OBSTACLES TOWARDS ADOPTION OF MOBILE … 35th volume/1 rumaniyaka .pdfAdoption of mobile banking in Tanzania is negatively affected by factors such as theft of mobile handsets, poor

International Journal of Information Technology and Business Management

29th

March, 2015. Vol.35 No.1

© 2012-2015 JITBM & ARF. All rights reserved

ISSN 2304-0777 www.jitbm.com

1

OBSTACLES TOWARDS ADOPTION OF MOBILE BANKING IN

TANZANIA: A REVIEW

Joel D.Rumanyika

College of Business Education (CBE)-Dodoma Campus, Department of ICT and Mathematics

P.O Box 2077 Dodoma, Tanzania

Email: [email protected]

Abstract

Adoption of mobile banking in Tanzania is negatively affected by factors such as theft of mobile handsets, poor

network coverage, lack of knowledge of m-banking users, high mobile money transaction fees, irregular standards

of mobile money payments, lack of enough float of mobile money agents, ATM breakdown and theft, lack of trust of

mobile money agents, and poor security of mobile networks. Fourteen (14) current papers (2010-2014) related to

the study were reviewed to extract obstacles which appear most frequently. The frequencies and percentages of eight

(8) studied variables were computed using excel and presented in tables and pie chart. The findings reveal that poor

network coverage, lack of knowledge of m-banking users, lack of enough float of mobile money agents and ATM

breakdown and theft are major obstacles on the way to the adoption of m-banking in Tanzania. The study

recommends that, the government and all other stakeholders should hastily focus their first priority to tackle the

most critical obstacles instead of dealing with a huge number of obstacles, taking into account the limited resources

the country is facing. This approach may be productive since it needs little resources, integrated efforts and

strategies which must be implemented in parallel with government policies such as National Strategy for Growth

and Reduction of Poverty (NSGRP).

Key words: Obstacles, Adoption, Mobile Banking, Tanzania

INTRODUCTION

Mobile services are highly adopted in developing

countries because of the rapid growth in mobile

networks [46]. It is on these mobile networks mobile

banking (M-banking) services can travel seemingly

effortless across distance, and which constitutes the

bridge that many donors now put their hope too [11].

In mobile banking the mobile devices have

specialized built-in hardware, such as cameras,

accelerometers, Global Positioning System (GPS)

receivers, and removable media readers. Mobile

devices are integrated with multiple wireless

communication technologies such as Wireless

Fidelity, (Wi-Fi), Worldwide Interoperability for

Microwave Access (WiMAX), Bluetooth, Near Field

Communications (NFC), and a cellular interface

which are configured to use CDMA or GSM network

schemes [46].

Worldwide, there is an increase of mobile banking

services for example in India banks such as State

Bank of India (SBI) provides bank accounts, deposit,

withdrawal and remittance services, micro-insurance,

and micro-finance facilities to its customers through

mobile banking [51]. In the year 2009 Pakistan

launched mobile banking solution, in coordination

with Taameer Bank, under the label Easy Paisa. In

Iran, Guatemala and Mexico consumers can access

mobile banking services with local mobile networks,

whereas in Saudi Arabia banks like Riyadh, Rajhi,

Alahali, SAMBA, and SABB have made substantial

investments in mobile banking capabilities and

smaller banks are not far behind. In African

countries companies like Vodafone have launched

mobile money transfer for business, known M-Pesa

in 2007 and M-Kesho in 2010 in Kenya whereby

Equity Bank and Safaricom Mobile phone services

mailto:[email protected]


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facilitate customers to transfer money to and from

their Equity bank account via the mobile phones and

still enjoying other benefits which come with the

bank accounts [39]. In Rwanda, MTN was authorized

to provide mobile money services in February 2010,

likewise in Uganda, Airtel and MTN started their

mobile money programs in 2009.The mobile banking

penetration rates in Africa vary a lot, from under 10%

in Ethiopia to nearly 100% in Gabon, where the most

responding countries are Ghana (39.3%),

Mozambique (49.7%), Nigeria (26.9%), South Africa

(30.1%) and Zambia (22.1%).The average growth for

mobile banking in whole continent is of about (33%)

([48]; [16]).

According to the statistics from Tanzania

Communications Regulatory Authority (TCRA) it

shows that, the number of mobile phone subscribers

has increased up to (58%) with over 27 million

subscribers in 2013 [57]. This indicates that mobile

technologies are rapidly being adopted both locally

and globally, a situation which has open up new

business ventures and hence giving financial

institutions some additional channels for them to

deliver their services through mobile

telecommunication systems. Today, mobile banking

systems e.g. electronic payment systems which

comprises of Automatic Teller Machines (ATMs),

Point of Sale (POS) devices, Electronic Cards,

Internet banking, Mobile Payment Services and

Money Transfers Services (Remittances) are serviced

in most of urban and rural centers and therefore

contributing towards wider outreach of financial

services to unbanked population of both rural and

urban areas of the country [64].

