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Transforming Financial Services: Mobile Banking’s Impact in Kenya

Jun 20, 2023 | 0 comments

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Jun 20, 2023 | Essays | 0 comments

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Investigating the trends for Adoption of Mobile Banking in Kenya: A Commercial Bank of Africa study

A Dissertation submitted in partial fulfillment of the requirements for the Degree of Master of Science in Mobile Telecommunication and Innovation (MSc. MTI)

Faculty of Information Technology


I warrant that this work has not been previously submitted or approved for the award of a degree by this university or any other. To the best of my knowledge, the dissertation contains no material previously published or written by any other person except where due reference is made in the dissertation itself.




This dissertation was checked and approved by:

Faculty Director


“The larger the island of knowledge, the longer the shoreline of wonder.”

~Ralph W. Sockman


Banking as an activity has moved from the traditional modes of banking where a customer has to travel to a branch to get served or to transact via the specific bank branch. This model has since changed to a more conventional mode of banking that adopts a branchless model of banking, leading to a greater number of people holding accounts in these banks. These forms of branchless banking include modes of mobile banking that have been brought about by mobile telephony especially in the Kenyan market. Growth in mobile telephony in Kenya has led to the birth of innovations that enhance mobile money transfer, an example of such innovations include M-Pesa, Airtel Money, and Yu Cash among others. Banks in their day to day activities have adopted this technology to produce programs like Easy 247 by Equity, and Kenya Commercial Banks’ (KCB) Mobi banking as a mobile banking strategy, and Cooperative Banks adoption of Co-op Kwa Jirani as a mode of branchless banking.

This research involved the development of a Mobile Banking model application that was used as a proof of concept in this research. The analysis of the questionnaire question results, interview results led to the development of the above applications as proof of concept. The literature review brought to light that other banks in other countries, as well as in Kenya have successfully managed to launch mobile banking solutions. These include the likes of FNB Bank in South Africa and Kenya Commercial Bank in Kenya.

The key factors to mobile technology adoption by bank customers, for their satisfaction in using the technology include security, reliability, and authenticity of the technology. From the findings, the integration of security and reliability of the application was highly a concern by the customers and it needed to be done right the first time for the bank customers to adopt mobile banking technology. Further research is recommended, with a great focus on information technology’s innovative services, customer trust, and security as the main indicators for technology adoption by their clients.

Key Words: Mobile Banking, the conventional mode of banking, mobile money transfer


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This research has been made possible by several people to whom I am greatly indebted and to whom I would like to express my sincerest gratitude.

To my work colleagues Samuel Kolala, William Muriuki, Moses Mwangi, and Josphat Mwathi, who were willing to help with the testing and who were always willing to critique the system, I thank full for all the help offered during the start to the accomplishment of the final system to a working system. Thank you for the help in the integration of the modules that you were in charge of, and for the surety that the system worked seamlessly.

To the system users, especially Jean Akinyi and Mark Oyier at CBA thank you for the constant midnight calls to enable the system to work flawlessly. Thank you as well for the test that made the system work with minimal to no error occurrence.

To all who made a direct or indirect contribution towards this project that I haven’t acknowledged above, I have not forgotten you- thanks for your endless contribution, I highly and greatly appreciate it.


CBA – Commercial Bank of Africa

CBS – Core Banking System

KCB – Kenya Commercial Bank

OOP – Object Oriented Programing

USSD – Unstructured Supplementary Service Data

SMS – Short Message Service

WAP – Wireless Application Protocol

IT – Information Technology

FAQ – Frequently Asked Question


Co-op Kwa Jirani –The name given to the cooperative bank agency banking application

KCB Mtaani – The name given to the KCB bank agency banking application

M-Commerce – The name adopted for the customer registration module

M-Pesa – A mobile money transfer service for the Safaricom network provider

WapTX – The system module responsible for the mapping of the user accounts stored at the Core Banking System and the mobile banking system

M-transfer – The term given to money transfer via mobile phones

Mshwari – The term given to the latest Safaricom/ CBA application that enables users to get money-saving services


