This research examines the factors influencing the adoption of mobile banking by the Bottom of the Pyramid (BOP) in South Africa, with a special focus on trust, perceived cost and perceived risk including the facets of perceived risks: performance risk, security/privacy risk, time risk, social risk and financial risk. The research model includes the original variables of extended technology acceptance model (TAM2) (Venkatesh & Davis, 2000).
Data from this study was collected through a physical hardcopy survey in townships around Gauteng.
The research has found that customers in the BOP will consider adopting mobile banking as long as it is perceived to be useful and perceived to be easy to use. But the most critical factor for the customer is cost; the service should be affordable. Furthermore, the mobile banking service providers, both the banks and mobile network providers, should be trusted. Trust was found to be significantly negatively correlated to perceived risk. Thus, trust plays a role in risk mitigation and in enhancing customer loyalty. i © University of Pretoria Keywords
Adoption of mobile banking, perceived risk, trust, perceived cost, Bottom of the Pyramid (BOP).
ii © University of Pretoria Declaration I declare that this research report is my own, unaided work. It is submitted in partial fulfilment of the requirements for the degree of Master of Business Administration at the Gordon Institute of Business Science, University of Pretoria. It has not been submitted before for any degree or examination in any other University. I further declare that I obtained the necessary authorisation and consent to carry out this research. ………………………………. Khumbula Masinge 10 November 2010 Date iii © University of Pretoria Acknowledgements I wish to express my sincere gratitude to my supervisor, Dr Tashmia Ismail, for her patience, support and guidance. I am grateful to those who agreed to participate in this research by completing the questionnaire, conducting the survey, data capturing, analysis and editing. I wish to express a word of gratitude to my employer for providing me the opportunity and support to do my MBA studies, including my colleagues for their support.
Research Paper:Mobile Healthcare (MHealth) Bible: 2014 – 2020
The Mobile Healthcare (MHealth) Bible: 2014 – 2020 With more than 7 Billion mobile network subscriptions worldwide, the mobile communications sector is rapidly gaining traction from a diverse range of vertical sectors. Healthcare is no exception to this trend. To Read The Complete Report with TOC:- http://www.marketresearchreports.biz/analysis-details/the-mobile-healthcare-mhealth-bible-2014 ...
According to the International Telecommunication Union (ITU) report, there is significant growth in the use of mobile phones, with over 90% of the population in South Africa using them (ITU, 2009).
Mobile phones have become a tool for everyday use, which creates an opportunity for the evolution of banking services to reach the previously unbanked population through mobile banking. The use of mobile banking can make basic financial services more accessible to low-income people, minimising time and distance to the nearest retail bank branches (CGAP, 2006).
To get more low-income people or the previously unbanked to have effective access to banking facilities is also an objective of the financial Sector Charter (BASA, 2003).
Mobile banking (or another form of mobile money transfer) provides a secure means of accessing and transferring funds, provides a channel for access to savings products and services, and gives access to credit for low-income housing or financing agricultural development and insurance products and services (BASA, 2003; GSMA, 2009).
© University of Pretoria
There are possible benefits for using mobile banking, however questions still remain about whether low-income customers will adopt mobile banking in a scale that would make a meaningful economic impact. The question is, will lowincome customers view banking through their mobile phones as reliable and trustworthy, or risky? (CGAP, 2006).
The Term Paper on Challenges for Mobile Banking Services
Banking transactions over the mobile phone are usually performed either by sending a SMS to the bank or by using mobile internet. When you send a SMS requesting a financial transaction, it travels to the SMS center of your cellular service provider and from there it goes to the bank's system. Then, you receive the response that is sent by the bank via the service provider, all within a few ...
Prahalad (2005) argues that there is a fortune at the Bottom of the Pyramid (BOP) economic segment (meaning poor or low-income people).
Karnani (2007, 2009) argues against Prahalad’s notion, indicating that the poor do not have purchasing power and are price sensitive.
This research will examine how the cost factor as compared to the benefit of mobile banking affects the decision of a low income individual to adopt a mobile banking service. There are also regulatory barriers which may prevent mobile operators from independently offering innovative mobile money services (FICA, 2002; GSMA, 2009).