Scientifically, performing transactions using a mobile

device, a customer must initiate the request that goes

through the mobile network operator (MNO) and

then terminates at the server application that can be

administered by a technology vendor or

independently by a financial institution. The most

used data transmission technology is Global System

for Mobile (GSM) which can connect the globe and

allowing the full access to details and transactions of

personal bank accounts. The most famous engrossed

telecommunication companies and financial

institutions offering mobile money transfer services

in Tanzania include: Tigo Tanzania Ltd, Vodacom

Tanzania, CRDB Bank, and National Microfinance

Bank (NBC) whereby the services offered are

Tigopesa, M-Pesa, Ezy-Pesa, Airtel Money, TTCL

and NMB Mobile respectively. All of the above

mentioned companies are in competition with each

other and the entire sector is open to further

investment be it local or foreign [57].

Mobile coverage is improving, especially as more

competitors enter the market and up to year 2013,

(89%) of population is said to be covered to the

95dBm signal level, with (54%) of geography

covered [23]. The value of mobile (SMS) banking

transactions has increased to (94.36%) in year 2013,

whereas the value of internet banking transactions

has increased up to (28.05%) in year 2012. This

increase is attributed to the increase of the number

of banking institutions offering mobile (SMS) and

internet banking namely: Equity Bank (T) Ltd, NIC

Bank (T) Ltd, Barclays Bank (T) Ltd, Citibank (T)

Ltd, CRDB Bank Plc, NBC Bank Ltd, Standard

Chartered Bank (T) Ltd, FBME Bank Ltd, Bank M

(T) Ltd, United Bank for Africa, Stanbic Bank (T)

LTD, Amana Bank Ltd, Azania Bank Ltd, Diamond

Trust Bank (T) Ltd , Commercial Bank of Africa Ltd

[64].


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Fig. 1: The different equipments involved in mobile transactions

Source: Compiled from Literature Review

In addition, the Tanzanian government through its

ICT sector has increased broadband connectivity by

linking to the SEACOM and Eastern Africa

Submarine Cable System (EASSy) networks in 2009-

2010, and the launching of the National ICT

Broadband Backbone (NICTBB) in year 2012. The

financial institutions with banking license and

infrastructure have enabled the exchange of money

between different parties [33]. Banks provide

oversight and regulatory compliance with Bank of

Tanzania (BoT) and with mobile network operators

(MNO).

Bank of Tanzania has signed a Memorandum of

Understanding (MOU) with TCRA with the intention

of sharing regulatory and supervisory information.

Also, Tanzania is the member of Alliance for

Financial Inclusion (AFI), which recently has issued

a guideline note for Supervision and Oversight of

Mobile Financial Services to its members

(SOMFS).Despite the efforts made by the

government and private sectors in improving mobile

banking systems and apart from the opportunities and

services offered by mobile banking companies and

despite having almost half of Tanzania population

possessing mobile phones and other mobile banking

supporting devices still and astonishing there is low

rate of mobile banking adoption among most of

Tanzanians. This study examines the obstacles

towards the adoption of mobile banking in Tanzania.

LITERATURE REVIEW

Theoretical Literature Review

This study adopts the Diffusion Innovation Theory

(DIT) which was developed by Rogers in (1983) and

modified in (2003). This is due to considering mobile

banking as technological innovation and also

considering DIT as the theory which attempts to

explore the factors which affect an individual to

adopt an innovation or new technology. [52] defines

diffusion as the adoption of an innovation over time

by the given social system. According to Rogers

(p.175), there are five perceived characteristics of

innovation that can be used to form a favourable or

unfavorable attitude toward an innovation, namely:

relative advantage, compatibility, complexity,


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trialability, and observability. The five attributes and

their relationship with m-banking innovation

adoption can be summarized as follows:

Relative advantage is the degree to which an

innovation is perceived as being better than the idea it

supersedes [13]. For a person to choose to use a

technology for a specified task, it should provide

some form of benefit for the task concerned. This

means that when the users perceive relative

advantage or usefulness of a new technology over an

old one, they tend to adopt it ([35]; [52]). In mobile

banking adoption scenario, advantages like

convenience, speed and affordability to customers is

reported [30]. Increased performance, cheaper costs

and increased social standing brought about by

mobile banking show a sense of relative advantage.

Compatibility refers to the degree to which a service

is perceived as consistent with users’ existing values,

beliefs, habits and present and previous experiences

[15]. Compatibility is the degree to which an

innovation is perceived as consistent with the existing

values, past experiences, and needs of potential

adopters. Compatibility has further been found

influential in the adoption of mobile payments and

mobile banking ([30]; [27]; [14]). Furthermore,

compatibility may be of a technical basis such as

software or hardware with a computer and therefore,

interruption to one’s workflow should also be

minimal and the technology should not cross one’s

value or belief system. In mobile banking

compatibility represents the ability of users to adopt a

reliable system which matches with the existing

values, past experiences, and needs of potential

adopters.

