Aug 30, 2017 the growth in mobile banking use represents a huge opportunity for banking institutions to cut costs, increase efficiency and expand their customer bases. Subsequent innovations have seen the mobile banking phenomena continue to grow steadily. Factors influencing the adoption of mobile banking in kenyas. Kenya was chosen because of its successful mobile payment service offered by. It was established that though customers have remained loyal to banks, the banks have not been able to grow their. In less than ten years, kenya has become the leading country in ssa for mobile banking penetration and mobile banking has. The impact of mobile money on monetary and financial. Impact of mobile banking innovations on service delivery on. The indian experience ejbe 2009, 24 page 47 deyoung et al. To determine the effect of mobile banking on the financial performance of commercial banks in kenya. This was further reinforced by the central bank of kenya cbk, 2012 report on growth of m banking. Tavneet suri is an associate professor of applied economics at the mit sloan school of management.
The goal of this project was to measure the impact on the usage of mobile banking technology by the microfinance industry. Pdf mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. Equity bank reported the disbursement of ksh 57 billion since 2014. The adoption of mobile agency banking had enhanced the banks channels of service delivery to clients while at the same time had led to a. Regulatory impact on mobile money and financial inclusion in.
However according to an annual report by central bank of. Fraud in mobile financial services mirrors fraud in other financial services such as banking, cards, and atms. We examine how mpesa is used as well as its economic impacts. Mpesa and the major impact it has had in kenya, they have been no published academic studies done so far in kenya on the socioeconomic impact of mobile banking in kenya gikunju. This study sought to determine the impact of mobile banking on the financial. Abstract this study is for providing an analysis of the impact of mobile banking in financial performance of unguka bank. Cross sectional descriptive survey was employed in this case.
An analysis of the perspectives of banks customers. This was because of the indirect relationship of mobile banking and financial performance. The definition of electronic banking varies among researchers, because electronic banking refers to several types of services through which bank customers can request information and carry out most retail banking services via computer, television or mobile phone daniel, 1999. Effects of internet banking on the financial performance of. What is the impact of mobile telephony on economic growth. Kenyan banking industry and identifying ways in which the industry could improve its fraud handling. Bank account ownership, access to atms, mobile banking and internet banking are inversely related to mobile money ownership. Currently, there are about 8 million users of m banking services. Currently, kenya prides herself with the services of over 45 commercial banks of which most of them have mobile and agency banking. The paper aim to examine the impact of mobile banking on service delivery in the nigerian commercial banks. To establish the extent of use of mobile and internet banking in financial institutions in kenya. At jpal, she is scientific director for africa, cochair for the agriculture sector and of the agricultural technology adoption initiative and chair of the digital identification and finance initiative. We examine how mpesa is used as well as its economic.
A further feature of mobile banking is the way in which it facilitates the development of relations of trust where previously there was no basis for it. There has been increased competition from local banks as well as international banks, some of which are new players in the country. The second specific objective sought to establish the effects of perceived impact of cost on adoption of mobile banking. It would therefore be informative to analyze the impact of mobile banking, specifically mpesa to the society in kenya and understand perceptions about. The definition of electronic banking used in this study is.
Research questions the following research question guided the study. Rapid development of information technology has made banking tasks more efficient and cheaper. The age dependency is the number of people younger than 15 and older than 64 divided by number of working people of. Study provides fresh insights into the benefits of mobile. Development and the introduction of mobile banking to kenya had a revolutionary impact on the scope of business and how day to day transactions are carried out. In particular, mobile banking provides an instantaneous and traceable record of transactions that were otherwise anonymous and unverifiable through cash. On the effect of mobile agency banking on service delivery, this study concludes that adopting mobile banking agency is one of the most effective ways of enhancing commercial banks service delivery. The development of mobile banking has contributed towards enhanced financial inclusion in subsaharan africa ssa. Pdf the effect of mobile banking on the performance of. During the last few years, the use of mpayments as a new payment channel has resulted in an increase in the volume of. The main competitor zain followed suit with zap in mobile banking and yu cash for the yu mobile phone operator. Impact of mobile banking on financial performance of. These facilities aimed to enable customers access information relating to their accounts.
