if yes, to what extent each factor does, and, second, to test the model and find out if the integration of TAM with TPB is successful in prediction of IB adoption.

The model here is more sophisticated than in previous papers. In fact, it is made up of determinants from TAM and TPB plus risk factors. The idea is that some factors, such as, for example, subjective norm or perceived usefulness, positively influence Intention to use IB; at the same time, there are risk factors (for example, security risk - a risk to lose money because the account will be broken, or time risk, which can arise if there is some problem in the system or navigation process is difficult), which negatively affect people's desire to use IB.

To sum up, the results of the estimation has shown that most significant risks are security and financial risks and most significant positive factors are Perceived Ease of Use and Perceived Usefulness (MC Lee, 2009).



3. Model of Internet banking adoption: the case of Moscow

The research of this work is devoted to the adoption of IB by Russians. First of all, it was necessary to collect needed data for the research and define key dependent and independent determinants. To know about the preferences of people in banking services and their readiness to use IB services, the questionnaire was developed with the scale of answers from 1 to 7 (where 1 is “strongly disagree” and 7 is “strongly agree”). In this questionnaire people evaluated statements about their attitude to Internet banking, such as, for example, “I think that using online banking can save my time in performing banking transaction” or “I feel that my online banking account is safe from the illegal access”. There were 30 statements in the questionnaire and they were grouped according to the chosen determinants, influencing the dependent variable.

After excluding irrelative answers, we got completed questionnaires from 150 respondents. The average age of them was 26 years old. The geographical scope of the research was Moscow. The questionnaire was send among the respondents by e-mail, with the help of social networking sites and in printed versions. Among the respondents there were mostly students of leading Moscow universities and workers of large companies, who were actively using the Internet.

The basic models for this research are the Technology Acceptance Model (Davis, 1989) and the Theory of planned behavior (Ajzen, 1991). These models were crucial in choosing the appropriate variables. In the current research Intention to use Internet banking is considered as the dependent variable. As can be concluded from the previous researches, some authors were choosing Actual system use as the dependent variable. But this approach doesn't seem fair because if a person with the positive intention starts using Internet banking, the model with the Actual system use is no longer working because it doesn't include such people.

As you can see from the next table, there are two types of explanatory variables in this research:

Table 6 Dependent variable - Intention to use Internet banking

Explanatory variables:
1) Positive factors	2) Negative risk factors
Perceived usefulness	Performance risk
Perceived ease of use	Time risk
Subjective norm	Financial risk
Perceived behavioral control	Security risk
Perceived benefit
Attitude

The choice of variables was made, based on two basic models (TAM and TPB) and on the model of MC Lee, 2009.

The first type of explanatory variables includes factors from the basic models:

1) Perceived usefulness corresponds to "the degree to which a person believes that using a particular system would enhance his or her job performance" [7, 26]

2) Perceived ease of use reflects "the degree to which a person believes that using a particular system would be free from effort" [7, 26]

3) Subjective norm, according to Ajzen, 1991, corresponds to “an individual's perception about the particular behavior, which is influenced by the judgment of significant others” [1, 188].

4) Perceived behavioral control. The idea here is that a person's confidence in his ability to perform a behavior is a constitutive factor of this behavior [9, 132].

5) Perceived benefit includes direct and indirect advantages from IB usage (Ming-Chi Lee, 2008).

6) Attitude refers to “an individual's positive or negative evaluation of self-performance of the particular behavior” [1,188]

Another type of explanatory variables includes risk factors. According to the Third Basel Accord, there are three main types of risks - credit, market and operational. Operational risk is “the risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses" (Basel II). In Basel III, there was proposed a revision to the framework of operational risk with a standardized approach in calculation of this risk. Operational risk also includes such risks as fraud, security and privacy, risks, connected with legal activities, physical and environmental risks [22]. There is an operational risk in the current research, but we will divide it in four groups - performance, time, security and financial risks, which customers are bearing. Performance risk is connected with the opportunity of “losses incurred by deficiencies or malfunctions of online banking websites” [9, 131]. Time risk is, in fact, the risk of losing time while dealing with the online services. Security risk refers to a “potential loss due to fraud or a hacker compromising the security of an online bank user” [9, 131]. Finally, financial risk implies the “potential for monetary loss due to transaction error or bank account misuse” [9,131].

The method of this research is the multiple regression. We use the next formula:

a + b₁*X₁ + b₂*X₂ +b₃*X₃ +…+ b₁₀*X₁₀,

Where Y - is the dependent variable (Intention of customers to use Internet banking), X₁-X₁₀ - are the explanatory variables listed in Table 6. The confidence level of the test is 95%.

