Risk Perception, Risk Tolerance and Consumer Adoption of Mobile Banking Services

The increasing availability of mobile banking has the potential to transform the way consumers interact with their financial institutions and expand access to financial services for previously underserved populations. However, given the sensitive nature of the information shared when using mobile banking, its adoption is impeded by consumer concerns about the overall security of the technology. This study uses a unique dataset to examine how consumers' perceptions of the risks of using mobile banking, as well as their own personal level of risk tolerance, impact adoption of mobile banking. We find that consumers who believe that mobile banking is unsafe or who don't know how safe it is adopt mobile banking at much lower rates than those who believe it is safe. We further find that consumers with higher levels of risk tolerance are more likely to adopt mobile banking, even after controlling for their perceptions of the riskiness of mobile banking