Impact of mobile banking on traditional banking practices in zimbabwe mavhiki severino midlands state university, gweru, zimbabwe. Impact of mobile banking on microfinance institutions. How mobile banking is transforming africa huffpost. Mobile banking m banking is among the latest in a series of recent mobile technological wonders. The study used secondary data from the central bank of kenya, mobile phone companies and kenya. Effects of internet banking on the financial performance. The study recommends that the policy makers take mobile banking awareness creation into consideration when drafting policies on the operations of banks in kenya. Consequently, the specific objective of this study involved determining the effect of mobile top up, fund transfers, bill payment and balance enquiry on. Therefore, this study will be conducted with the expectation of filling this gap.
It highlights differences among the 4 countries and their financial regulatory environment. Integrating mpesa with other financial services like banking completed its journey to formalisation. This informed who, how and what about the mobile banking in commercial banks in kenya and as a onetime event. Pauls university hard copy available in university library. To establish the impact of mobile and internet banking on the performance of financial institutions in kenya. The bank has 152 branches in kenya 8 in rwanda and 5 in tanzania the bank has over 7,720 agents in kenya and thousands of atms around the regions wafula, 2011. Mobile banking and financial inclusion the world bank. The service provides mobile access to normal banking services, such as balance inquiry. In tanzania, the ability to send mobile payments is significant, as mobile phone ownership has grown rapidly in recent years, expanding from 275,560 mobile accounts in 2001 to 25,600,000 in 20112. This study will be of value to different stakeholders in the field. However, according to an annual report by central bank of kenya cbk, its adoption and usage has been surpassed by mobile banking m banking in the last few years cbk 2008. The uptake of mobile phones in kenya has been unprecedented.
A further sample of 70 students in the population were requested to take part in the study. Impact of mobile banking on service delivery in the nigerian. The purpose of the study was to establish the effects of. A future researcher can conduct a research with the aim of. Effects of mobile banking on the financial performance of commercial banks in kapsabet. The study results show that mobile banking has a moderate influence on profitability of commercial banks in kenya. This study was guided by the following specific objectives. In a pure bank model the bank or other formal deposit taking institution holds the license. This research aimed to establish and explain the relationship between mobile banking and the competitive advantage of commercial banks in kenya. This trend has manifested itself in increased demand for mobile banking platforms and even in the loss of customers by banks that have yet to offer mobile banking services. It further examines different regulations that have influenced the development of financial inclusion through the use of the mobile financial services in the 4 countries. Analyzing data from two waves of individual data on financial access in kenya.
The impact of mpesa in kenya isaac mbiti and david n. This study focused on mobile banking technology in relation to its effect on commercial banks financial performance. The impact of internet banking on bank performance and. Thus, this study sought to explore the effects of internet banking on the financial performance of commercial banks in kenya. The supply of digital credit in kenya market overview.
Impact of mobile banking on financial performance of unguka. According to a report released by javelin strategy and research, banking institutions have the potential to save millions in operational expenses each year. Effects of mobile banking on the financial performance of. The application of mobile banking as a strategic response by equity bank kenya limited to the challenge in the external environment. The purpose of this research method has been adopted is to examine the extent of mobile banking in which can be facilitate of economic transaction, to view the strength of somalia local currency in respect to mobile banking system and to explore the. In kenya, for example, we have mshwari, which is offered by commercial bank of africa in conjunction with safaricom kenya limited. The growing investment in mobile technology and bank financial performance in kenya need various studies to establish whether mobile banking has contributed to the financial performance of banking institutions in kenya.