Complexity refers to the sense of difficulty that the

user has in using and understanding an innovation. In

m-banking adoption, complexity in use is a major

factor [7]. There are significant amount of empirical

researches on the mobile technology which suggest

that users’ intention to adopt m-banking is hindered

by the perceived complexity of the innovation ([10];

[32]. This means that barriers of mobile banking

adoption are predominantly related to technical

complexity of technical infrastructure and the design

of technology. In Tanzanian environment users will

reject to use mobile banking services if and only if

they find it demanding more mental efforts, time

consuming, unstable, risky and even frustrating.

Trialability refers to the capacity to experiment with

new technology before adoption and it covers

opportunities such as test drives, demonstration units

and simulations. Physiologically, if potential adopters

are allowed to experiment with an innovation, they

will feel more comfortable with it and are more likely

to adopt it ([52]; [4]). Also [55] argue that, if

customers are given a chance to try the innovation, it

will minimize certain unknown fear and lead to

adoption of it. In mobile banking perspective, the

perception of risk is even more important due to fear

of loss of PIN codes, fear of hackers access to bank

accounts via stolen PIN codes and fear of loss or theft

of mobile device with stored data or information

([50]; [28]; [31]; [17]). Therefore, in Tanzanian

environmental context perceived risk is more likely

to negatively affect the mobile banking adoption

since most of the adopters are afraid of the mentioned

risks.

Observability of an innovation describes the extent to

which an innovation is visible to the members of a

social system, and the benefits can be easily observed

and communicated [52]. Rogers found evidence for

the power of observability when he plotted the

number of adoptions over time. These plots revealed

a normal Bell curve and adopter categorization on the

basis of innovativeness. Examples of these curves are

shown in Figure 2. (a and b), both reflecting how

knowledge and observability shape the rate of

diffusion of the adopters.

Rogers (2003) defined the adopters and categorized

innovation adopters into five groups which are:

Innovators who are (willing to experience new ideas

and thus be prepared to cope with unprofitable and

unsuccessful innovations, and a certain level of

uncertainty), Early adopters who (are more limited

with the boundaries of the social system and who are

more likely to hold leadership roles in the social

system), Early majority (who have a good interaction

with other members of the social system, though do

not have the leadership role but their interpersonal

networks are still important in the innovation-

diffusion process) Late majority (which occupy one-

third of all members of the social system and who

wait until most of their peers adopt the innovation).

The last group is Laggards (who have traditional

view and they are more skeptical about innovations

and change agents than the late majority though they


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do not have leadership role). In the context of mobile

banking, observability means the ability to access the

banking services at any time and from any location

without any delay or queue, and seeing the effect of

mobile banking transactions immediately, and

conveying the accessibility benefits to others [7].

Therefore, in Tanzania context observability has the

positive effect on mobile banking adoption

Figure 2(a): Bell curve of adoption frequency

Source: Rogers (2003)

Figure 2(b): Adopter Categorization on the Basis of Innovativeness

Source: Rogers (2003)


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From the above figures adoption is slow in the

beginning as awareness of the technology is limited,

but as more and more people use the technology, the

public becomes more aware of the technology and

thus the rate of adoption increases until the

technology is in common use and has saturated the

market. This means that, for a person to adopt a

technology, seeing, hearing about, or otherwise

attract other individuals to adopt that technology

dramatically. Based on the above view, the suitability

of DIT in this study is thus mobile banking adoption

in Tanzania can be accepted or rejected if and only

if there are clear observed customers’ benefits such

as technology flexibility, not time consuming, not

prone to insecurity, and creates high degree of

interaction. DIT fits the study since it exposes the

requirements for adoption of the technology which is

related with measuring the attributes of relative

advantage, complexity, compatibility, trialability, and

observability. These attributes are the most frequently

salient factors for adoption of mobile banking

technologies and can be used to make decision for

full use of an innovation. This study, examines the

obstacles which delay the full adoption of mobile

banking of most citizens in Tanzania.

Empirical Literature Review

Obstacles Towards Adoption of Mobile Banking

in Tanzania

Mobile banking (m-banking) is one of the emerging

Information and Communication Technologies (ICT)

elements that have changed the operations of the

banking sector. In mobile banking refers to the

execution of financial services using mobile

communication techniques together with mobile

devices [24]. Mobile banking services can be

classified into SMS Banking, Application (Software)

oriented, Browser (Internet) based model and Mobile

Apps [19]. Banks are introducing m-banking in order

to take advantage of high mobile phone penetration

around the world and more specifically in Africa

[59]. However, in developing countries for example

both in Sub-Saharan Africa and North Africa, there

most frequently reported obstacles. Globally,

obstacles for mobile banking can mean the

confronting events or difficulties which hinder the

adoption of certain technology or confronting events

which are contrary to the adoption of certain

technology. For instance 80% of adults in Sub-

Saharan Africa had no formal accounts and 60% in

North Africa [18]. This implies that, apart from

adoption of ICT for financial services and especially

mobile banking service still there are obstacles facing

the effectiveness of the technology.

