MOBILE MONEY AND THE EFFECTS ON BANKS PERFORMANCE IN CAMEROON
Abstract
The study sought to establish the effects of Mobile money on the banks performance in Buea- Cameroon. The study Objectives were to investigate the how effect of mobile money saving facility on banks performance, to ascertain the effect of mobile money transfer services on banks performance and to investigate the effect of mobile money bank deposits and withdrawal on banks performance.
The study target population was the staffs of Eco-Bank Buea branch which comprises of Directors, managers, marketers and bank staff with a sample size of 40. The study used a descriptive survey design.
A substantial aspect of the study involved collecting primary data through the instrumentation of self-administered questionnaires so as to collect the required data. The data collected were classified and analyzed using descriptive statistics and the multiple regression analysis with the help of Statistical Package for Social Sciences (SPSS) software.
The hypothesis was tested through a correlation test, and it revealed that there is a strong positive relationship between the variables (r = 0.819). This result showed that mobile money practices enhances banks performance hence, the null hypotheses were rejected and the alternative hypotheses accepted which states that mobile money saving facility, mobile money transfer services and mobile money bank deposits and withdrawal has a significant impact on banks performance.
Therefore, the study thus recommends that the management of the commercial bank should conduct research on other possible m-banking packages to capture market niches that competitors have not identified hence expand on the market share leading to improved financial performance. #
The study also recommends that policy makers consider mobile banking in their formulation of policies because of the technological developments and the expected switch from physical branch networks to technologically supported banking services.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The majority of economic activities undertaken in every economy involve the use of money. Money is generally defined as any generally acceptable medium of exchange which may be in the form of beds, gold, coins, bank notes etc. In other words, it is any object that is generally accepted for the payment of goods and services and repayment of debt in a given country.
Before the concept of money came into existence, trade has being carried out through the barter system wherein goods and services were exchanged for goods and services. However, the system had some inherent limitation which necessitates the use of a more efficient system. The quest for this more efficient system for trade was what led to the idea of money which came about 5000years ago in Mesopotamia.
Nowadays, there is the permanent need for business partners dealing in the exchange of goods and services to rely on the use of money, all things being equal regardless of their product, size, location etc. This therefore makes the role of banks very essential. Among other functions, the banking system facilitates the transfer of money from one person to another through varied services available.
Indeed, people’s decision on whether or not to do business with a particular bank is dependent on how reliable they are in rendering their services ( Kulu and Appiah-Kubi 2021). However, the cost of money transfer transactions that are made through the bank and non-bank transfer system over the years has been relatively expensive particularly from small amounts for both international and domestic transactions (Kirui Al 2013).
According to Rapha el Auer et al., banks are faced with a new challenge caused by the new forms of money. The use of physical cash payment continues to decline, and the demand for convenience, especially with regard to e-commerce, has fuelled public appetite for digital payments through Cryptocurrency, Mobile Money, etc(Bank of England, 2021)
Mobile money is on the edge of transformation from a service used by technical experts to service for mass market (Kimotho, 2013). “Mobile money is a form of cash delivery is viewed by enterprises as affordable means of money transfer that can be used anywhere and at any time”(Anurag, Tyagi & Raddi 2009).
Mobile money is being used word over by a number of institutions in different sectors some of which are financial services providers like banks who are deliberately developing ways to give customers access to their accounts through mobile devices in order to bring banking services closer to them. Banks therefore ought to regard this emergent technology as a potential catalyst that is capable of increasing their operational efficiency.
Receiving or transferring money is a vital activity in the daily life of the average Cameroonian. Money transfer also needs a reliable, effective and affordable mobile transfer services that says to it that money deposited in one location can be withdrawn in another location (Opare 2018). A mobile money system is a financial tool that makes use of mobile phones in sending and or in receiving money from far and wide within real time. The mobile money service was launched in Cameroon on 31st August 2010, the founder Dr. Nick Hughes.
Cameroon has two active mobile money providers which include MTN Mobile Money and Orange Mobile Money. Mobile money generally refers to services operated from mobile device usually mobile phones. One typical feature that makes the service popular is the fact that providers of the service are relatively available on every corner of the street in geographically remote area (Gosavi 2018).
The type of financial services provided through mobile money has been grouped by World Bank (2012) into mobile finance, mobile banking and mobile payments. Mobile finance includes credit, insurance and savings. Mobile banking can be transaction. Mobile payments range from payments made from person-to-person or business-to-person.