In South Africa, banks are in partnership with mobile operators to offer mobile banking (mobile money) services (MTN banking, 2009; WIZZIT, 2005).
The mobile banking providers are making investments into the mobile banking infrastructure for effective provision of mobile banking service to the low-income market.
Hence, it is important for mobile banking service providers to understand the factors influencing the intention to use or adopt mobile banking in the low-income economic segment, in order to obtain the expected return on investment made (CGAP, 2006).
A clear understanding of these factors will enable mobile banking service providers to develop suitable marketing strategies, business models, processes, awareness programmes and pilot projects (GSMA, 2009).
2 © University of Pretoria This research examines the factors influencing the adoption of mobile banking on low-income earners in South Africa. 1. Research Problem Mobile banking can provide benefits for both the mobile banking service provider and the low-income customer, i. e. people at the BOP in South Africa. In order for mobile banking service providers to effectively provide mobile banking services to the previously unbanked or low-income population, there is a need for proper understanding of the BOP population’s behaviour patterns. There are basic questions which need to be answered: what are the factors influencing the adoption of mobile banking on the BOP? Do customers at the BOP behave differently from middle and upper income people?
Do people at the BOP perceive risk and cost differently? Do they have sufficient knowledge about mobile banking service providers, services and products to trust them? Research has been conducted on the areas of mobile commerce and mobile banking, with foci on different factors and contexts. Wu and Wang (2005), in a study on middle class populations, found that cost had minimal significant impact on the adoption of mobile banking, however it is critical when the technology is first introduced. This study will be conducted on the low-income market, a population with little disposable income.
The Essay on Bank of America Mobile Banking
Brown, who was responsible for the development and launch of mobile banking, reported on the current status, "In less than three years we have four million mobile banking customers. Brown was hesitant to make the bank's mobile app complex by adding more features. The added complexity could slow down the app and negatively affect user experience. He explained, "App comple xity has led to some high- ...
Karnani (2009) indicates that the BOP population are price sensitive. Hence, it is necessary to understand the effect of cost on the BOP population. 3 © University of Pretoria Various studies on perceived risk in the context of online banking (Tan & Teo, 2000; Im, Kim & Han 2008; Wu & Wang, 2005) and mobile banking (Brown, Cajee, Davies, & Stroebel, 2003; Walker, 2004) exist, however the perceived risk variable has only been modelled as a single construct. When the perceived risk is modelled as single construct, it fails to reflect on the characteristics of the risk factor (Lee, 2009).
In South Africa, Brown et al. (2003) conducted an exploratory study that examines the factors that influence the adoption of cell phone banking in South Africa. Walker (2004) conducted a similar study to examine the factors affecting the adoption of a wireless delivery channel (mobile banking service) in retail banks in South Africa (Walker, 2004).
The study by Brown et al. (2003) was urban based in Cape Town, and some of the questionnaires were sent by email. Similarly, the study by Walker (2004) was conducted in the context of urban based bankers, a segment of the population that was contacted by email.
Both the research by Brown et al. (2003) and Walker (2004) did not therefore accommodate the majority of the population in the BOP segment who lack access to the internet. A study by Wu and Wang (2005) on the costs of mobile commerce showed that perceived cost had minimal significance when compared to other variables such as perceived risk, compatibility and perceived usefulness . This study will contribute to the research by assessing the relevance and effects of perceived cost, trust and perceived risk in influencing the adoption of mobile banking services.
The Research paper on The Impact of Mobile Phone in Our Daily Life
A mobile phone can make and receive telephone calls to and from the public telephone network which includes other mobiles and fixed-line phones across the world. It does this by connecting to a cellular network owned by a mobile network operator. In addition to functioning as a telephone, a modern mobile phone typically supports additional services such as SMS (or text) messaging, MMS, e-mail and ...
This study will focus on the previously unbanked or 4 © University of Pretoria underbanked consumer base and potential customers in the BOP economic segment in South Africa (SA).