Here is the scheme of a model of this research, which is based on the model, presented in the paper of MC Lee, 2009 (his research was discussed above):

As you can see from this scheme, some explanatory variables are interconnected. For example, perceived ease of use influences perceived usefulness and attitude. In order to test the model, it is worthy to formulate the hypotheses, based on the main researches on the adoption topic, discussed in the current paper, and test them [1, 7, 9]:

H1: Perceived benefit is the crucial factor influencing intention of people to use Internet banking.

H2: Perceived ease of use has a significant impact on perceived usefulness.

H3: Financial risk has the strongest negative impact on intention of customers to use Internet banking.

First, we build a regression with perceived usefulness influenced by performance risk and perceived ease of use. Second, we do the same for the Attitude as the dependent variable with risks, perceived ease of use and perceived usefulness as the explanatory ones. Finally, we build a regression with Intention to use Internet banking as the dependent variable and perceived usefulness, perceived benefit, perceived behavioral control, subjective norm, attitude, financial and security risks as explanatory variables.

From the first regression with two explanatory variables (perceived ease of use and performance risk) and perceived usefulness (PU) as the dependent variable we get:

PU = a₁₀ + b₁₀*PEOU + b₁₁*perrisk + ₁

From the second regression we get the correlation of variables with Attitude:

Att = a₂₀ + b₂₀*PEOU + b₂₁*PU + b₂₂*perrisk + b₂₃*finrisk + b₂₄*trisk + b₂₅*secrisk + b₂₆*pbenefit + ₂

And, finally, we get from the last regression:

Intention = a₃₀ + b₃₀*Att + b₃₁*PBC + b₃₂*PU + b₃₃*perrisk + b₃₄*finrisk + b₃₅*trisk + b₃₆*secrisk + b₃₇*pbenefit + b₃₈*subnorm + ₃

To sum up, in the results we have:

*- p<5% , **- p< 1%, ***- p< 0,1%

This estimation proves that there is a link between Intention and chosen explanatory variables. We can conclude that the strongest factor influencing Intention is perceived benefit, which means that our first hypothesis was correct. Other strong factors are perceived usefulness, attitude and perceived behavioral control. These results prove findings of other authors (MC Lee, 2009; Chan and Lu, 2004). The second hypothesis is also correct: perceived ease of use, indeed, has a strong impact on perceived usefulness (in fact, 0,67). Among risk factors, security and financial risks have the strongest impact on intention. Our third hypothesis is also proved because, in the results, we have that financial risk has the strongest impact on intention (-0,30).

The explanatory power of the current research, in fact, accounts for as much as 58% for the first regression with perceived usefulness as the dependent variable, for 65% for the second regression where attitude was the dependent variable and, finally, for 71% for the third, main regression with Intention.

The results of this research for Russian banks showed us that banks should work on their risk reducing strategies. The most important for banks in the risk question is to decrease the number of frauds and other illegal actions with the customers' accounts. Of course, it is extremely important for banks to protect their servers and computers, which is impossible without qualified programmers. The problem of workers' qualifications is essential for a faster development of Internet banking.

Another important task for banks is to persuade people that they can ask any questions about Internet banking or ask for help with any problems occurred during its usage. People must feel protected and aware of all the main features of IB usage.



Conclusion

The researches on the Internet banking adoption have become indisputably important in the world practice and for Russian banks. In modern conditions, Russian banking system is actively developing and banks are looking for new ways to maintain their competitiveness among other banks and attract new customers. That's why banks now are investing in the development of Internet banking services, which can provide bank's clients with the same range of services as they would get by addressing directly to the bank. And, at the same time, Internet banking can save customer's time and money and help the bank to decrease its operating expenses. This is the reason why banks are interested in the development of Internet banking services. But to implement the innovation, the bank should be aware if and how people adopt the innovation. So the IB adoption models are extremely important because they can help the banks predict the behavior of their customers and whether the level of adoption is high.

In our model, the dependent variable is intention of customers to use Internet banking, the explanatory variables are - perceived usefulness, perceived ease of use, perceived benefit, perceived behavioral control, subjective norm, attitude and risks (performance, security, time and financial).

The results of the research proved the model assumptions and the importance of chosen explanatory factors. The strongest factors influencing Intention are perceived benefit, perceived usefulness, attitude and perceived behavioral control. Among the risks, the impact on intention of security and financial risks was the strongest. All three hypotheses were proved: perceived benefit, indeed, has the strongest impact on intention; perceived ease of use has a significant impact on perceived usefulness; finally, financial risk is crucial for people in their decision on Internet banking usage.

In conclusion, the results proved other findings of foreign authors such as, for example, the research of MC Lee, 2009 on the “Factors influencing the adoption of Internet banking” where the author used the TAM model together with the TPB.

These results are important for banks, as long as banks can understand what influences the intention of its customers to use IB and work on these problems in order to attract new customers. We can say that, according to the gained correlations, banks should simplify the usage of IB, make good instructions for customers and hire professional workers, capable to explain the customers how to use Internet banking, and, finally, work on their risk reducing programs.

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