Adoption readiness in service innovation: the case of digital money

Abstract

One challenge for firms seeking to develop new services is to understand the conditions likely to affect rates of adoption. Understanding relative degrees of "adoption readiness" provides innovators with information to choose market segments and indicates opportunities to influence adoption environments. This paper considers these issues through the case of digital money, a service innovation some claim to have the potential to provide major economic and social benefits. However, there is little research into the adoption readiness of countries upon which firms can base their new service development decisions. Defined as "currency exchange by electronic means", we conceptualize digital money as a socio-technical system, and propose a Digital Money Readiness Index. This composite index integrates institutional, financial, technological, economic, industrial and social attributes to measure adoption readiness. We identify four stages of readiness and systematically analyze the factors that drive under or over adoption of digital money technologies.Key words: Service innovation, digital money, adoption readiness, composite index, cashlessness 3 INTRODUCTIONPerhaps the most influential service innovations shaping history, money has driven wealth creation and socio-economic development. Innovation in the technologies of money has the potential to provide major economic and social benefits. Dodgson, Gann, Wladawsky-Berger, and George (2012) argue that the reduction of time lost in making transactions, or waiting for receipt or confirmation of payments, will improve productivity by removing the "friction" in transactions.Others have emphasized potential social and economic benefits of mobile payments such as M-PESA in developing nations (Jack & Suri, 2011;Morawczynski, 2014). Digital money innovation also offers the possibility of "dis-intermediating" financial systems through removing the requirements for intermediaries to facilitate transactions (Dodgson et al., 2012). The development and adoption of digital money poses a range of questions for innovation studies and for management scholars (Dodgson, Gann, Wladawsky-Berger, Sultan, & George, 2015).A challenge for firms and governments seeking to develop and regulate new service innovations such as digital money is to understand the conditions of adoption in different markets.However, comparisons of service innovation adoption across markets is difficult, as social, economic, political and cultural factors complicate such comparisons (Cooper, 1998;Rogers, 2003). Research comparing service innovations across markets has generally considered firm level new service development rather than national level adoption (see for instance Thakur & Hale, 2013;Yen, Wang, Wei, Hsu, & Chiu, 2012). Digital money adoption probably represents an extreme polar case (Yin, 1984), as the flow of money influences, and is influenced by, a wide range of social and institutional conditions including economic policy, security, ethics, and morality (Eagleton & Williams, 2011;Simmel, 1990)...

Barriers to bank customers’ intention to fully adopt digital payment methods

“…For example, vulnerable customers may easily be targeted by merchants because of the everyday monitoring of their financial behaviour on the internet (Larsson et al, 2016) and obligatory acceptance of cookies may lead to unwanted tracking on bank websites (Yu et al, 2016). Taken together, privacy is among the most-discussed risks on the road to the full adoption of DPMs by various groups of bank customers (B atiz-Lazo et al, 2014;Larsson et al, 2016;Lundberg et al, 2014;Rehncrona, 2018;Thomas et al, 2016;Zhang et al, 2018).…”

“…However, many customers perceive mobile payments as too easy to access and conduct and security is perceived to decrease when customers can use their money in a fast and easy way without any additional effort (Rehncrona, 2018). Based on previous research (Dahlberg et al, 2015;Larsson et al, 2016;Thomas et al, 2016;Shin, 2021), security is identified as a significant risk in the digital payment process and Lian and Yen (2013) indicated that even adopters perceive security as a major risk because of the potential risk that data can be stolen and misused. Despite ongoing technical improvements, mobile payments are perceived as insecure (Rehncrona, 2018;Shankar et al, 2020).…”

“…This study applies the latter definition but focusses on several barriers impeding bank customers’ intention to fully adopt DPMs. Perceived risks have been found to play a key role in the DPM adoption process (Yang et al , 2015), so various risks may limit customer readiness to take further steps towards full adoption (Thomas et al , 2016). Several studies have applied the technology acceptance model, related to TPR (Lee, 2009; Yang et al , 2015).…”

Barrier-breakers’ influence on full-adoption of digital payment methods

“…, 2015). These developments have influenced the banking and commerce industries as well as customers’ readiness to adopt new digital services (Thomas et al. , 2016).…”

“…Societal developments have made citizens more technology dependent (Priporas et al, 2017), rapidly challenging their behavior (Yang et al, 2015). These developments have influenced the banking and commerce industries as well as customers' readiness to adopt new digital services (Thomas et al, 2016). In fact, the adoption of digital payment methods (DPMs) has increased worldwide, and cash usage has further decreased due to the COVID-19 pandemic, forcing a move from traditional to digital services (Leong et al, 2022;Santo and Marques, 2022).…”