1. 3 Research Objectives The main objective of this study is to investigate the factors influencing the adoption of mobile banking by the Bottom of the Pyramid economic segment in South Africa. Various studies were conducted in South Africa and other countries, looking at different factors such as risk, trust, cost and perceived benefit (Brown et al. 2003; Walker, 2004; Wu & Wang, 2005; Luarn & Lin, 2005; Zhang, Gou & Cheng, 2008; Yen, Wu, Cheng & Huang, 2010).
The study seeks to investigate the effects of perceived risk, trust and perceived cost on the adoption of mobile banking by the BOP economic segment in South Africa. The following questions will be investigated: Question 1: What are the main factors influencing the adoption of mobile banking by the BOP? Question 2: How does the customer at the BOP perceive risk with regards to mobile banking? Question 3: What influences the customers at the BOP to trust mobile banking?
Question 4: How do customers at the BOP perceive the cost of mobile banking? Question 5: How does perceived usefulness and perceived ease of use influence the adoption of mobile banking at the BOP? 5 © University of Pretoria This research seeks to achieve the following: i. To assess the effect of five facets of perceived risk (performance risk, security/privacy risk, time risk, social risk and financial risk) with regards to the adoption of mobile banking for customers at the BOP. ii. To reveal the effect of consumer trust on the adoption of mobile banking for customers in the BOP. iii.
To assess the effect of banking perceived cost on the adoption of mobile banking for customers at the BOP. iv. To assess the effect of perceived usefulness and perceived ease of use with regards to adoption by the BOP. 1. 4 Research Scope This research is conducted in Gauteng, South Africa. The survey will be conducted on the low income markets, which are mainly based in townships, informal settlement and rural areas. The research will cover the following main constructs: adoption of mobile banking, perceived usefulness, perceived ease of use, perceived cost, customer’s trust and perceived risk.
The Research paper on Research on Mobile Software Engineering
Research on the Software Engineering on Mobile Applications Derrick S Ablog Q-1123E Fort Del Pilar Baguio City 0932-8622564 com ABSTRACT This research study is a compilation of previous researches and will concentrate on three aspects of Software mobile engineering; 1) important software engineering issues 2) its significant challenges and 3) its significant challenges 4) the future of software ...
This research will be based on the technology acceptance model (TAM) (Davis, 1989) as a research model. The scope of the research is described by the following definitions: • Perceived risk refers to the five facets of risk including performance risk, security/privacy risk, time risk, social risk and financial risk. 6 © University of Pretoria • Trust refers to the three dimensions of trust, influenced by ability, integrity and benevolence. This will be observed from three perspectives: the bank, mobile network provider and wireless infrastructure. Perceived cost refers to the transaction cost of conducting mobile banking transactions, including the airtime and bank charges. • Technology acceptance model refers to the acceptance or adoption of mobile banking according to literature. • Bottom of the Pyramid (BOP) refers to the low income market in South Africa, as defined in literature. 1. 5 Research Motivation The primary purpose of this report is to investigate factors likely to influence the adoption of mobile banking, with a special focus on the BOP in South Africa.
This research contributes to the financial services sector, in that it brings an understanding of consumer behaviour with regards to the adoption of mobile banking services. It also contributes to active academic research and adds to the understanding of technology adoption, economic developments and mobile banking services in the BOP consumer base. To achieve the objective of this research, a review of the literature on the adoption of mobile banking was conducted. The extended technology acceptance model (TAM2) (Venkatesh & Davis, 2000) was adopted.
A revised research model was used based on the TAM2 model, with the addition of trust, perceived cost and perceived risk (with five facets: performance risk, security/privacy risk, time risk, social risk and financial risk).
7 © University of Pretoria The revised research model is used on this research, and will contribute to the literature by incorporating the integral roles of perceived risk, trust and perceived cost into innovative technology adoption. Pitta, Guesalaga and Marshall (2008) acknowledged that the BOP market may offer opportunities to create value for both the poor people and the mobile banking service provider.