A study of [29] investigating consumers’ attitudes

towards online and mobile banking in China reveals

fear of security risks to be the main reason for the

rejection of internet banking whereby, low computer

technological skills and Chinese traditional cash-

carry culture are associated to be the main factors for

rejection.

In India and Jordan studies of ([19]; [26]) and [54]

identify challenges such the rapid changes of

technology for example changes like 2 Generation

(2G), 3 Generation (3G) and 4 Generation (4G),

evolutions of smart phones, evolution of new

operating systems such as androids and new mobile

Apps as the obstacles for mobile banking adoption.

The changes in mobile technology is considered as

the stumbling blocks because (53.8%) of mobile

banking customers in the country used conventional

mobile phones while (46.2%) used smart phones and

(75.4%) of customers had not even tested mobile

services of their banks up to year 2013. Other

challenges reported in that study are risk of mobile

phones theft and a lack of awareness on the kind of

security mechanism to be followed by a customer for

securing their transactions e.g. Password/Mobile PIN

number.

[6] study in Nigeria reveals that the main constraint

to the adoption of mobile banking are poor network

security, poor or unavailable telecommunication

infrastructures especially in rural areas and poor

internet and computer knowledge whereby mobile

phones are as a luxury with only the basic functions

utilized, i.e. making and receiving calls and

sometimes sending text messages. In the same study

the issue of cost of compatible mobile phones. The

costs of smart phones devices, cost for repair and

maintenance and costs of purchasing internet services

are beyond the reach of most workers in both the

public and private sectors as a result, they depend on

the bank branches and are simply content with the

short message services from the banks.


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Furthermore, a study of [22] on Barriers to Adoption

of Mobile banking in Ghana states four main reasons

contributing to the rejection of mobile banking by the

consumers to include: poor knowledge about mobile

banking, low consumers’ attitude to learn about

mobile banking, poor telecommunication network

and enormous consumers’ preference for traditional

means of banking instead of mobile enabled banking

services.

In Tanzania a study of [33] identifies the obstacles

for poor mobile banking in the country to be: fear of

security risks such mobile viruses and other form of

malware, poor privacy in data protection, poor

knowledge on PIN number protection and fear of

harassment e.g. female customers as obstacles which

hinder mobile banking in the country. Fear of

security risks such as viruses and other form of

malware is due to the reason that, handheld devices

can receive viruses from multiple channels through

internet applications technologies such as WAP, Wi-

Fi, Instant Messaging (IM) and Bluetooth, which

leads to lack of end-to-end security.

The Selected Studies from Tanzanian Context on Obstacles Towards Adoption of Mobile Banking

To accomplish this study, previous studies were

reviewed and from which independent variables were

selected and measured as shown in the Table 1.0

Table 1.0: Major Findings from Tanzanian Context on Mobile Banking

Author(s) and Title Major Findings

[8]. Analysis of Mobile Banking for Financial Inclusion in

Tanzania: Case of Kibaha District Council.

i) Poor security of mobile handsets, ii) technological

changes e.g. mobile handset, iii) poor m-banking

infrastructure to handle exponential growth of the

customer base iv)bank system failure e.g. ATM

machines.

[46]. Enhanced Security Model For Mobile Banking Systems

In Tanzania.

i) Poor mobile network security, ii) users ignorance to

use the m-banking systems, iii) fear of fake base

stations especially GSM networks.

[63]. Mobile Money for Business Development in East

African Community: A Comparative Study of Existing

Platforms and Regulations. United Nations Community

i) Mobile agents running out of cash, ii) increased

wrong transfer, iii) network downtime, iv) unclear

mobile money regulations and jurisdiction, v) increased

cyber crime, vi) delays on refunding the money in case

of wrong transfer.

[11]. Mobile Money Transfers and usage among micro-and

small businesses in Tanzania.

i) Poor network coverage, ii) large amount charged for

e-transactions iii) lack of security arrangement, iv) low

knowledge and capacity to use mobile transaction

supporting devices and v) low or no enough cash from

mobile agents.

[44]. Challenges of mobile-phone money transfer services’

market penetration and expansion in Singida District,

Tanzania.

i) Unavailability of network coverage ii) poor mobile

money payment systems arrangement, iii) increased

mobile transaction charges, v) fraud issues and

insecurity, v) increased unfaithful workers, vi) lack of

e-float/cash of mobile agents.


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[61]. Modeling the Adoption of Mobile Payment System for

Primary and Secondary School Student Examination fees in

Developing Countries: Tanzanian Experience.

i) Lack of enough cash from mobile agents , ii) lack of

trust of m-baking systems iii) Fear of unfaithful

workers, iv ) inadequate float or cash of mobile agents

to serve the customers.

