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CHAPTER TWO OVERVIEW OF MOBILE BANKING
Introduction
This Chapter offers an overview of the concept of mobile banking by including a discussion on mobile banking as a technology and how it has changed the landscape of the world of business and industry and that of ordinary citizens. This is thereafter extended to a discussion on the role of mobile phones in mobile banking which provides the reader with a general background of mobile phones in the world of banking and the role it has played in the lives of people. Mobile banking is further discussed in country contexts, using a few examples of countries in the developed and developing world. This general overview is intended to draw attention to the transformational role of mobile banking and its significant impact as a technological innovation. The South African context is also referred to in a following section, so as to illustrate the role of mobile banking in the local context of the study, which is finally followed by a discussion on mobile banking for the un-banked population. Providing a general overview of mobile banking for the un-banked, sets the tone for further discussions to follow that are specific to this study on rural South Africans.
Mobile banking
Mobile banking technology has been instrumental in presenting opportunities for access to financial services for billions of people throughout the world, particularly rural areas with no bank branches and poor transportation and communication infrastructure (Christen, Rosenberg & Jayadeva, 2004). Mobile phones are no longer used to merely receive and make calls, but they are successfully used to carry out mobile banking services, or popularly known as m-banking. The most fundamental change in the banking industry has been the movement from traditional brick and mortar branch banking to electronic delivery channels such as cellphones, making the industry digitised and automated (Karjaluoto, Mattila & Pento, 2002:26).The access and penetration of mobile phones play a major role in economic development and the impact is great where the presence of landlines is low. Mobile phones affect economic growth through its impact on financial inclusion or through creating access to finance by providing mobile financial services to those who do not have access to financial services, especially in remote areas. While mobile phones have been associated with challenges, they are still considered less expensive and accessible as a communication tool for poor rural communities (Andrianaivo & Kpodar, 2011:21).Many studies have shown that developing countries are behind high-income developed countries in information communication technology (ICT) and applications. This is mostly due to the low literacy levels and numeracy skills and high cost in mobile phone usage. People in rural remote areas are the most affected (Oluwatayo, 2013:66).
However, considering the distribution and market penetration of affordable cellular devices and growing network of service providers coupled with mobile phone connectivity, which for example is reported at just above 40% for sub-Sahara Africa, this forms a platform for mobile banking expansion and resolves any potential barrier to access to a mobile phone device (GSMA, 2017).The strides and advances in information and communication technology today have made the adoption of mobile banking possible in many countries without the limitations of technology infrastructure. The inherent characteristics of mobile technology with its convenience of anywhere, anytime banking provide an unparalleled solution to problems of access to finance facing many developing emerging economies (World Bank, 2009).
Mobile banking is considered one of the fastest growing technologies to have entered markets and is known to have a minimum annual growth rate of at least 14% worldwide with the same rate of penetration as the introduction of cellphones. According to scholars such as Maduku and Mpinganjira (2012); Püschel, Mazzon and Hernandez (2010) and Bara (2013), the introduction of mobile banking was the result of added initiatives of banks in order to increase customer satisfaction, convenience and access to services. Mobile banking, which has a number of advantages over traditional banking methods, is an enabler of banking services to people worldwide, who have a mobile phone but no bank account. It offers advantages such as immediacy, security and efficiency and is not a geographical constraint (Mas & Kumar, 2008 in Oluwatayo, 2013:66).Tiwari and Buse (2007:64) refer to mobile banking as the provision of financial services with the help of mobile telecommunication devices and it is a channel used by customers to interact with a bank using a mobile phone. Lee, Lee and Kim (2007:2) view mobile banking/cellphone banking as the ability to deliver financial services by using mobile devices such as a cellular phone and portable data assistant (PDA). Mobile banking enables customers to bank virtually at any convenient time and place (Suoranta, 2003:15). For Pousttchi and Schurig, (2004:1-2) mobile banking or m-banking is a means of carrying out or executing financial services through the use of mobile communication technology. Luo, Li, Zhang, & Shim (2010:223) and Kim, Shin and Lee (2009:290) consider mobile banking as innovative in accessing banking services whereby the mobile phone or PDA is the means by which a customer interacts with the bank. This in itself gives customers the edge in anywhere, anytime banking. Cruz, Neto, Muñoz‐ Gallego and Laukkanen (2010:344) consider that through the introduction of mobile banking, the manner in which banking is done has revolutionized, changed and has contributed to an increase in financial inclusion in most developing countries. With mobile banking, banks have the potential to expand their market penetration in previously un-banked or rural areas since the expenses that are related to branch overhead costs are reduced (Lee, Lee & Kim, 2007:2).
