Ethics in Mobile Banking: A Case Study of Kenya's Mobile Money Platforms

Ethics in Mobile Banking: A Case Study of Kenya's Mobile Money Platforms

Rehema Kagendo Kiarie (Riara University, Kenya)
Copyright: © 2020 |Pages: 23
DOI: 10.4018/978-1-7998-2398-8.ch009
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This chapter addresses the ethical issues relating to mobile money transfer in Kenya. The mobile money transfer industry has grown exponentially in Kenya. Both the formal and informal sectors have embraced the use of mobile money transfer as a convenient means of transacting. With a plethora of advantages, most notably financial inclusion of the informal sector, mobile money transfer also has its ethical demerits. Despite the ethical challenges being experienced, the use of regulation coupled with education of users on ethical issues and security of mobile money transactions will assist in reducing unethical conduct.
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The invention and embracement of money transfer commonly referred to as mobile banking has enabled consumers who would otherwise be locked out of access to financial services stand in a better position. Mobile Money Transfer (MMT) has pervasively cut across almost all economic sectors in the country paving way for a new way of substituting cash transactions that were seemingly tiresome.

In Africa, and particularly in Kenya, the industry has tremendously grown with numerous companies joining in to share the pie in the market space. Being the newest technological development in recent times, it has bridged a gap that existed and people who were previously unable to access loans through the bank can do so now with ease, at the comfort of their phones. Financial services via the mobile phone is one principal way in which mobile telephony is transforming the life and business in developing countries (Gavin & Jesse, 2009).

With companies such as Tala, Zenku and Mshwari by Safaricom in Africa, the informal sector is now at a vantage point and they do not need to go through the bureaucracies associated with banks to access mobile cash and loans. Mobile money transfer has become an inordinate tool towards the achievement of Sustainable Development Goal (SDG) eight (United Nations, 2016). However, this might not be realized unless mobile industries integrate and implement the ethical and moral values and virtues in their business operations at this time when we are ‘witnessing the disintegration of ethics or at least failure to apply it in business operations as argued by polo (2008) and (Gomez, 1999). However, the biggest question is ‘what are the Ethical issues surrounding Mobile Money Transfer? ‘

Boatright (2009), indicates that this being a relatively, there are in-house plans by the regulators to establish a modern incubation laboratory in the region to advance their services in mobile money transfer and other mobile applications. However, the sector has not yet acted on the ‘critical and moral issues’ which if overlooked will contribute to unethical conduct in the industry (Every business has ethical codes and operating methods and industry principles, (Badi & Badi, 2009, p. 27).

Gichure (1997) defines ethics as “the systematic study of the actions of humans from the point of view of their rightfulness and wrongness as a means for the achievement of man’s ultimate happiness. Weiss (2006) on the other hand posited that good business is equated to good ethics. As moral agents, our actions are a true reflection of our society.

Gichure (1997) explains that we are all guided by ethical values such as; accountability, honesty, integrity, reliability, loyalty, respect, truthfulness, diligence, fairness, self-restraint and citizenship. Undeniably, there are soft and hard ethical issues within the MMT industry that needs to be addressed. Legal frameworks applicable to mobile payments maybe insufficiently defined to clearly allocate rights and obligations between consumers and the network operators in the event of operational errors, incidences of theft or fraud or other unforeseen problems (Kenya Bankers Association [KBA] 2013).These issues are security threats from online hackers, fraudsters and money launderers which includes drug dealers and unethical conduct of some of the industry players. These security threats are actively contributing to emergence of ‘economic bandits’ in Kenya as inferred by Fisman and Miguel (2008) and Spinello (1997).

This review therefore outlines the ethical and moral issues witnessed in mobile payment applications specifically the Kenyan environment with an overview of how the ethical issues are affecting the mobile payment applications available. The background will highlight the pertinent issues growing day by day as well as the main ways that Mobile Network Operators (MNO) have adopted to counter them, The author will thereafter address the gaps that are glaring as witnessed by the current regulatory framework where consumer protection issues have not been sufficiently addressed.

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