FACTORS AFFECTING CONSUMER ACCEPTANCE OF MOBILE BANKING IN NIGERIA CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Invention of mobile technology and its devices have brought about efficiency in the manner in which commercial and business activities are performed (Tiwari and Buse, 2007; UNCTAD, 2007). One such technology is mobile telephony. Mobile telephony serves as a platform for launching innovative mobile phone applications and services (UNCTAD, 2007). The utilization of mobile technologies for commercial activities initiates the concept of mobile commerce (m-commerce). There has been a record increase in the number of mobile phone subscribers in developed and developing countries (Boadi et al., 2007; UNCTAD, 2007). The mobile market is one of the fastest growing markets in the world (Gupta, 2005; UNCTAD, 2007). Financial institutions have seized this opportunity to gain market advantage by offering a variety of value added services to customers through the use of mobile banking (Gupta, 2005).
Nowadays, mobile phones function as handheld personal computers in their own rights (Kiesnoski, 2000). The cheapest cell phone today has enough computing power to become a digital “mattress” and digital bank for the poor (Friedman, 2010). This is further proliferated by the phenomenal growth in mobile phone usage in the World. Fuelled by the fire of globalisation, mobile banking also known as mbanking is gaining prominence all over the world. For instance, the number of mobile transactions in South Korea rose on a daily average to 287,000 in 2005 up 104%, the number of registered users by 108% in comparison to 2004 (Korea Times, 2006). In the US, 30% of household are projected to bank using m-banking in 2010 alone (Mobile Marketing Association, 2009). The number of mobile banking users in China increased by 150% between 2010 and 2011 (Cellular News, 2011). In Europe, many bank customers are willing to pay extra for utilising mobile banking (Tiwari & Buse, 2006). Nigeria today has over 100 million active mobile subscriptions making the country a fertile ground for the use of m-banking. This perhaps informed the decision of the Central Bank of Nigeria (CBN) to license 16 mobile money operators to carry out a pilot of a mobile financial services system for a period of four months to demonstrate that the system can work in the country (Daily Times Nigeria, 2011 & UNCTAD, 2012)
Mobile banking (m-banking) is an application of mobile commerce that enables customers to bank virtually at any convenient time and place (Suoranta, 2003). It is the provision of banking and related financial services such as savings, funds transfer, and stock market transactions among others on mobile devices (Tiwari and Buse, 2007). There has been unprecedented growth in m-banking market in many nations. For example in the United States, about 30 percent of households use their mobile phones to perform banking operations (MMA, 2009). This is also the case in European and Asian countries where 80 percent of households use mobile banking services (Gupta, 2005). In Africa, mobile phones are the most widely used form of communication technology (ITU, 2007). This has enabled the mobile market industry in Africa to be the fastest growing in the world when compared with other continents. (ITU, 2007). Nigeria is one of the leading market players for m-banking applications in Africa (UNCTAD, 2007).
In 2012, the Federal Government of Nigeria through the regulatory financial institution: The Central Bank of Nigeria (CBN) introduced what it called the cashless policy to drive the country’s development and modernization of its payment system. This is expected to amongst other objectives; help Nigeria in its vision 2020 goal of making the country one of the 20 biggest economies by the year 2020. Other reasons for this policy is to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach and to improve the effectiveness of monetary policy in managing inflation and driving economic growth.
Lagos was chosen as the pilot states with plans to implement this policy nationwide. The policy stipulates cash handling charges on daily cash withdrawals or cash deposits that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies. The policy also sets a withdrawal limit of N150, 000 for all third party cheques. To ensure success of this policy, all banks are expected to deliver electronic banking channels and encourage customers to use same (CBN, 2011). However, the success of the cashless policy is predicated on the development and introduction of alternative payment systems some of which include e-banking, m-banking, e-wallet, ATM cards etc. Thus a study such as this will identify key factors affecting one of the alternative payment systems being encouraged by the CBN; Mobile Banking. Once these factors are empirically established, policy formulation on encouraging the use of mobile banking would be aided. Also, a model describing the acceptance of mobile banking in Nigeria will help policy makers anticipate inhibitions surrounding its acceptance, thus further strengthening the accuracy of relevant policies.
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