Predicting the Attitude toward Mobile Financial Services in Developing Countries

Abstract

Globally, only about a sixth of the 3 billion poor people of working age currently have access to formal financial services. This translates to 17% coverage of the market, leaving 83% under-served or “unbanked”. Addressing the needs of these people is the “self-sustaining approach” to microfinance. Mobile banking is one of the newest approaches to the provision of financial services made possible by the widespread adoption of mobile phones in low income countries. However, reports show that potential users may not be using these systems despite already being available. This study was conducted in 2008. It extends the Luarn & Lin mobile banking adoption model by adding two additional constructs: “Enhancement of image” and the “enhancement of quality of life by having access to financial service” to test the attitude toward mobile banking. In order to test these constructs, 11 hypotheses are proposed. The chapter successfully applies Luarn & Lin’s model in a new geographic and economic context. Consistent with their study, perceived usefulness, perceived credibility, perceived ease of use and perceived self-efficacy were found to be significant antecedents. Perceived financial costs, however, was found to have a positive relationship with attitude. This finding is diametrically opposite to Luarn & Lin’s study. Perceived enhancement to quality of life showed a strong relationship and Perceived enhanced image showed a weak relationship with the attitude toward mobile banking. The control group analysis showed the previously unbanked group (Mzansi) had the highest expectation of mobile banking and also found the idea most attractive. This study therefore concludes that mobile banking can indeed be a channel to reach out to low income groups.