Examining the Role of Emotions in Gen Z’s Behavioural intention of adoption of Digital Financial Services

Abstract

Purpose: This study examines Generation Z’s adoption of digital financial services by integrating the Technology Acceptance Model (TAM) with emotional and cognitive behavioral factors. The research investigates how social influence, perceived usefulness, perceived ease of use, digital financial literacy, and emotional biases—namely optimism bias, impulsive buying, and present bias—shape behavioral intention and subsequently drive actual digital financial service adoption.

Design/Methodology/Approach: A quantitative research design was employed using a structured questionnaire administered to Gen Z respondents in Delhi NCR. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to evaluate both measurement and structural relationships. The extended TAM model was checked by testing indirect, direct, and effect-size relationships between the various constructs under study that determine the digital financial service adoption.

Findings: The results showed that the behavioral intention is the most relevant predictor of actual adoption of digital financial services. The most relevant antecedent of intention was found to be digital financial literacy , followed by perceived usefulness and optimism bias, which highlights the role of education about digital platform usage and financial literacy as a whole and perceived value. On the other hand, factors like social influence and perceived ease of use, along with present bias, were discovered to be statistically insignificant in intention prediction, which suggests that digital users are more focused on functionality along with social validation over emotional impulse and usability. The present model showed strong statistically predictive accuracy and statistically satisfactory discriminant validity.

Originality/Value: This study increased the literature of technology adoption by integrating the classical Tam construct with emotional biases and empirically showed their selective impact among Gen Z digital users. This presented new insights into various technological, social, and psychological mechanisms driving adoption of digital financial services among Gen Zs. The findings could provide useful implications for fintech innovators, policymakers, and financial institutions who are desiring to design user-centric and socially useful digital financial products.

Paper Type: Empirical Research Paper