FACTORS AFFECTING CONSUMER ACCEPTANCE OF MOBILE BANKING IN NIGERIA
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF 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 mbanking. 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, 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.
1.2 STATEMENT OF THE PROBLEM
Available statistics show that there exists a huge growth potential for mobile banking in Nigeria and indeed Africa.
According to statistics, 30% of the adult population (25.4 million people) of Nigeria has at least one bank account
while 56.9 million adults are unbanked (UNCTAD, 2012). Out of the 23 banks in Nigeria today, virtually all of them
offer m-banking services. Services on offer on most m-banking platforms include: account alerts, account
balances update and history, customer services via mobile, bill payments, fund transfers and transaction
verification. Despite the huge potentials for the success of mobile banking in Nigeria, the rate of usage still low
compared with what is obtainable in similar developing countries in Africa and Asia. Studies show that Kenya,
South Africa, India and Botswana have a higher rate of usage of mobile payment systems than Nigeria (UNCTAD,
2011).
Locally, various studies have been conducted on mobile banking. Mutua (2009) studied mobile banking as a
strategic response by equity bank limited to the challenge in the external environment. Otieno (2008) studied
challenges in the implementation of mobile banking information systems in commercial banks in Nigeria. But none
of these studies assessed the factors affecting the acceptance of mobile banking by customers in Nigeria,
however this research will embark on the factors affecting consumer acceptance of mobile banking in Nigeria.
1.3 OBJECTIVE OF THE STUDY
The main objective of this study is to find out the factors affecting consumer acceptance of mobile banking in
Nigeria, specifically the study intends to:
Find out the factors affecting consumer acceptance of mobile banking in Nigeria
Find out the level in which Nigerians are using mobile application
Find out the challenges that affect commercial banks customers’ acceptance of mobile banking.
Proffer solution to the challenges that affect commercial banks customers’ acceptance of mobile banking.
1.4 RESEARCH QUESTION
Is there any factor affecting consumer acceptance of mobile banking in Nigeria?
To what level does Nigerians use mobile banking application?
What are the challenges that affect commercial banks customers’ acceptance of mobile banking?
1.5 RESEARCH HYPOTHESIS
Ho: there is no significant factor affecting consumer acceptance of mobile banking in Nigeria
Hi: there is a significant factor affecting consumer acceptance of mobile banking in Nigeria
1.6 SIGNIFICANCE OF THE STUDY
The finding from this research work is expected to contribute to the adoption literature in the area of mobile
banking and in the developing nations. More specifically, to bridge the gap that exists for Nigeria by serving as a
starting point for further research. The findings from this research study can be used by banks to improve mobile
banking facilities and to identify those factors that can either contribute to the failure or success of the mobile
banking industry and this could be further used for decision making.
FACTORS AFFECTING CONSUMER ACCEPTANCE OF MOBILE BANKING IN NIGERIA