[45]. Mobile banking services in the East African community

(EAC): Challenges to the Existing Legislative and

Regulatory Frameworks.

i) High transaction fee, ii) unclear policies of mobile-

payment platform, iii)lack of technical experts, iv) low

customers’ knowledge on m-banking usage .

[36]. Mobile Money in Tanzania: Use. Barriers and

Opportunities (InterMedia, Washington DC).

i) Insufficient knowledge of customers on m-banking,

ii) unfaithful mobile money agents, iii) poor network,

iv) technical problems on registering for m-money.

[62]. Safety on ATM and Mobile Banking Services -

Communication Systems Design-Summer Final Report

(Version 1.2).

i) ATM cards skimming, ii) ATM card theft, iii) data

compromising via social engineering iv) mishandling

of PIN and ATM card, v) collusion with colluded staff

from mobile phone operators e.g. SIM Swapping, vi)

failure of ATMs.

[56]. Mobile Money: A Path to Financial Inclusion, Tanzania

Intermedia.

i) Lack of customers’ understanding of mobile money,

ii) increased security risks tied to PIN sharing, iii)

problems with registration, iv) poor network service)

difficulties in charging phones i.e.unstable electricity

vi) mistrust with mobile money agents.

[33]. State of Mobile Banking In Tanzania and Security

Issues.

i) Mobile network are prone to security, ii) lack of

common standard among mobile banking service

providers, iii) mobile money agent misconduct, iv)

increase of mobile malware e.g. viruses.

[43]. Assessment of Challenges Facing Customers in

Automated Teller Machines in the Banking Industry in

Tanzania: A Case of Some Selected Banks in Tanzania.

i) ATM card locking, ii) mobile network insecurity, iii)

ATM machine breakdown, iv) ATMs out of cash, v)

and long time in cash dispensing.

[41]. SURVEY OF MOBILE PHONE USAGE PATTERNS

AMONG STREET VENDORS IN DAR ES SALAAM

CITY-TANZANIA.

i) Language problem e.g. used mobile language

should be Swahili (native language), ii) lack of

awareness on the benefits received as regarding the

usage of mobile money transfer, iii) poor network

infrastructure, iv) mobile phone software and hardware

incompatibility.

[38]. Mobile money for the unbanked: Lessons from

Tanzania.

i) Unwillingness to use m-banking tools, ii) high cost

imposed on mobile transactions, iii) lack of trust of

mobile network, iv) lack of knowledge on how to use

mobile phones, vi) no access to network agents, vii)

lack of mobile handsets.

Source: Literature Review


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METHODOLOGY

This research employs a quantitative approach in

which descriptive analysis was adopted. Exhaustive

literature review was conducted in order to identify

the most frequent obstacles towards the adoption of

mobile banking in Tanzania. Different studies from

different perspective worldwide have been reviewed

.In order to make the study more focused; variables

of the study were extracted from fourteen (14)

selected literatures from a Tanzanian environment.

The choice of the literatures was based on their

relevance to the topic in discussion but also was

limited to only five (5) current years. A sample size

of 14 literatures was viewed sufficient for statistical

analysis since [53] and [37] used a sample of 12

literatures to draw up the conclusions. From the

literature, ten (10) challenges were identified and

analyzed descriptively and presented in tabular form

in which frequencies and percentages were

computed. These variables include; (i) increased theft

of mobile handsets and ATMs cards, (ii) poor

network coverage, (iii) lack or low knowledge of

mobile banking systems users, (iv) large amount

charged on mobile money transactions, (v) irregular

standards of mobile money payments, (vi) lack of

enough float, ATMs breakdown and theft, (vii) lack

of trust of mobile money agents, (viii) poor security

of mobile networks. In this study, the choice for the

critical obstacles was restricted only to those obstacle

which with scores at least 50% ([34]; [53]; [37]).

Conceptual Framework

Based on the literature review, a number of obstacles

headed poor adoption of mobile banking in Tanzania

have been identified, whereby independent variables

are: (i) increased theft of mobile handsets, (ii) poor

network coverage, (iii) lack or low knowledge of

mobile banking system users, (iv) high mobile

money transactions fees, (v) irregular standards on

mobile money payments, (vi) lack of enough float

and ATMs breakdown, (vii) lack of trust of mobile

money agents, (viii) poor security of mobile

networks which affect the route for the adoption m-

banking in Tanzania. The dependent variable in this

study is “adoption of mobile banking in Tanzania”.

Figure 4: Conceptual Framework

Source: Developed from Literature Review


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Hypotheses

From on the literature reviewed, obstacles towards

mobile failure banking in Tanzania can lead to

having the following hypotheses:

H1: There is a negative relationship between theft of

mobile handsets and mobile banking adoption in

Tanzania.

H2: There is a negative relationship between poor

network coverage and mobile banking adoption in

Tanzania

H3: There is a negative relationship between lack of

knowledge of m-banking users and mobile banking

adoption in Tanzania.

H4: There is a negative relationship between high

mobile money transaction fees and mobile banking

adoption in Tanzania.