Chapter 1: Introduction


Mobile telephony in Kenya has seen remarkable growth in the recent past. Entrepreneurial Programming and Research on Mobile Phones (EPROM) (2009), suggests that Africa with Kenya being at its forefront is currently the world’s fastest-growing mobile phone market. A new report by the Communication Commission of Kenya (CCK) suggests that the number of mobile phone subscribers went up by 34% to 17.4 million at the quarter ending June 2009 as compared to 12.9 million subscribers as of June 2008 (Government of Kenya, 2009). There are four licensed mobile phone operators in the Kenyan market, namely, Safaricom, Airtel, Telkom’s Orange, and Essar’s Yu. 47.5% of all Kenyans had mobile phones in the year 2009, with the rate rising to 72.8% in urban areas, and 80.4% in Nairobi. 37.1% among those having mobile phones send airtime or credit to other users, while 43.1% send text messages, and 17.9% used phones for money transfers (Synovate/Steadman Group Research on Mobile usage for FinAcess, 2009). The boom in mobile phone usage is created as the creation of new jobs in the informal sector; it has been said that an additional ten mobile phones per 100 people increase a developing countries GDP by 0.6 percent (EPROM, 2009). The Kenyan Economic report (2009) notes that in 2006, there were 18.47 mobile phone subscribers to every 100 inhabitants compared to 7.89% internet users per 100 inhabitants. These mobile devices allow for easy access to telephone services as well as communication services like email via the internet. This revolution has been dubbed to be greater than the wheel revolution (Naftali, 2004).

With mobile telephony increasing it is important to discuss the value that these devices add over and above the normal calling functionality. Mobile devices allow for applications to be installed on them, hence adding value like email access, picture taking among others. Of the applications installed on these mobile devices, some require internet access to achieve their function, while others are totally dependent on the mobile devices and they don’t need the internet to exchange information from a server to the device. These applications that are installed on the devices vary in the category from entertainment, business to even financial applications. Financial applications are those for financial purposes as a way to enhance financial transactions making transactions easier and faster.

An example of a financial application is the M-Pesa which was launched in 2007 (Tonny, 2009). Tonny, (2009) suggests that M-Pesa was developed as a system to help improve access to financial services. With the base of mobile users growing, access to such a technology improved financial services provision.

Financial applications that are residents on mobile devices have a significant effect on how financial institutions do there day to day activities. These institutions are in constant competition to increase their profit share in the market. This competition is kept healthy by the various strategies that they put in place. The strategies developed involve major shifts from traditional banking to branchless banking (Zohra, 2011). Such a transition is only made possible by technological advancements that emanate from the multiple uses of mobile devices which thus translates to the high availability of many mobile devices in the market. Numerous devices have led to high uptake in mobile-based products (Adrian, 2010).

An appropriate banking environment is considered a key pillar, as well as an enabler of economic growth (Koivu, 2002). With the continuous wave of technology driving our economy, financial institutions are forced to adopt technology in a bid to have a cake of the huge advancement. This advancement is aimed at achieving more profits in the day to day running of these institutions. Given the huge demand for finance-oriented activities, banks are restructuring from the traditional based serviced to more advanced methods of execution. Such methods of execution include agency banking, which has been introduced by various banks. Names that the various banks have given to their so-called agencies are Coop Kwa Jirani for the Cooperative Bank of Kenya and KCB Mtaani for Kenya Commercial Bank. Agency banking as observed by Adrian (2004) is one of the new methods of execution that banks or financial institutions are adopting.

According to a report by Financial Deepening Kenya (FSD Kenya), data indicates that only 19% of adult Kenyan’s reported having access to a formal, regulated financial institution while only 38% of Kenyan’s indicated no access to even the most rudimentary form of informal service. With this, a remarkable 80% of adult Kenyan’s are left outside the bracket of the reach or access to mainstream banking. There is growth in demand for an affordable and reliable way of holding funds while ensuring that risk levels are consigned to a minimum (Adrian, 2004). With this demand, there is a need to develop a system with the potential to obliterate the historical hurdles of cost and free access which have for a long time stood in the way of willing partakers of banking services.

Mobile banking (Internet banking using mobile devices, also known as M-Banking, mbanking, SMS Banking, etc.) can perform account balances and transaction history inquiries, funds transfers, and bill payments via mobile devices such as cell phones, smartphones, and PDAs (personal digital assistants) (Laukkanen et al., 2007). This is becoming a key tool in banks servicing their customer’s needs.

One cannot discuss mobile banking without mentioning non-mobile internet banking. As a case to consider mobile banking differs from non-mobile internet banking in two main ways. One of these differences is found by the fact that mobile banking evolves faster as opposed to non-mobile internet banking (Laukkanen, 2007a). Another difference observed would be, mobile banking has new features which include and not limited to aspects like, ubiquity and flexibility, while non-mobile internet banking features like, phone-banking is still too conventional and lack these additional features. Information system researchers as well observed that mobile banking can be considered to be one of the most significant innovations which are emerging as a key platform for expanding access to banking transactions via mobile or handheld devices, and operating wireless communication technologies (Herzberg et al., 2003).

1.2. Problem Statement

Globally, the banking industry accounts for about 60 percent o financial transactions and capital flows (CBK, 2005). With trade liberalization and easy and fast technological innovations, banks are being forced to change the mode of providing financial services. In Kenya, there is heightened competition in banking segments. Mobile banking in other countries has had a huge success especially in countries where internet accessibility is well defined. Users have ease of access to their accounts with transactions on a 24-hour basis. To achieve the same in Kenya where the concept is upcoming among the financial players, it is vital to determine the success factors for mobile banking adoption. The purpose of the research was underlined to determine the factors that can lead to the successful adoption of mobile banking, by the bank customers in the Kenyan market.

