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Title: Customer's operational risk towards electronic banking products and its mitigation: a covariance-based structural equation modelling approach

Authors: M. Aravind; Vinith Kumar Nair

Addresses: TKM Institute of Management, Musaliar Hills, Karuvelil P.O, Kollam District, Kerala 691505, India ' TKM Institute of Management, Musaliar Hills, Karuvelil P.O, Kollam District, Kerala 691505, India

Abstract: The e-banking operations can cause loss or damage to the customers in the form of processing errors, fraud, or via external events. The purpose of this work is to analyse the major risk factors influencing the customers in their e-banking operations. Based on the classic stimulus-response approach, we have identified 15 risk stimuli and four major risk constructs that can cause some encumbrance in e-banking operations. We have also identified some risk mitigation strategies based on the review of literature and focus group discussions. In this work, a stimulus-response model was constructed by linking the operational risk in e-banking with the risk mitigation strategies. Further, we used data from 742 respondents for empirically validating the proposed model. The results of covariance-based structural equation modelling (CB-SEM) revealed that the strategies identified have a positive effect on mitigating the internet banking risk (IBR) only.

Keywords: e-banking; stimulus-response model; risk mitigation; CB-SEM; operational risk.

DOI: 10.1504/IJEBANK.2020.105416

International Journal of Electronic Banking, 2020 Vol.2 No.1, pp.38 - 54

Received: 15 Apr 2019
Accepted: 08 May 2019

Published online: 21 Feb 2020 *

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