The mobile money service is also known to help reduce the challenges associated with the banking sector in the form of banking solvency, joining of long queues, and failure in branch network (Gosavi 2018). Mobile money services in Cameroon are witnessing expansion in terms of the number of subscribers and new products introduced and their conveniences. For instance, it can be used to pay electricity bills, water bills, school fees, etc.
Banks operate in a complex, competitive and highly regulated environment, with low margins and high customer expectation. To manage this rapidly changing economic and regulatory system, banks need a reliable way of financial innovations with concrete actions that lead to measurable results.
The banking system in Cameroon keeps expanding with time as new banking products and innovations are introduced. The banking system is thus relevant and can be structured to perform even better and amidst the success of the mobile money system. This study is important to banks as it attempts to answer the questions of whether banks should adopt or continue exploring technology based product in the conduct of banking business.
It helps banks identify the benefits and pitfalls. In order to achieve high level of performance, banks have undergone a number of challenges such as competition, new technologies, economic uncertainty, and demanding customers have created an unprecedented set of challenges (lovelock, 2001). Adequate performance of financial institution is of crucial importance to their customer.
Given that the two systems provides almost the same service, the question arises “is momo system servicing a substitute to the banking system hence a fall in the latter’s performance?”. In the Cameroon economy where the role of finance is vital, there is the need to investigate the relationship between the two systems.
Thus, authorities are making significant efforts is safeguarding the services of both mobile money and banking sector. For instance the mobile money interoperability and other links or services performed by the mobile money initiative and the banking sector are commendable (Aker and Wilson, 2013).
However, there is a paucity of study in the context of Cameroon in investigating the effects of momo on the performance of the banking sector as an effort to provide empirical evidence on these implied effects and the possible recommendations aimed at guiding them in the right direction.
This study is therefore geared towards filling the research gaps, and thus its focus is in helping to achieve economic stability and improving the overall performance of the banking sector. Thus the study aims to contribute to the mobile money literature of Cameroon by mainly assessing the effects of mobile money and the banking performance in Cameroon.
1.2 Statement of the Problem
Mobile money has received overwhelming uptake in Cameroon since its introduction in 2010. This success is attributed to the services being affordable and accessible to both high and low income earners (Mbogo 2010).
The technological invention is considered easy to use yet efficient and reliable with the potential to extend financial services to unbanked or those preferring cheaper financial services as it are an appropriate technological service to support their business operations. This research looks to examine the effect of mobile money services on banks in Cameroon. The research looks to find through the use of empirical data and interviews, that although banks may actually lose minimally in the short-run but mobile money can actually be complementary to ways of banking and will only fast track the achievement of a cashless economy.
In the recent past, banks in Cameroon have mainly relied on charging exorbitant interest rates in order to maximize their profit without taking a critically look at other sources of income,which accounts for the high level Non-performing loan (NPLs) which stood at 18.2% as at the end of December 2018. it is therefore imperative that this source of income is not sustainable and so with the introduction of modern technologies that provide clients platforms to transact without having to worry about time, it is about time banks focus on their non-funded income to remain relevant.
Needs for payments and transactional services are not always well served by Banks since they do not always find it easy or cost efficient to adopt full package for banking services( Higgins Kendall & Lyon, 2012). Mobile money transfer services can be used to rais efficiency and boost business growth through cheap, effiecient and reliable mobilr money services support system that reduces the need for cash transactions and the risk associated.
A key assumption of most research work is done on the improvement of operations that has been technological innovations are directly proportional in improvement in performance (Upton & Kim 1999). The advancement in technology has caused some tasks to be more efficient and cost effective but it also has a fair set of challenges. These are seen in firms in the banking sector of Cameroon which uses technology to develop alternative banking channels to reduce and enhance efficiency and convenience but still fail (Kombe & Wafula 2015). This entails a review on the impact mobile money innovation have on the performance of banks.
Studies that discuss mobile money innovations and financial performance innovations proposes many theories about them (Miscra & Pradhah et al). These studies however are relatively on empirical studies that provide a quantitative analysis of financial innovation by financial institutions. Though the change in form of financial instrument and latest and more efficient ways of providing financial service has influence the entire global financial system, little research about the study is documented (Noyer 2007).
Literature reveals that mobile money is faster, cheap, more reliable and safer (Jack & Suri 2011), The benefits of cashless transactions including less opportunity for fraudulent and criminal activities, and mobile money technology have increased adoption rate among Banks in Cameroon (Mbogo 2010). With many studies carried out regarding mobile money and the effect on the economy,(Kmondo 2012) argued that mobile money affects banking services in banks but does not focus on the effect on the banks performance.
Other studies have covered the relationship of mobile money and financial performance, the determinants of financial performance of banks in Cameroon, few or more systematic qualitative and quantitative analysis of the effect of mobile money innovation on financial performance of banks variable in studies more so in Cameroon.
With all the studies that have been done, none have been done to try and establish the effect of mobile money on banks. The main literature gap exists in revealing how mobile money has affected Banking industry in Cameroon. This study therefore sought to answer the research question; what is the Effect of Mobile money on banks in Cameroon taking a Case of Eco-Bank Buea Branch
1.3 Research Questions
1.3.1 Main Question
What are the Effect of Mobile Money on Banks in Cameroon specifically Eco-Bank Buea Branch?
1.3.2 Specific Questions
- What is the effect of mobile money-saving facilities on banks’ performance?
- What is the effect of mobile money transfer services on a bank’s performance?
- What is the effect of mobile money bank deposits and withdrawals on banks’ performance?
Check out: Accounting Project Topics with Materials
| Project Details | |
| Department | Accounting |
| Project ID | ACC0181 |
| Price | Cameroonian: 5000 Frs |
| International: $15 | |
| No of pages | 55 |
| Methodology | Descriptive |
| Reference | yes |
| Format | MS word & PDF |
| Chapters | 1-5 |
| Extra Content | table of content, questionnaire |
This is a premium project material, to get the complete research project make payment of 5,000FRS (for Cameroonian base clients) and $15 for international base clients. See details on payment page
NB: It’s advisable to contact us before making any form of payment
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Using our service is LEGAL and IS NOT prohibited by any university/college policies. For more details click here
We’ve been providing support to students, helping them make the most out of their academics, since 2014. The custom academic work that we provide is a powerful tool that will facilitate and boost your coursework, grades, and examination results. Professionalism is at the core of our dealings with clients.
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OR
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MOBILE MONEY AND THE EFFECTS ON BANKS PERFORMANCE IN CAMEROON
| Project Details | |
| Department | Accounting |
| Project ID | ACC0181 |
| Price | Cameroonian: 5000 Frs |
| International: $15 | |
| No of pages | 55 |
| Methodology | Descriptive |
| Reference | yes |
| Format | MS word & PDF |
| Chapters | 1-5 |
| Extra Content | table of content, questionnaire |
Abstract
The study sought to establish the effects of Mobile money on the banks performance in Buea- Cameroon. The study Objectives were to investigate the how effect of mobile money saving facility on banks performance, to ascertain the effect of mobile money transfer services on banks performance and to investigate the effect of mobile money bank deposits and withdrawal on banks performance.
The study target population was the staffs of Eco-Bank Buea branch which comprises of Directors, managers, marketers and bank staff with a sample size of 40. The study used a descriptive survey design.
A substantial aspect of the study involved collecting primary data through the instrumentation of self-administered questionnaires so as to collect the required data. The data collected were classified and analyzed using descriptive statistics and the multiple regression analysis with the help of Statistical Package for Social Sciences (SPSS) software.
The hypothesis was tested through a correlation test, and it revealed that there is a strong positive relationship between the variables (r = 0.819). This result showed that mobile money practices enhances banks performance hence, the null hypotheses were rejected and the alternative hypotheses accepted which states that mobile money saving facility, mobile money transfer services and mobile money bank deposits and withdrawal has a significant impact on banks performance.
Therefore, the study thus recommends that the management of the commercial bank should conduct research on other possible m-banking packages to capture market niches that competitors have not identified hence expand on the market share leading to improved financial performance. #
The study also recommends that policy makers consider mobile banking in their formulation of policies because of the technological developments and the expected switch from physical branch networks to technologically supported banking services.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The majority of economic activities undertaken in every economy involve the use of money. Money is generally defined as any generally acceptable medium of exchange which may be in the form of beds, gold, coins, bank notes etc. In other words, it is any object that is generally accepted for the payment of goods and services and repayment of debt in a given country.
Before the concept of money came into existence, trade has being carried out through the barter system wherein goods and services were exchanged for goods and services. However, the system had some inherent limitation which necessitates the use of a more efficient system. The quest for this more efficient system for trade was what led to the idea of money which came about 5000years ago in Mesopotamia.
Nowadays, there is the permanent need for business partners dealing in the exchange of goods and services to rely on the use of money, all things being equal regardless of their product, size, location etc. This therefore makes the role of banks very essential. Among other functions, the banking system facilitates the transfer of money from one person to another through varied services available.
Indeed, people’s decision on whether or not to do business with a particular bank is dependent on how reliable they are in rendering their services ( Kulu and Appiah-Kubi 2021). However, the cost of money transfer transactions that are made through the bank and non-bank transfer system over the years has been relatively expensive particularly from small amounts for both international and domestic transactions (Kirui Al 2013).
According to Rapha el Auer et al., banks are faced with a new challenge caused by the new forms of money. The use of physical cash payment continues to decline, and the demand for convenience, especially with regard to e-commerce, has fuelled public appetite for digital payments through Cryptocurrency, Mobile Money, etc(Bank of England, 2021)
Mobile money is on the edge of transformation from a service used by technical experts to service for mass market (Kimotho, 2013). “Mobile money is a form of cash delivery is viewed by enterprises as affordable means of money transfer that can be used anywhere and at any time”(Anurag, Tyagi & Raddi 2009).
Mobile money is being used word over by a number of institutions in different sectors some of which are financial services providers like banks who are deliberately developing ways to give customers access to their accounts through mobile devices in order to bring banking services closer to them. Banks therefore ought to regard this emergent technology as a potential catalyst that is capable of increasing their operational efficiency.
Receiving or transferring money is a vital activity in the daily life of the average Cameroonian. Money transfer also needs a reliable, effective and affordable mobile transfer services that says to it that money deposited in one location can be withdrawn in another location (Opare 2018). A mobile money system is a financial tool that makes use of mobile phones in sending and or in receiving money from far and wide within real time. The mobile money service was launched in Cameroon on 31st August 2010, the founder Dr. Nick Hughes.
Cameroon has two active mobile money providers which include MTN Mobile Money and Orange Mobile Money. Mobile money generally refers to services operated from mobile device usually mobile phones. One typical feature that makes the service popular is the fact that providers of the service are relatively available on every corner of the street in geographically remote area (Gosavi 2018).
The type of financial services provided through mobile money has been grouped by World Bank (2012) into mobile finance, mobile banking and mobile payments. Mobile finance includes credit, insurance and savings. Mobile banking can be transaction. Mobile payments range from payments made from person-to-person or business-to-person.
The mobile money service is also known to help reduce the challenges associated with the banking sector in the form of banking solvency, joining of long queues, and failure in branch network (Gosavi 2018). Mobile money services in Cameroon are witnessing expansion in terms of the number of subscribers and new products introduced and their conveniences. For instance, it can be used to pay electricity bills, water bills, school fees, etc.
Banks operate in a complex, competitive and highly regulated environment, with low margins and high customer expectation. To manage this rapidly changing economic and regulatory system, banks need a reliable way of financial innovations with concrete actions that lead to measurable results.
The banking system in Cameroon keeps expanding with time as new banking products and innovations are introduced. The banking system is thus relevant and can be structured to perform even better and amidst the success of the mobile money system. This study is important to banks as it attempts to answer the questions of whether banks should adopt or continue exploring technology based product in the conduct of banking business.
It helps banks identify the benefits and pitfalls. In order to achieve high level of performance, banks have undergone a number of challenges such as competition, new technologies, economic uncertainty, and demanding customers have created an unprecedented set of challenges (lovelock, 2001). Adequate performance of financial institution is of crucial importance to their customer.
Given that the two systems provides almost the same service, the question arises “is momo system servicing a substitute to the banking system hence a fall in the latter’s performance?”. In the Cameroon economy where the role of finance is vital, there is the need to investigate the relationship between the two systems.
Thus, authorities are making significant efforts is safeguarding the services of both mobile money and banking sector. For instance the mobile money interoperability and other links or services performed by the mobile money initiative and the banking sector are commendable (Aker and Wilson, 2013).
However, there is a paucity of study in the context of Cameroon in investigating the effects of momo on the performance of the banking sector as an effort to provide empirical evidence on these implied effects and the possible recommendations aimed at guiding them in the right direction.
This study is therefore geared towards filling the research gaps, and thus its focus is in helping to achieve economic stability and improving the overall performance of the banking sector. Thus the study aims to contribute to the mobile money literature of Cameroon by mainly assessing the effects of mobile money and the banking performance in Cameroon.
1.2 Statement of the Problem
Mobile money has received overwhelming uptake in Cameroon since its introduction in 2010. This success is attributed to the services being affordable and accessible to both high and low income earners (Mbogo 2010).
The technological invention is considered easy to use yet efficient and reliable with the potential to extend financial services to unbanked or those preferring cheaper financial services as it are an appropriate technological service to support their business operations. This research looks to examine the effect of mobile money services on banks in Cameroon. The research looks to find through the use of empirical data and interviews, that although banks may actually lose minimally in the short-run but mobile money can actually be complementary to ways of banking and will only fast track the achievement of a cashless economy.
In the recent past, banks in Cameroon have mainly relied on charging exorbitant interest rates in order to maximize their profit without taking a critically look at other sources of income,which accounts for the high level Non-performing loan (NPLs) which stood at 18.2% as at the end of December 2018. it is therefore imperative that this source of income is not sustainable and so with the introduction of modern technologies that provide clients platforms to transact without having to worry about time, it is about time banks focus on their non-funded income to remain relevant.
Needs for payments and transactional services are not always well served by Banks since they do not always find it easy or cost efficient to adopt full package for banking services( Higgins Kendall & Lyon, 2012). Mobile money transfer services can be used to rais efficiency and boost business growth through cheap, effiecient and reliable mobilr money services support system that reduces the need for cash transactions and the risk associated.
A key assumption of most research work is done on the improvement of operations that has been technological innovations are directly proportional in improvement in performance (Upton & Kim 1999). The advancement in technology has caused some tasks to be more efficient and cost effective but it also has a fair set of challenges. These are seen in firms in the banking sector of Cameroon which uses technology to develop alternative banking channels to reduce and enhance efficiency and convenience but still fail (Kombe & Wafula 2015). This entails a review on the impact mobile money innovation have on the performance of banks.
Studies that discuss mobile money innovations and financial performance innovations proposes many theories about them (Miscra & Pradhah et al). These studies however are relatively on empirical studies that provide a quantitative analysis of financial innovation by financial institutions. Though the change in form of financial instrument and latest and more efficient ways of providing financial service has influence the entire global financial system, little research about the study is documented (Noyer 2007).
Literature reveals that mobile money is faster, cheap, more reliable and safer (Jack & Suri 2011), The benefits of cashless transactions including less opportunity for fraudulent and criminal activities, and mobile money technology have increased adoption rate among Banks in Cameroon (Mbogo 2010). With many studies carried out regarding mobile money and the effect on the economy,(Kmondo 2012) argued that mobile money affects banking services in banks but does not focus on the effect on the banks performance.
Other studies have covered the relationship of mobile money and financial performance, the determinants of financial performance of banks in Cameroon, few or more systematic qualitative and quantitative analysis of the effect of mobile money innovation on financial performance of banks variable in studies more so in Cameroon.
With all the studies that have been done, none have been done to try and establish the effect of mobile money on banks. The main literature gap exists in revealing how mobile money has affected Banking industry in Cameroon. This study therefore sought to answer the research question; what is the Effect of Mobile money on banks in Cameroon taking a Case of Eco-Bank Buea Branch
1.3 Research Questions
1.3.1 Main Question
What are the Effect of Mobile Money on Banks in Cameroon specifically Eco-Bank Buea Branch?
1.3.2 Specific Questions
- What is the effect of mobile money-saving facilities on banks’ performance?
- What is the effect of mobile money transfer services on a bank’s performance?
- What is the effect of mobile money bank deposits and withdrawals on banks’ performance?
Check out: Accounting Project Topics with Materials
This is a premium project material, to get the complete research project make payment of 5,000FRS (for Cameroonian base clients) and $15 for international base clients. See details on payment page
NB: It’s advisable to contact us before making any form of payment
Our Fair use policy
Using our service is LEGAL and IS NOT prohibited by any university/college policies. For more details click here
We’ve been providing support to students, helping them make the most out of their academics, since 2014. The custom academic work that we provide is a powerful tool that will facilitate and boost your coursework, grades, and examination results. Professionalism is at the core of our dealings with clients.
For more project materials and info!
Contact us here
OR
Click on the WhatsApp Button at the bottom left
Email: info@project-house.net
