Trust Formation in Online Services in Latin America: The Effect of Reputation and Familiarity, and the Moderating Role of Experience and Internet Penetration

This paper addresses reputation and familiarity as determinants of trust in online banking and examines the effects of experience as a moderator in a Latin American context. The study uses data from two countries, Chile and Bolivia that represent the highest and lowest Internet penetration in the region. The effects of reputation and familiarity on trust are supported. However, these relationships differ in their strength. In a low Internet penetration market, when penetration is low and experience is short, the effect over trust is produced mainly by reputation; when experience is large, familiarity is more important. For high Internet penetration rates, these effects are reversed. Past studies in online banking focused on the factors affecting trust, not on the strength of these relationships depending on external moderators. This study contributes to understand the role of Internet penetration and experience; and helps to fulfill a lack of research in the Latin American relationships context. Introduction Client migration from traditional banking to online systems has been one of the key areas of competition in the financial sector during the last decade (Jayawardhena 2004; Yiu et al. 2007; Sohail and Shaikh 2008), allowing users to have better availability, more direct control over their accounts, cost savings, and an increasing customization of the services provided by banks (Eriksson 2008). As a consequence, academic research in online and interactive marketing has focused on the factors influencing the use and adoption of online platforms. Trust has been found as a central construct for the explanation of the usage of web-based banking services (Rexha et al. 2003). Therefore, trust and its antecedents have captured a lot of attention from researchers in the field (Pavlou 2003). In particular, bank reputation and familiarity (with online systems) are the main determinants of trust, as both variables are related to the knowledge