CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The earliest mobile banking service used SMS which was then known as SMS banking. After smart phones were introduced with WAP (Wireless application protocol) support allowing the use of the mobile web in 1999, the first European banks started offering mobile banking on this very platform to their customers Vaidya, (2011). In 1981, four large banks in New York City provided customers with access to personal accounts via landline telephone cables.

This was initially referred to as “online” banking. However, what became online banking via the Internet began in October 1994 when Stanford Federal Credit Union gave its customers the opportunity to bank online. Presidential Bank followed a year later, giving their customers full access to personal accounts, the first bank in the U.S. to do soBenge,(2001).

Although it was in May 2011, when the first fully functional banking app was launched by RBS (Royal Bank of Scotland), but was only available for Apple devices. It soon became available for Blackberry and Android users as well. It is said that in its first six months more than a million users signed up and more than one billion pounds were transferred using this very app and since then, mobile banking has only traveled upwardsTiwari et al, (2006).

In the USA, mobile banking was introduced in 2006 by Wachovia bank. In September 2007, Aite group predicted the mobile banking users in the United States would reach 1.6 million by the end of the year 2007 and will rapidly increase to 35 million by the year 2010. The report indicated the growth potential for mobile banking Pitruzzello, (2008). Wachovia bank was the first to announce mobile banking services to their customers in September 2006 and re-launched in March 2007 followed by a few other banks. They developed their own banking product with AT&T. Bank of America started mobile banking services in March 2007 in collaboration with four major wireless carriers, which reported 500,000 users within the first 6 months. Initially, the services offered were funds transfer, bill payment, branch and ATM locations, account balance, etc. Since then there has been huge progress in mobile banking services.

In 2009 and 2010 respectively, San Antonio, Texas-based USA launched their new application for the iPhone and Android platform that is capable of remote deposit capture allowing users to take a photo of the check and deposit electronically. In the middle of 2010 Chase bank also introduced the mobile RDC application for the iPhone. In Nov 2010, U.S. Bank and Visa announced a mobile payment system for their customers. They offer the service via use of the Micro SD card, which fits in most existing mobile devices Lan et al, (2012). A month before that, U.S. bank launched a full suite mobile banking solution for prepaid cardholders with bill pay capabilities.

Many banks in the world have offered mobile banking and financial services for years. European and Asian countries have been offering mobile banking services for years that vary for banking related services to the mobile “proximity” payments. Japan and South Korea are the world leaders in adopting mobile banking technology Guardini, (2004). Before 2004, the Internet was the only way of using mobile banking in Japan, which enabled customers to browse the merchant website through a web browser. However, customers still had to use their credit/debit cards for payments. In 2004, NTT DoCoMo started using FeliCa contactless IC chips developed by Sony for mobile devices, which can carry personal and financial information that facilitated remote payments and substituted mobile devices for cash and cards at merchants’ points of sale

Kiesno, (2007). In 2003, LG Telecom started South Korea’s first IC chip based mobile banking service, which significantly increased the market share of LG Telecom. The other carriers also adopted IC chips following the success of LG Telecom. Also, Visa and MasterCard have successfully operated in South Korea since 2006. Since then mobile banking services have come a long way in other countries of the world Banai, (2008)

In Africa, Vodacom started offering mobile financial services in 2008 with its MPESA brand; Zain now Airtel followed with Zap Money (Airtel Money) and the third to join the race was Zantel with Z-Pesa, now EzyPesa, Zantel is deploying EFulusi solution Seitz and Stickel, (2008). In 2010, Tigo officially launched its mobile money product – TigoPesa bringing the number of telecommunication companies to four competing in the ‘non-bank led model’, in offering mobile financial services in the market. According to BOT, by September 2010, there were 5.4 million registered mobile money accounts and by September 2012 was 15 million subscribers and the total value of mobile money transactions was 1.7 trillion shillings equivalent to almost 14 per cent of commercial banks’ total private sector deposits.

