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Technological innovation is rapidly changing the traditional banking approach. The transition from the costly physical branch system to modern banking ranging from automated teller machines to 24/7 e-banking is definitely an achievement (Arif, Afshan, & Sharif, 2016). The advancement of information technology has certainly provided banks and users such as micro and small enterprises with significant unit cost-saving and the required level of efficiency for a competitive edge. For example, Small and Medium Enterprises (SME) owners/managers have taken the liberty to adopt mobile banking as they need low-cost accounts to take advantage of small savings and micro-credit opportunities, as well as to enhance the quality of their services and increase growth (Kones, 2014). The use of information technology has therefore placed banks closer to their customers by providing convenience and comfortable banking services (Bangens & Söderberg, 2011). With the help of the internet, the branchless banking system has revolutionized the way micro, small and medium companies pay their suppliers, receive customer deposits and settle their trades with wholesalers (Bangens & Söderberg, 2011; Ndiwalana, Morawczynski& Popov, 2010).
Mobile banking refers to a “channel whereby the consumer interacts with a bank via a mobile device, such as a mobile phone or personal digital assistant; in that sense it can be considered as a subset of electronic banking and an extension of internet banking with its own unique characteristics” (Laukkanen & Pasanen, 2008). The use of mobile banking technology can, therefore, be considered as an innovative alternative channel to traditional banking approaches such as Automated Teller Machine (ATM), internet banking and physical branch-banking (Arif et al., 2016).
In Tanzania, the use of mobile banking technology picked up since 2007 when the idea was first introduced (Masamila, 2014; Mwinyimvua, 2013). Although there are nearly 50 Banks in the country, most of them are operating in a greatly unbanked market (Masamila, 2014). According to the Bank of Tanzania BOT (2016), mobile banking transactions had reached 4,411,674 million worth of TZS 194.1 billion in 2016. The benefits attached to mobile banking such as convenience, accessibility and personalization are an indication of its positive effects on daily business transactions in the country.