Model Development of Millennial Intentions Using Digital Banking Platforms in Indonesia (Extended the Unified Theory of Acceptance and Use of Technology-3 (UTAUT-3) with Financial Literacy)

Abstract

Advancements in digital banking technology provide financial management features that range from simple savings and transactions to more complex levels like stock investing, gold, and insurance. Digital banking demands digital literacy and financial literacy competence from its users, especially for the target segment of the millennials in using these features. However, banks still face the challenge of increasing Indonesian millennial financial literacy. On the other hand, banking rivalry in offering the finest digital banking services to its clients forces banks to develop the correct strategy for enhancing service quality and boosting customer satisfaction and loyalty to digital banking services. The aim of this research is to develop a model that is capable of representing the millennial intensity of adopting digital banking technology. In this study, the author combines three theoretical models relevant to digital banks: the Unified Theory of Acceptance and Use of Technology-3 (UTAUT-3) and Financial Literacy. Analysis of the model is carried out using the Structural Equation Modelling (SEM) method to find out the structural relationships between the variables used in order to determine the validity of the built model and become a recommendation in the preparation of the digital banking development strategy. 532 Indonesian millennials were surveyed using the purposive sample technique, and Partial Least Squares Structural Equation Modelling (PLS-SEM) was utilized for analysis. Result indicated that performance expectations, effort expectations, social influence, facilitating conditions, habits, price values, hedonic motivation, and personal innovativeness have a significant positive effect on the behavioural intentions of use digital banking. Facilitating conditions, habits and personal innovativeness have a significant positive effect on the use behaviour of digital banking. Financial knowledge, financial attitude, and financial skill have a significant positive effect on the financial behaviour of digital banking customers. Financial behaviour has a significant positive effect on the digital banking customer's behavioural intention. Financial behaviour significantly positively influences the usage behaviour of digital banking customers. The structural model results provide highly explanatory power, with R² values of 0.640 for financial behaviour and the model's Q² value 0.403 has large predictive relevance on financial behaviour, confirming the expanded UTAUT-3's effectiveness in predicting digital banking adoption behaviours.