Literature on the definition and reference to mobile banking and or the use of mobile phones to access financial services tend to overlap. For this study, the term mobile banking is used, as it is considered a means to bring financial services to the rural un-banked population through the use of mobile phones in an easy and accessible manner.Cruz et al. (2010:344) indicate that mobile banking has the potential to create financial access for people in remote hard to reach areas by providing reliable services where internet access is limited. As a variant of mobile electronic banking, mobile banking offers consumers banking services at anytime and anywhere with benefits like convenience, immediacy, location, customization and functionality (Ha, Canedoli, Baur & Bick, 2012:219).Mobile banking has attracted much attention as it has been presented as being able to provide affordable financial services to previously excluded populations (Ivatury & Pickens, 2006:2). Substantial research and literature have demonstrated that creating access to financial services for the un-banked can lead to efficient markets, better decision-making and meeting various development goals.Mobile technology through mobile banking provides financial services to the poor at affordable rates. This is due to the major expenses associated with the initial stage of development of the technology coupled with other fixed costs, with low marginal rates per transaction or per new customer. The low costs therefore provided a stimulus for the development and expansion of mobile money in developing countries which in turn led to an increase in financial inclusion (FinMark Trust, 2015).
According to GSMA (2015), mobile money has extended the reach of financial services in the last decade, more than that of traditional bricks and mortar banking in the last century. To illustrate the magnitude of the impact of mobile money, the GSMA (2015) report showed that, mobile account ownership in Tanzania increased by 33.8 million from 2009 to 2014 compared to the increase in formal account ownership by only 9.9 million in the same period. The GSMA (2015) report indicated that at least 19 countries in the world have more mobile money accounts than bank accounts, and 37 countries have 10 times more registered agents than bank branches. The results of a Global Findex showed that mobile money account growth is particularly noticeable in sub-Sahara Africa (SSA), which is a major driver of increased financial inclusion in the region (Demirgüç-Kunt & Klapper, 2012:19).However, according to FinMark Trust, (2015) more than 20 million adults have mobile money accounts in the SADC region and as a result the mobile money penetration rate in SADC is 15 percent, which is higher than the SSA average of 12 percent. Considering that approximately 20 million people own a mobile phone in the region with no access to financial services, it is an indication of the potential role of mobile banking services (FinMark Trust, 2015).Porteous (2006:15) indicates that there are two aspects of mobile banking which are additive and transformational. He suggests that the mobile phone contains the additive aspect whereby the device is the channel to an existing bank account. As such, it enhances the convenience of existing customers of mainstream financial institutions. Transformational mobile banking services refer to financial products that are linked to the use of the phone and are targeted at low income people. According to Donner and Tellez (2008:319), transformational mobile banking services act as a tool to bring or create access to financial services to largely un- banked populations of developing countries. The intention is that by having access to financial services, the lives of people will be transformed and for this to take place the un-banked must adopt and use the services that are available to them. Donner (2008:320) and Tobbin (2012:75) found that it is important for policy makers, research and industry to explore the factors that enable and / or hinder the adoption of mobile banking services and to assess the usage and impact of mobile banking as a phenomenon.Porteous (2006:26) indicates that some mobile banking systems are offered exclusively by banks, while others are offered by telecommunication service providers, and there also exists some that are in partnership between banks and telecommunication providers. Mobile phones have enabled communication between banks and customers and therefore financial services institutions can combine information services, marketing and not only a message informing customers about bank balances (Riivari, 2005:21).The expansion of technology-based innovations not only has the potential to achieve the objectives of sustainable development, but at an institutional level technology can effectively enhance businesses and save cost in doing business. Technology can also contribute to better management of businesses. At an individual level; technology can create opportunities and conveniences, particularly for people in remote areas (Unnikrishnan & Jagannathan, 2015:145).