From the regression model of 5 years the study found evidence of positive relationship between mobile banking and bank performance. New evidence suggests that the mobile money banking system has helped reduced poverty levels, particularly in. Modernization and development, pages 247293, national bureau of economic research, inc. A close ended structured questionnaire was used to collect the data. Mobile phone ownership is estimated from finaccess 2016 data. Lower levels of mobile money penetration in almost half.
Mobile money adoption is lower among those that own a bank account and also those who use atms, mobile banking, and internet banking to access their bank account. Each client is required to have an established account with the bank. To address this evidence gap, this study assesses the impact of mobile money across several countries in subsaharan africa. The study sought to establish the effect of mobile banking services on financial sector development in kenya. Mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. Another form of e banking in kenya is eazzy 247 offered by equity bank of kenya. Each year, more and more banking consumers are turning to mobile banking applications to stay up to date with their banking needs. Effects of mbanking services on financial performance and. Monetary economics mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. The impact of internet banking on bank performance and risk. To the management in commercial banks, this study will inform them on the financial effect of mobile banking.
Nov 14, 2016 rosengard believes kenya has struck on a promising solution. However, t he effect of mobile banking on the performance of commercial banks in nigeria was not examined. This study sought to determine the impact of mobile and internetbanking on performance of financial institutions in kenya where the survey was conducted on financial institutions in nairobi. Needless to say, it has put kenya on global innovation map and now threatens plastic money. Interest earned on these deposits is donated to a charity, which allows safaricom to avoid being regulated as a bank. The specific objectives were to establish the effect of mobile banking transactions volume and mobile banking products on the financial performance of commercial banks. Regulatory impact on mobile money and financial inclusion. Mobile money services started in kenya in 2007 through mpesa m for mobile, pesa for money in swahili, a popular mobile money service. Kenya its adoption and usage has been surpassed by mobile banking in the last few years.
Although automated teller machine atm, telephone, and internet banking offer effective delivery channels for traditional banking products, but as the newest delivery channel established by retail and microfinance banks in many developed and developing countries, m banking. Banking credit and debit cards, atms, interactive tv and branchless banking. E40,o16,o33 abstract mpesa is a mobile phone based money transfer system in kenya which grew at a blistering pace following its inception in 2007. The effect of mobile banking on the performance of commercial banks in nigeria article pdf available march 2017 with 7,333 reads how we measure reads. The impact of mobile banking on financial performance of. Pesa can be seen as having aspects of banking as will be seen below, one can even view it as paying interest. The kenyan banking industry is regulated by the central bank of kenya cbk, which manages bank supervision and monetary policy in line with key economic objectives within kenya central bank of kenya.
A study finds the mobile money service mpesa has lifted 194,000, or 2 percent, of kenyan households out of poverty, having greater impact on femaleheaded households and helping 185,000 women shift from farming to business occupations. The role of mobile money in financial inclusion in the. The study concludes that cost was a key factor stopping people from adopting mobile banking. The diffusion and impact of mobile phones on the informal.
The study was coauthored by tavneet suri of the mit sloan school of management. The effects of mobile banking on the financial performance of commercial banks in kenya mba thesis, university of nairobi. The banking ind ustry in kenya has also involved itself in automation, moving from the traditional banking to better meet the growing complex needs of their customer and globalization challenges. However, the impact of mobile money on macroeconomic and financial development is not as well understood, particularly in relation to monetary and financial stability, which form the two primary objectives of central banks. Evolution of mobile banking in kenya mobile banking started with the creation of services by banks which could be accessed through the mobile phone. Rosengard believes kenya has struck on a promising solution.
Agency model was very successful in kenya and the bank decided to replicate in other countries like rwanda and tanzania. This project used smep, a local mfi in kenya as a case study. Mobile money mpayments are increasingly being adopted by organisations as a new way of doing business in the 21st century. It is not unique to mobile and therefore lessons learnt in other areas can be replicated in the context of mobile money. Generating longterm loyalty to stay profitable and grow in the new digital economy, banks need to adopt a customercentric business model, diversify online delivery of products and services channels, and begin making.
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