The mobile money subscribers use MFS to make payments, send remittances and store funds for shorter periods at low cost Brich, (2015). Utility companies-DAWASCO, TANESCO have linked with Mobile Network Operators platforms to allow customers pay for their bills. Even Precision Air and FastJet have linked with MNO platforms to facilitate payments for air tickets. Tanzania Revenue Authority has as well linked with MNO platforms to allow easier and faster remittances of some taxes; Western Union has partnered with some MNOs to facilitate delivery of international transfers directly to the recipient’s e-money account Muller, (2014).

In Cameroon, this service has been available since September 2011, in partnership with commercial banks who provide regulatory supervision in its usage. The phenomenon has been growing since 2014. There are now over 700 payment locations across the country. This new concept allows for a great deal of security, confidentiality and speed, which is why it so quickly became a part of Cameroonian daily life. In the world of business, they say “time is money” Mitchell, (2015). Well, Mobile Money spread throughout Cameroon overnight because of the time it saves when paying electricity and various other bills by allowing customers to skip the long lines and loss of time in branch.

Money transfers are free and available twenty-four hours a day and seven days a week. In addition, the service comes without the added electronic payment fees and minimum balance requirements typically associated with traditional banks Maier, (2018). Mobile Money is now a reality in Cameroon. Consumers are using this electronic payment method more and more.

1.2 Statement of the problem

Nowadays, mobile banking is a quite popular banking system in the world. Many banks are providing mobile banking services. Mobile banking is a financial transaction conducted by logging on to the bank’s website by using a hand phone or cell phone. There are a lot of services that offer by mobile banking such as mini-statement and checking of account history, access to loan statement and card statement, status on cheque, stop payment on cheque, ordering check books, bill payment processing and so on.

According to Laukkanen, (2007), mobile banking services enable consumers, for example to check their account balance and latest transactions, to transfer funds between accounts, to make buy and sell orders for the stock exchange and to receive portfolio and price information. Although only the traditional banking can let the customers to take out their money but customers need to waste time to complete their transaction.

This research explores and examines the important elements that will affect the customers to use the mobile banking.  Bankers should understand the needs of the customers so that they can improve the inadequate and insufficient of the services. This also can increase the customers’ usage intention of mobile banking services. By using mobile banking, some of the problem might occur. Some customers will think that mobile banking is difficult to utilize and its use is complicated. Mobile banking services might make the customers difficult to use because it is a new technology service.

Rogers, (2003) determine that the innovation services are perceived as difficult to understand and use. Some customers also will think that the mobile banking is not secure and they will meet risk. They will worry that hacker will forgery their information and takes out their money without notify the customers. They will also doubt that their money is still in their account or not. Sometimes, customers will feel helpless when they are using mobile banking services because there will might occur some errors during the transaction. According to Mitchell, (1999), risk is a subjective-determined expectation of loss; the greater the expected probability of loss, the higher the risk perceived. This will lower the customers’ motivation to adopt the mobile banking.

There is lack of communication using mobile banking, it is because mobile banking does not have assistance which can explain or help them to do the transaction. Mobile banking only give the steps and do not explain. Murkherjee and Nath (2003) also found out that communication has played a significant on trust and trust can influence more customers to use mobile banking services. As a result of these problem faced by customers of commercial banks in the use of mobile banking services, it has retard the growth of commercial banks through mobile banking. It is on this base that the following research questions are designed.

1.3 Research Questions

This study seeks to tackle among the following questions:

1. To what extent does risk and security of mobile devices in carrying out mobile banking affects the growth of commercial banks in Buea?
2. What is the effect of ubiquitous finance control on the growth of commercial banks in Buea?
3. To what extent have customers’ perceived trust in mobile banking affected the growth of commercial banks in Buea?
4. How have customers perceived the ease to use this mobile banking service affects the growth of commercial banks in Buea?

Read More: Banking & Finance Project Topics with Materials