H5: There is a negative relationship between irregular

standards on mobile money payments and mobile

banking adoption in Tanzania.


enough float, ATM breakdown and theft and mobile

banking adoption in Tanzania.


trust of mobile money agents and mobile banking

adoptions in Tanzania.

H8: There is a negative relationship between poor

security of mobile networks and mobile banking

adoptions in Tanzania.

FINDINGS AND DISCUSSION

After an extensive literature review, the most

extracted obstacles headed to mobile banking

adoption in Tanzania for are presented in as

presented in Table 2.0. The sign (∞) shows the

variables which have been found to be the critical

challenge as per this study.

Table 2.0: Obstacles Towards Adoption of Mobile Banking Adoption in Tanzania

Researcher/Article

Findings

{1}

TMHs

{2}

PNC

{3}

LKMU

{4}

HTF

{5}

ISMP

{6}

LFAB

{7}

LTMA

{8}

PSMN

[8] ∞ ∞ ∞ ∞

[46] ∞ ∞

[63] ∞ ∞ ∞ ∞

[11] ∞ ∞ ∞ ∞ ∞

[44] ∞ ∞ ∞ ∞ ∞ ∞

[61] ∞ ∞

[45] ∞ ∞ ∞ ∞


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[36] ∞ ∞ ∞

[62] ∞ ∞ ∞

[36] ∞ ∞ ∞ ∞

[33] ∞

[43] ∞ ∞ ∞ ∞

[41] ∞ ∞

[38] ∞ ∞ ∞ ∞ ∞

Key: {1} TMHs = Theft of mobile handsets, {2}

PNC = Poor network coverage, {3} LKMU = Lack of

knowledge of mobile banking users {4} HTF =High

mobile money transaction fees, {5} ISMP = Irregular

standards on mobile money payments, {6}

LFAB=Lack of enough float, ATMs breakdown and

theft, {7} LTMA =Lack of trust of mobile money

agents, {8} PSMN=Poor security of mobile

networks. From Table 2.0, the most frequently

extracted variables are presented in Table 3.0 to

show the frequencies and percentages of variables

studied.

Table 3.0: Frequencies and Percentages of the Obstacles Towards Adoption of Mobile Banking in Tanzania

Variables Frequency Percent

Theft of mobile handsets and ATM cards 3 21.4

Poor network coverage 11 78.6∞∞∞

Lack of knowledge of m-banking users 8 57.1∞∞

High mobile money transaction fees 4 28.6

Irregular standards of mobile money payments 3 21.4

Lack of enough float, ATMs breakdown and theft 7 50.0∞

Lack of trust of mobile money agents 6 42.8

Poor security of mobile networks 8 57.1∞∞

Source: Compiled from Literature Review, 2015

The results (Table 3.0 and Figure 3) indicate poor

network coverage (78.6%), lack of knowledge of m-

banking users (57.1%), lack of enough floats, ATMs

breakdown and theft (50%), poor security of mobile

network (57.1%), are critical obstacles towards the

adoption of mobile banking in Tanzania

.


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Figure 3: Frequencies Showing Obstacles Towards the Adoption of Mobile Banking in Tanzania

Source: Literature Review, 2015

Poor network coverage (78.6 %), lack of knowledge

of mobile banking users 57.1%, lack of enough floats

and ATMs breakdown (50%), poor security of

mobile network (57.1%) are critical obstacles

towards the adoption of m-banking in Tanzania.

Poor network coverage in Tanzania still persists

whereby the network down time increases. The

findings noted that, poor network coverage is the

result of poor mobile network infrastructure. In both

urban and rural areas transactions using a mobile

device require a customer to initiates the request that

goes through the mobile network operator (MNO)

and terminates at the server application that can be

administered by a technology vendor or

independently by a financial institution. A study [40]

identifies that (45%) of Tanzania areas have limited

cellular network whereby the urban areas has at least

reasonable coverage compared with rural areas.

Another cause for poor network coverage may

include increased number of customer served by a

single base transceiver station (BTS) whereby the

same study identifies that (44.6%) of the subscribers

at the University of Dodoma claimed of network

outage and call dropout a situation caused by lack of

sufficient BTS whereby 23,000 customers could be

served by only three BTS.

These results are in harmony with Tanzania

Infrastructure Report of year 2010 [65] which reveals

that only (65%) of the Tanzania population lives

within the range of a GSM signal, compared with

over (90%) in neighboring Kenya and Uganda. This

indicates that network coverage in Tanzania is still

inadequate. Also the ITU report of year 2013 shows

that, up to May 2014, the Tanzania communication

network stretched over 7,560 km across the country,

connecting 34 regional headquarters with only 6.1

million users, which is equal to (13.1%) of the

population. Inadequate network coverage and low

network capacity contributes to failure to adoption of

m-banking in Tanzania. However, these results are

supported by DIT in one of its constructs attributes

21.4%

78.6%

57.1%

28.6% 21.4%

50%

42.8%

57.1%

Percentage Showing Obstacles Towards Adoption of Mobile-Banking in Tanzania

Theft of mobile handsets

Poor network coverage

Lack of knowledge of m-banking

users

High mobile money transaction fees

Irregular standards of mobile money

payments

Lack of enough float, ATM

breakdown and theft

Lack of trust of mobile money agents

Poor security of mobile networks


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13

“observability” which address that, in order to adopt

m-banking a user should be able to access the

banking services at any time and from any location

without any delay or queue, and seeing the effect of

m-banking transactions immediately, and conveying

the accessibility benefits to others. In this study in

order to enhance m-banking, there should be network

coverage and ATM machines everywhere and at any

time.

Regarding lack of knowledge of mobile banking

users, the findings reveals that there is lack of

understanding of how mobile banking and mobile

related transactions operate. In many cases in the

review, the situation shows that most of users have

poor or lack skills of using m-banking supporting

devices such as mobile phones, ATMs, computers

and credit cards. These results are similar to the

results of [5] in Nigeria which reveals that (60%) of

the population lacks the requisite skills to fully

operate most internet technologies (quoted) in [1].

The reason behind such huge percent is that the

teaching of technology in most Nigerian primary and

secondary schools are usually in theory as there is

nothing to practice and hence the condition persist

up to adult level. Accordingly, these findings are

equivalent with those in [32] which identifies that the

early and first barrier to the adoption of mobile

payments in Finland was the complex procedures

giving an example of SMS formats which are

complex, slow to key in various codes and difficult to

remember. Using mobile phone requires knowledge

and ability to properly follow the procedures as a

study of [40] revealing that, the presence of

improper charging of the mobile phone battery

which limits its life span and hence leading to the

poor quality of the handset and susceptible to call or

login drop out when used for mobile payments or m-

banking. The same study reports the problem of the

language whereby most of the mobile handsets are

configured to operate in English or other foreign

languages, while majority of Tanzanians understand

native language known as “Kiswahili”. Similarly,

these findings are in harmony with DIT in one of its

constituents which claims that complexity in using

and understanding an innovation can be the hindrance

for user’s intention to adopt it. In this study, the

barriers of mobile banking adoption is predominantly

related to technical complexity of mobile handsets

language, SMS difficult procedures and poor

understanding on how to handle the mobile banking

supporting devices so that they can survive in service

for long time.

Considering, lack of enough floats, ATMs

breakdown and theft, the findings identifies the

obstacle to be critical with (50%). The case of mobile

money agents failure to serve their customers due to

having no enough float has been reported in many

papers. In the side of ATMs breakdown and lack of

cash, the findings have identified the issues ATMs,

network downtime which may lead to customer’s

disappointments due to time wasted. The issues of

cash theft through ATMs and ATM cards involving

actions such as card skimming (wireless fake PIN

pad overlay), wireless card reader, and wireless

miniature camera have also been reported. On the

same scenario there are actions executed such as

cutting ATM cards’ slits into both sides of the trap

which prevents a customers’ card from being

returned prior the completion of customers’

transactions. There are other unfaithful behaviors like

a criminal pretending to be a Good Samaritan, while

he\she wants to observe the customer’s PIN number.

The findings have revealed that some of customers

feel insecure or fear of being harassed especially

when they are requested to provide their details such

as mobile phone number and residents [26].

The entire findings are similar to those of reference

[9] in Kenya which reveals that mobile money

agents have been losing on average of five customers

everyday due to lack of float, a situation which has

led to (90%) of customers to keep on trusting the

physical bank transactions in the country.

Accordingly, these findings are in harmony with the

results of ([2]; [66]; [5]) in Nigeria which reveal the

introduction of ATMs in country to have led to

increased number of financial fraud whereby

fraudsters, have found it as a new heaven of

compromising innocent people's personal

identification numbers (PIN), a chance for bank

staff to inspect customers’ account numbers and a

chance for information technology experts to claim

for ATMs network failure while it isn’t. Also ATMs

have been reported to debiting customers’ account

without issuing physical cash and being a source of

frustrating queues. These results are similar to those

of reference [47] which report problems with ATMs

in Nigeria to include: ATMs debiting customer’s


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14

account without issuing physical cash (54.9%), ATM

cards getting trapped in ATMs and taking time to be

recovered (62.1%), ATMs financial fraud (67.6%)

and ATMs service network failure (62.6%). These

findings can also be supported by reference [12] in

Ethiopia which reveals that, large number of people

in the country (2.00 mode) fear to adopt e-banking

system especially the ATMs due to the risks they

posses. These findings are consistent with the

findings of [25] in Oman which indicates that the

technological barriers such as fear of security risks as

the main factor for poor adoption of electronic

banking in the country.

In the case of poor security of mobile networks and

the adoption of mobile banking, problems arise

because mobile transactions in Tanzania use

technologies such as Secure Messaging Service

(SMS), Unstructured Supplementary Services Data

(USSD) and Interactive Voice Response (IVR)

which are all widely deployed over GSM

generations such as 2G (Second Generation), GPRS

(General Packet Radio Services), EDGE (Enhanced

Data Rates for GSM Evolution), UMTS (Universal

Mobile Telecommunications System), 3G (Third

Generation), and LTE (Long Term Evolution)

networks whose initial design was meant for voice

traffic. Mobile network insecurity has been an

obstacle towards adoption of m-baking in Tanzania

because SMS service which is the simplest, cheapest,

available and most common channels is susceptible

to attackers who can read the contents of messages

they intercept, due weaknesses at the SMS Center

(SMSC). These findings are in correspondence with

the findings of [42] in Kenya which reveals the

problem of security over the internet as the hindrance

to mobile money transfer in country. The study also

points out major internet attackers which can lead to

slow adoption of mobile banking to include:

“hackers” who manipulate technologies to gain

unauthorized access to computer networks or diverge

data to unauthorized access, “eavesdropping

/sniffing/ snooping” attacks which have the ability to

monitor network traffic using some kind of network

monitoring software whereby, the sent SMS can be

amended and also “password” attacks which is able

to know the account ID or password of a particular

user and can gain access to the network, gather

information hence be able to modification, delete or

rerouting of network data. Other forms of attacks

posing network insecurity are back doors, Trojan

horses, viruses and worms. Furthermore, these

findings match with the United Nations Conference

on Trade and Development (UNCTAD) report of

year 2012 regarding Mobile Money for Business

Development in the East African which provides that,

data sent via SMS or USSD is vulnerable for

interception if it is not well protected. In this study

mobile network insecurity is the biggest factor

slowing down the growth of mobile banking adoption

and the biggest hurdle in the growth of mobile money

transfer [63].

CONCLUSION AND RECOMMENDATIONS This paper examined the obstacles towards the

adoption of m-banking in Tanzania. It has been

observed poor network coverage (78.6 %), lack of

knowledge of mobile banking users (57.1%), lack of

enough floats, ATMs breakdown and theft (50%),

poor security of mobile network (57.1%), are critical

obstacles towards the adoption of mobile banking in

Tanzania. Therefore, for the successful and quick

adoption of m-banking in the country the government

and responsible institutions should take serious

measure to improve network coverage i.e. telecomm

operators in the country should be ready to expand

from urban centres to the rural areas by connecting

the whole country to the national fiber optic cable.

This will push towards increased use of the mobile

phones and Internet broadband services and

integrated e-payment systems, which will also

simplicity financial transactions such as pay water

bills, electricity, communications and other bills.

Basically, the opening of sea cable for international

high speed Internet connectivity and the expansion of

mobile communication networks to 4G technologies

will open new rooms of business transactions using

payments systems such MasterCard for international

banking and transactions. Financial institutions

should equally work hard to minimize the rate of

network failures since ATMs related fraud can

equally be attributed to it.

To overcome a problem of lack of knowledge of m-

banking users, the responsible stakeholder should

educate customers by giving more details on the

benefits and risks of m-banking. The government and

responsible institutions should train their customers

on how use of mobile devices without regarding their

level of literacy. This could be done through posters,


29th




15

seminars and promotion and will educate customers

on understanding the procedures to follow on mobile

transactions activities and even how to secure the

transactions. Mobile banking education should not be

left to mobile money agents or friends because it can

lead to exposing of sensitive information of customer

a situation which bears risk and fear of customers m-

banking adoption

To address the problem of lack of enough floats,

ATMs breakdown and theft, responsible

companies/institutions should provide sufficient

float/cash to mobile money agents. This will reduced

the extent of distance to travel by customers looking

for agents with enough float or running to physical

transactions. For the case of ATMs and theft through

the machines, customers should be educated that the

only security of their ATMs card is the PIN number,

so they should not expose it to any and also be

advised to change the PIN number periodically plus

not to using PIN number like ones’ birthdates,

driving license, or passport. Banks in Tanzania

should strive to install ATMs with complex security

layers, developing technologies for higher levels of

security, such as voice, iris/retina biometrics, which

accurately authenticates users based on their voice

and face.

Responsible companies should deal with poor

security of mobile network by deploying security

technologies such as firewalls and proxy servers

which are both the best remedy to save guard outside

attacks on mobile money transfer transaction.

Mechanisms such as confidentiality of data which is

enhanced through the use of message encryption to

ensure end-to-end security and ensuring that data is

only be accessed by authorized parties should

implemented. Message integrity should ensured by

the use of message digests that are obtained by

hashing message contents prior to being transmitted

across the network. Finally, improvements on some

policies which are guiding m-banking adoption such

as, education, infrastructure and security management

are recommended.

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Documents

OBSTACLES TOWARDS ADOPTION OF MOBILE … 35th volume/1 rumaniyaka .pdfAdoption of mobile banking in Tanzania is negatively affected by factors such as theft of mobile handsets, poor