Factors Influencing Adoption of Sustainable Banking Services: A SEM-Based Study

Abstract

This study examined the factors influencing the adoption of sustainable banking services using a structural equation modelling (SEM) approach. In recent years, financial institutions have increasingly introduced sustainable banking practices aimed at promoting environmentally responsible and socially inclusive financial services. Despite growing availability, customer adoption of these services remains limited, particularly in developing economies where awareness and trust in financial innovations vary significantly. The study proposed and tested a conceptual model in which awareness, perceived benefits, trust in banks, and digital banking ease were considered as independent variables influencing sustainable banking adoption. Adoption intention was examined as a mediating variable, while actual usage behavior served as the dependent variable. The study adopted a quantitative research design, and data were collected through a structured questionnaire using a five-point Likert scale. A sample of respondents familiar with banking services was targeted to ensure relevance to the research objectives. Structural equation modelling (SEM) was employed to analyse the relationships among variables and to assess both direct and indirect effects within the proposed framework. The findings indicated that awareness of sustainable banking services significantly influenced adoption intention, highlighting the importance of knowledge dissemination. Perceived benefits and trust in banks were also found to play critical roles in shaping users’ willingness to adopt such services. Additionally, digital banking ease emerged as a significant predictor, suggesting that user-friendly digital platforms enhance acceptance of sustainable financial products. The mediating role of adoption intention was confirmed, demonstrating that behavioral intention acts as a key mechanism through which cognitive and perceptual factors translate into actual usage behavior. Overall, the study concluded that increasing awareness, strengthening trust, improving perceived value, and enhancing digital accessibility are essential for promoting sustainable banking adoption. The findings provide practical implications for banks and policymakers aiming to expand sustainable finance initiatives and improve customer participation in environmentally responsible banking systems.