The Review on Mobile Banking
Abstract With the emergent of new technology especially mobile technology as given new direction with respect to its corporate usage. Mobile banking is one of new way of banking with the emerging technology adopted by banks around the globe. The purpose of this research is to identify the key factors of mobile technology adoption which influence customer satisfaction in Pakistan. Questionnaires ...
The mobile banking service provider needs to understand the characteristics of people in the low-income sector and to recognise that serving the BOP market requires a different business model (Pitta et al. , 2008).
This research will contribute to the understanding of the mobile banking services providers, in terms of patterns and behaviours of the customers at the BOP with regard to perceived risk, trust and perceived cost in order for them to develop suitable business models and marketing approaches for BOP customers. 1. Structure of the report Chapter 1: Introduces the research problem, research objectives and the rationale for the study. Chapter 2: Through a literature review, this chapter describes the mobile banking situation in South Africa and defines the Bottom of the Pyramid (BOP) economic segment in the South African context. It further describes the research conducted on the main constructs in this research: perceived risk, perceived cost and trust. It conducts an assessment of various technology adoption models and suggests a suitable model for this research. 8 © University of Pretoria
Chapter 3: Provides a research model based on the key factors likely to affect the adoption of mobile banking by the BOP in SA. It defines the research question and hypotheses for this research. Chapter 4: Provides details of the research methodology, which uses empirical research to test the hypotheses. Chapter 5: Presents the data analysis and hypotheses testing results. Chapter 6: Discusses the findings of the research, synthesis with the literature and provides conclusions for the hypotheses. Chapter 7: Discusses the implications for business, gives recommendations for future studies and concludes this study. © University of Pretoria Chapter 2: Literature Review 2. 1 Introduction This chapter critically reviews the literature that pertains to the developments in South African mobile banking situation and defines the Bottom of the Pyramid (BOP), which is the context of this study. The background of mobile commerce and mobile banking technologies is reviewed. The literature review then discusses a technology acceptance framework for mobile banking. It further reviews the constructs within the framework, which includes perceived usefulness , perceived ease of use, perceived risk, perceived cost and trust.
The variables (risk, trust and cost) are added to the extended technology acceptance model (TAM2) (Venkatesh & Davis, 2000) to develop a research model to investigate factors affecting adoption of mobile banking by the BOP in South Africa. The structure of the literature review was designed to discuss the SA BOP context and mobile banking concept first, for better understanding of the relevance of the research model and main construct of the study. 2. 2 Bottom of the Pyramid (BOP) in SA According to Prahalad (2005), the distribution of wealth and the capacity to generate incomes in the world can be captured in the form of an economic pyramid.
According to Prahalad (2005) there are more than four billion people at the BOP living on less than $2 per day purchasing power parity (PPP), in both developing countries and least-developed countries. Karnani (2007) used the 2001 World Bank estimates of 2. 7 billion people at the BOP living on less 10 © University of Pretoria that $2 per day (PPP); and furthermore in 2009, Karnani (2009) used an estimated the figure of 2. 5 billion people on the BOP. Jaiswal (2008) used the 2005 World Bank estimates of 2. 4 billion people living in low-incomes countries.
This study will not focus much on the estimated figure for the BOP population, but rather on the definition of BOP. PPP in international dollars is used rather than United States dollars to have a better comparison, since PPP exchange rates take into account the local prices of goods and services not traded internationally (cost of living) (Karnani, 2007; Jaiswal, 2008; Louw, 2008).
Prahalad (2005) argues that there is a fortune at the Bottom of the Pyramid and that the private sector and entrepreneurs should target these vast untapped rural markets in developing countries with low-cost services and ppropriate business strategies. This notion is opposed by Karnani (2007, 2009), who suggests that it is a fallacy to claim that there is much “untapped” purchasing power at the BOP. The poor consume most of what they earn, and as a consequence, have a low savings rate. Guesalaga and Marshall (2008), in a study comparing the buying power index (BPI) of BOP consumers in different geographic areas, found that more than 50% of the purchasing power resides in the BOP segment in developing countries. However, the BOP consumption concentrates mainly on food, housing, and household goods (Guesalaga & Marshall 2008).
