Towards an Understanding of Consumer Adoption of Financial Technologies: Evidence from Open Banking in Pakistan

Abstract

Open banking has become an essential trend in the FinTech space, providing new ways to share data, integrate services and deliver customer-centric financial solutions. Open banking initiatives have been rapidly expanding across various regions globally. Nonetheless, limited studies have been conducted in developing economies to investigate the elements affecting customers' acceptance of open banking. Empirical evidence on consumer uptake of open banking is limited in Pakistan, where digital financial services (DFS) are growing and regulatory measures encouraging financial innovation are on the rise. In order to explain consumer behaviour in financial sector in terms of UTAUT framework comprehensively, the study adds context specific variables such as perceived risk, financial readiness, social awareness and personal trust. This study design was quantitative cross-sectional with 150 respondents from main cities in Pakistan who filled a structured questionnaire. The research model was tested using partial Least Squares Structural Equation Modeling (PLS-SEM) which is a new program developed by SmartPLS. The Cronbach's alpha of the measurement model ranged from 0.760 to 0.814, composite reliability was 0.852–0.887, and average variance extracted (AVE) was 0.452–0.684, showing that the model had good validity and reliability. Results of the structural model showed that financial preparedness (β = 0.383, p < 0.001), social influence (β = 0.303, p < 0.01) and performance expectancy (β = 0.216, p < 0.01) had significant positive effects on customers' intention to use open banking services. However, no statistically significant effects were reported for effort expectation (β = −0.022, p > 0.05), perceived danger (β = 0.036, p > 0.05), or social awareness (β = 0.073, p > 0.05). In addition, the adoption intention and usage intention had a strong correlation (β = 0.436, p < 0.001), while adoption intention and usage intention and personal trust did not have a significant correlation (β = 0.063, p > 0.05). The suggested model accounted for 20.2% of the variation in the intention to use (R² = 0.202) and 66.0% of the variance in the intention to adopt (R² = 0.660). The findings validate the extended UTAUT model's relevance adoption of Online Banks by Pakistani people, and they contribute to a growing body of work on FinTech uptake in emerging economies. The report offers practical advice for financial institutions, FinTech enterprises, and regulators on how to improve consumer financial preparation, the importance of social influence mechanisms, and improved communication of the practical benefits of open banking services.