Abstract—In internet things era, there has been a change in banking delivery channel towards online banking. Besides providing the ease for their customer to perform banking activity in anytime and anywhere using internet network, the cost of online banking development is considered much cheaper than the cost to set up new office branch or new ATM service. Although internet banking provides many benefits and eases for banking customer, many customers have not utilized internet banking to its potential usage. Many banking customers refuse to use online banking service due to the risk perceived by the customer in performing an online transaction using internet banking. Based on the previous study, overcome risk issue in internet banking, bank sector should win customer’s trust. Thus, trustworthiness is considered a critical factor for the success of e-business including internet banking. Most of the studies related user’s acceptance are conducted using TAM model, but still few studies that integrate perceive risk, TAM, and trust. This study aims to increase the understanding towards the factors that drive the customer to refuse the usage of internet banking, the factors which drive the customer to accept internet banking usage, and the role of those factor towards customer’s behavioral intention in using internet banking service. An empirical study was conducted using 242 sample data of internet banking customer in Indonesia. The result of this study shows that trust has a negative effect towards risk and security risk has a non-significant effect towards attitude towards using and behavioral intention. Index Terms—Internet banking, perceived risk, TAM, trust. I. INTRODUCTION Recently, there has been a change in banking delivery channel towards online banking service such as internet banking [1]. Beside provide the ease for their customer to perform banking activity in anytime and anywhere using internet network, the cost of online banking development is considered much cheaper than the cost to set up new office branch or new ATM service [2]. Internet banking is defined as internet based service which provided by the bank through a particular internet portal, through which customer can use different kinds of banking service such as bill payment, making investments, obtain account information, etc. [1]. Although internet banking provides many benefits and eases for banking customer, many customers have not utilized Manuscript received December 25, 2016; revised April 26, 2017. Iwan Inrawan,Wiratmadja and Natasya Dameria are with the Industrial Engineering Department, Bandung Institute of Technology, Bandung, Indonesia (e-mail: iwan@ lspitb.org, natasyadameriamanalu@gmail.com). Amelia Kurniawati is with Industrial Engineering Department, Telkom University, Bandung, Indonesia (e-mail: ameliakurniawati@telkomuniversity.ac.id). internet banking to its potential usage. Based on data obtained from one of the largest banks in Indonesia, from over 3 million banking customer, less than half million customers using internet banking to perform an online transaction. Durkin and O’Donnell [3] found that even though internet banking is considered as innovative technology, many customers showed no interest in using internet banking to replace face-to-face interaction in the bank. Moreover, Robinson [4] found that half of the people that have tried online banking service will not become an active user. Therefore, it indicates that internet banking acceptance is faced with problems. A lot of attentions have been given towards factors that can drive customer’s acceptance towards internet banking, but to obtain comprehensive explanation towards banking customer acceptance of internet banking, both drivers and barriers in banking customer’s acceptance of internet banking must be considered. Technology Acceptance Model (TAM) [5] has been widely used to explain user’s acceptance towards particular technology through construct perceive ease of use and perceive usefulness that will positively affect user’s attitude and behavioral intention towards a particular technology. In this study, TAM concept through perceived ease of use and perceived usefulness will be used as driver construct that will lead to internet banking acceptance. One of the barriers faced by the bank in encouraging the usage of internet banking is constrained by banking customer resistance to use online banking due to the risk perceived by the customer in performing online transaction using internet banking [6]. Banking customer tends to assume that there is uncertainty in performing online transaction in terms of security, functional defect, etc. [1], [7]. Banking customer tends to refuse in giving sensitive information in using internet banking due to lack of trust to internet banking security [7]. Lee [6] stated that to overcome the issues above, internet banking sector should win customer’s trust. The statement is supported by Chiou and Shen [8] that stated that trustworthiness is a critical factor for the success of e-business including internet banking where trust in the bank as a whole can affect customer’s trust in online banking. Customer’s trust is needed to minimize the risk of internet banking usage perceived by customers. Although many studies related to online banking acceptance has been developed, but few studies integrates trust and risk aspect together as a factor that affects customer’s intention in using internet banking. In this study, TAM concept and perceived risk are combined and the role of trust in minimizing perceived risk is also examined. This The Role of Perceived Trust of Physical Bank towards Perceived Risk on Internet Banking Acceptance from the User Perspective Iwan Inrawan Wiratmadja, Natasya Dameria, and Amelia Kurniawati Journal of Economics, Business and Management, Vol. 5, No. 4, April 2017 168 10.18178/joebm.2017.5.4.506 doi: