The advancement of technology has led to the banking industry being subjected to various changes. They have basically changed their services from paper-based banking solutions, and they are now offering other services such as online and mobile banking, due to the advancement of technology. The banking sector is placing a stronger emphasis on mobile banking than online banking mainly because of the rate of growth in the mobile communication technology sector. Mobile banking is considered to be a subset of banking because through this platform, it allows everyone that has a mobile phone to have easy access to the banking services that are available through their mobile handsets.
In Nigeria in particular, the adoption of mobile banking has received more attention over the years due to the fact that there are many mobile users in that country. However, most people in the country still prefer to use paper money as their main means of exchange and store value.
The Need to Move to Mobile Banking in Nigeria
Mobile banking is a payment service that primarily uses mobile phone platforms as its main facilitator in conducting financial services. A user that has subscribed to mobile banking can access money anywhere and at any time without the need of physically going to the bank as is the case in traditional banking. It is seen as an ideal option to provide financial services to low-income earners or people who are in regions that banks have not managed to penetrate because of a variety of issues such as the remoteness of the region, or security threat in regions that have been overrun by the Boko Haram rebel group.
Nigeria has a large unbanked population, due to some of the factors that have been mentioned in the previous paragraph. However, it has high levels of telecommunication penetration that ensures that there is a potential in terms of implementing mobile money payment policy in the country, therefore moving the country from a cash-based economy to a cash-less economy. According to a study that was conducted by EFInA Access to Financial Services in Nigeria in a 2014 survey, it showed that approximately 0.8 million adults use mobile money payments as compared to a population of 178 million who have access to this payment policy. It is a demonstration that mobile payment has not yet been able to penetrate this market.
Factors Affecting the Adoption of Mobile Banking in Nigeria
There are various factors that have affected the adoption or non-adoption of mobile banking in Nigeria.
The use of mobile phones to conduct payments and other financial services is still a new phenomenon in developing countries, especially African countries with the exception of Kenya where their mobile payment platform (M-PESA) has been highly successful. Therefore, the level of information especially among the unbanked population in Nigeria has acted as an impediment in terms of adoption and usage of online banking. There is the need to create more awareness to the customers in order to influence them to move from conventional to mobile banking.
In order for an individual to adopt to a new technology, he or she has to perceive that the new innovation will enhance his or her job performance. There is the need to show the potential customers the benefits that they will likely receive from using this technology. For instance, it will enable them conduct more financial transactions, and even send money to their family members and friends who are in remote areas. Therefore, the customers will be in a better position to take advantage of this innovation because they will find that it is useful for them.
Ease of Use
It is the norm especially among the older people that the use of technological innovations requires a certain degree of knowledge and therefore for them to use the mobile banking platform it will require a lot of mental effort. Most customers will adopt an innovation that they feel is easy to learn and then use. If they feel it is hard to learn and use the technology will become less adopted. People will move to mobile banking more, if they feel that the process of usage will be easy for them.
In Nigeria, the adoption of mobile banking will increase if most people in the society believe that it is a good innovation that is convenient for them to use. The opinions of people such as friends and family members play a key role in helping people to adopt and use mobile payment option for various uses.
Due to the fact that mobile payment policy is dealing with money, the customer intentions to use this innovation is influenced by security and privacy. Security, especially in Nigeria is a huge problem for people who conduct regular online transactions mainly because they are at risk of cyber-crime which is rampant in the country. There is also the issue of privacy. Some people are skeptical about using this innovation or technology because; they are afraid that their financial life may be exposed, if their information falls into the wrong hands. Therefore, for the service providers offering this service, there is the need to ensure that the customers gain confidence in this new system, and if they do, there will be an increase in terms of the number of users who use mobile payments as their main means of conducting financial payments.
When assessing the security of the mobile banking platform it is important to address the following factors: the identified perception of risk, the users lifestyle and the current needs of the target market. Most of the people who have not yet subscribed to mobile banking are afraid that using it will expose their private information because of the internet. It is also important to point out that mobile banking is still a relatively new concept especially in the rural areas of Nigeria and therefore people are quite uncertain about its security and the risks that are involved. Also, according to previous research, it has been suggested that the users intent to adopt to mobile banking has been affected by the perceived complexity of innovation. There is the need for the consumers or the customers to be assured security and privacy before they can be convinced to adapt to the usage of mobile banking. The reason for this is that; although most people are aware of the existing risks that have been posed by mobile banking, they have an inadequate understanding of these identified risks, and it has attributed to the fact that consumers confidence in technology is relatively weak.
Usability of Mobile Banking
The essence of mobile banking is to store value, and convert the cash-in and out of the stored value account. The principle behind the store-value in mobile banking is that a customer can be able to access his or her account through his or her mobile phone. Therefore, the customer will be able to deposit money into his or her account without necessarily having to go to the bank (through bank agents that can be placed anywhere in the country, and will be able to remotely load the money to the customers bank account. Once the process is completed, the customer receives a notification through the mobile phone showing that the money has been deposited into the account. The same case applies when the user wants to withdraw money from his or her account). Through mobile banking, a user can transfer the stored amount from his or her own account to another person- say a father sending pocket money to his child who is in a university in a different state of the country.
Proposed Mobile Banking Model
Mobile Bank Agent
Mobile Banking Server
Mobile Bank Agent
Mobile Banking Server
Account Top-Up Process
The Client visits a mobile banking agent, and informs him of the amount he wishes to top-up into his account. He proceeds to give the agent his account-number or mobile number and gives the cash to the agent.
The Mobile Banking Agent confirms the figure received and then proceeds to dial the mobile banking service USSD Code. He navigates through the options to the account top up option and then proceeds to supply the given mobile number or account number and the amount to be topped up into the clients account.
On the Banking Server, once the process is successful, the server sends an SMS to the client informing him of the amount topped up, as well as their new account balance. If for any reason the transaction fails, the client as well as the agent receive a failure SMS.
Justification of this Proposed Model
The main aim of mobile banking in Nigeria has been to gain access to the unbanked populations in the country. They have not been able to do it because of the factors that have been mentioned above. The mobile banking agent that is popular in developing countries such as Kenya needs to be adopted by Nigerian banks to improve their accessibility and promote mobile banking in the country. The mobile banking agents will be located in kiosks in the major shopping centers in the country, and they will main be responsible for helping the mobile banking customers to deposit and withdraw their funds without having to go to their respective banks. It addresses the issue of security because customers will only use authorized dealers. It is convenient for the users who are not tech savvy, and have feared to use mobile banking because of the perceived risks associated with this platform. It also ensures that the customers of the banks are able to adopt a model that ensures they maintain the two components of cash that they hold dear- they will still be able to use money as a medium of exchange and also effectively as a store of value. The reason for this is that if they want to conduct transactions, they will withdraw money from their account and purchase various goods. On the other hand as a store for value, they will be able to easily deposit their money in their mobile phones, and therefore it will be deposited in their bank accounts.
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