ABSTRACT
DECLARATION
DEDICATION
ACKNOWLEDGEMENTS
CONTENTS
LIST OF TABLES
LIST OF FIGURES
CHAPTER ONE INTRODUCTION
1.1 Introduction
1.2 Background of study
1.2.1 Context of the study
1.2.2 Banking in South Africa
1.3 Research problem
1.4 Research objectives and hypotheses
1.4.1 Primary research objective
1.4.2 Secondary research objectives
1.5 Hypotheses
1.6 Methodology
1.7 Thesis outline
1.8 Conclusion
CHAPTER TWO OVERVIEW OF MOBILE BANKING
2.1 Introduction
2.2 Mobile banking
2.3 Mobile banking – a global perspective
2.4 Mobile banking in South Africa
2.5 Mobile banking for the un-banked
2.6 Conclusion
CHAPTER THREE META-THEORETICAL FRAMEWORK
3.1 Introduction
3.2 Meta-theoretical framework
3.2.1 Systems theory
3.2.2 Research paradigm /worldview
3.2.3 Disciplines
3.2.4 Theories
3.3 Conclusion
CHAPTER FOUR LITERATURE REVIEW
4.1 Introduction
4.2 Conceptualisation
4.2.1 Relative advantage
4.2.2 Complexity
4.2.3 Observability/awareness
4.2.4 Trialability
4.2.5 Perceived Usefulness
4.2.6 Perceived Cost
4.2.7 Trust
4.2.9 Demographic factors
4.3 Conclusion
CHAPTER FIVE RESEARCH DESIGN AND METHODOLOGY
5.1 Introduction
5.2 Research design and paradigm
5.3 Methodological orientation
5.3.1 Quantitative method
5.4 Sampling strategy
5.4.1 Study population and sample size
5.5 Data collection process
5.5.1 Data collection
5.6 Data collection instrument
5.6.1 Questionnaire design
5.6.2 Reliability and validity in data collection
5.6.3 Ethical considerations
5.7 Data analysis
5.7.1 Factor analysis
5.7.2 Inferential analysis
5.7.3 Structural equation modelling
5.8. Conclusion
CHAPTER SIX PRESENTATION OF RESULTS
6.1 Introduction
6.2 Demographic profile of respondents
6.2.1 Sample size
6.2.2 Cellphone usage for financial services
6.2.3 Profile of respondents
6.3 Descriptive analysis
6.3.1 Factors perceived to affect the adoption of mobile banking
6.4 Kaiser-Meyer-Olkin Measure and Bartlett’s test of sphericity
6.4.1 Reliability statistics and scale reliability results
6.5 Exploratory factor analysis
6.5.1 Eigenvalues
6.5.2 Descriptive statistics for the six factors
6.6 Inferential statistics
6.6.1 Research hypothesis testing
6.6.2 Structural Equation Modelling (SEM)
6.7 Conclusion
CHAPTER SEVEN DISCUSSION AND CONCLUSION
7.1 Introduction
7.2 Findings of the study
7.2.1 Awareness of mobile banking
7.2.2 Complexity of mobile banking
7.2.3 Advantages of mobile banking
7.2.4 Usefulness of mobile banking
7.2.5 Trust in mobile banking
7.2.6 Affordability of mobile banking
7.2.7 Trialability of mobile banking
7.2.8 The effect of demographic variables on mobile banking
7.2.9 Structural equation model – the final model
7.3 Theoretical contribution
7.4 Management implications
7.5 Limitations
7.6 Recommendations
7.7 Further research
7.8 Importance of the study
7.9 Major areas of contribution
7.10 Conclusion
REFERENCES
APPENDIX
INFORMED CONSENT
