Academic journal article Journal of Emerging Trends in Economics and Management Sciences

Factor Analysis of Customers Perception of Mobile Banking Services in Kenya

Academic journal article Journal of Emerging Trends in Economics and Management Sciences

Factor Analysis of Customers Perception of Mobile Banking Services in Kenya

Article excerpt

Abstract

Mobile banking service, M-Shwari, allows users to save, earn interest and borrow loan over a short period of time using their mobile phones. The service has a potential to spur economic growth if consumers could understand the concept, its' benefits and adopts it. In our study, we investigated factors that influence the adoption of mobile banking services in Kenya. In particular we have shown empirically that the influence of the intervening demographic factors and the consumer perception may have differential impact in emerging market as compared to developed market situations. We extracted and grouped factors that were perceived by the clients as important in adoption of mobile banking. We then tested if the differences in perceptions on some of the factors extracted by exploratory factor analysis significantly differ between gender categories. The results indicated that there was no significant difference in the perception of ease of use and risk of use between genders in the decision to adopt mobile banking service in emerging market. The findings of our study will therefore provide the financial industry with a better understanding of the factors underlying consumer adoption of mobile banking services and help them formulate marketing and promotional strategies for mobile banking services.

Keywords: M-Shwari, Mobile banking, technology acceptance models, personal/demographic factor, Factor analysis, emerging market finance.

INTRODUCTION

Advances in application of computer networking technology are rapidly changing ways in which financial services are transacted in developed as well as developing countries. In Kenya, the money transfer technology known as M-Pesa, which was pioneered by Safaricom, a leading mobile service provider has been very successful. M-Pesa is responsible for transferring millions of shillings on a daily basis among its subscribers. Mobile banking is the latest development in this domain. This paper focuses on the factors influencing the adoption of mobile banking services by consumers in Kenya. In particular, it focuses on M-Shwari, the largest and fastest growing mobile banking service that was launched on 27th November, 2012 by Kenyan telecoms giant, Safaricom in collaboration with Commercial Bank of Africa. The technology acceptance models by Davis and Venkatesh and Roger's diffusion of innovation model have been adopted to study the determinants of consumer adoption of this innovation.

Ondiege, P (2013) outlined why Africa cannot afford to ignore the mobile banking technology. He argues that while Sub-Saharan Africa is now considered to be the fastest emergent continent for ICT sector growth, the majority of the population has no access to banking services (only 20% of African families have bank accounts). He further points out that in rural areas, which account for 60% of Africa's total population, there is limited access to financial services and the cost of providing banking services is exceedingly high due to factors such as underdeveloped commercial bank branch network, deficiency infrastructure and inaccessibility, and financial illiteracy. Therefore sub-Saharan Africa is creating a unique niche for mobile phone banking to develop on the continent. This could boost domestic savings, increase money transfers from the diaspora at low costs, and reduce financial transactions costs which leads to low cost of doing business and therefore benefit SMEs and overall private sector development.

In our study, we aim to determine whether demographic factors are important in influencing the adoption of mobile banking service in Kenya. Also we determine the consumer perception of the emerging mobile banking services concept in Kenya. The findings of our study provides the financial services industry with a better understanding of the factors underlying consumer adoption of mobile banking services and can help them formulate marketing and promotional strategies for mobile banking services. …

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