1.3. Research Objectives

General Objective

This study overall establishes the state of mobile banking in Kenya with a view of providing data for the development of effective use of mobile banking technology in the sector.

Specific Objectives

  1. Identify what has been done by other banks in the development of mobile banking solutions and whether the same can be replicated at a different bank for example CBA
  2. Identify the factors that could encourage or inhibit adopting a mobile banking solution in a financial institution
  3. Develop and test a mobile banking model application that will be used as a proof of concept for the adoption of mobile banking in a financial institution

1.4. Research Questions

This study attempts to answer the following pertinent questions emerging within the domain f the study problem

  1. What has been done by other financial institutions? Can this be replicated and used at CBA?
  2. What key factors can lead to the success or failure of the adoption of a mobile banking application?
  3. Would a model mobile banking application help understand the adoption of mobile banking in Kenya?

1.5. Research Hypothesis

The following hypotheses were used in the research:

H1. Perceived compatibility, ease of use, competence, and relative advantage have a positive effect on adopting (or continuing to use) mobile banking.

H2. Successful mobile banking in other financial institutions can be replicated at CBA.

1.6. Significance of the Study

Findings of this research form an important basis upon which financial institutions will deploy mobile banking applications. The results shall identify factors to be considered by these institutions in determining how the mobile banking application will work to best achieve adoption by the targeted users. Before commissioning the development of the applications, financial institutions need to understand what will make their application a cutting edge, among the users thus determine what will increase profits, since the adoption (or continuous use) directly translates to income by the institution, and as well classify which factors that won’t improve the adoption.

This paper seeks to demystify the analogy that innovation is necessarily key in the development of mobile banking applications. It sets forth to put the customer as the key determinant of how a mobile banking application should look and work for easier adoption by the institution’s customers. Overall, it is envisaged that the result of this study will benefit the banks since they will be able to focus on available mobile banking system applications and increase their market share over other competitors. The study will form a basis for future research on mobile banking applications in the fast advancing technology and competitive business industry.

1.7. Assumptions of the Study

  1. It was assumed that all respondents to the interview and questionnaire responded to the questions in an honest way and the best of their abilities.
  2. The study also assumed that the respondents’ literacy variations did not affect the study.

1.8. Scope

The research emphasis lies on the ability of CBA to produce a mobile banking application that is best suited for adoption and continual use by its customers. Whereas other financial institutions have other approaches in developing mobile banking solutions, the study analyses the situation at CBA and its unique customer base.

The study will as well entail the development of an application model that aims at portraying the findings of the research. The results of the research analysis shall define how various modules of the model application will work. The development of the applications shall encompass devices ranging from Android, JAVA devices, and Blackberry. Languages shall include JAVA, VB.net, and web definition languages.

1.9. Limitations

The study was conducted within the Nairobi region among the urban population. This was because the region was easy to reach and access with the population in this are matching most of the criteria used for selection of the study. The sample mobile application was tested by both CBA customers and selected customers of the CBA bank.

Limitations of the study include android smartphone users, in that only the persons with android phones managed to test the application. This is because the model application was on android phones and thus only persons that used these phones could test it. Also, the study limited itself to banks with mobile banking services only. As such, it does not cover other financial institutions, which would have been desirable for the study.

Another limitation is on the region selection, since the study was solely based on the urban population in Nairobi, no rural population was involved in the study. This is a limitation since it would have been an added advantage to collect data from the rural population and to determine what their wants and needs are in regards to mobile banking usage.

Chapter 2: Literature Review

2.1. Introduction

The term mobile refers to applications that are designed for users on the move (Anckar et al., 2002). A mobile device also is normally known as a cell phone and users commonly use it for communication and as a wireless delivery channel. This device marks the basic hardware for access from the customer level to financial services offered via mobile banking.

Mobile banking is also known as M-Banking or m-banking. According to Amin et al. (2007), he defines mobile banking as a form of banking transaction carried out via a mobile phone. In addition to this Pousttchi and Schurig (2004), define mobile banking as a type of execution of financial services in the course of which – within an electronic procedure- the customer uses mobile communication techniques in conjunction with mobile devices. Mobile banking technologies used to achieve the execution of the financial transactions include Interactive Voice Response (IVR), Standalone mobile application clients, Short Message Service (SMS), and Wireless Application Protocol (WIP) (Tiwari & Buse, 2006).

Mobile banking can be viewed as a technological innovation as it allows customers to conduct banking transactions without constraints of time and place and to connect to banking services easily and quickly with mobile devices (Laukkanen, 2007b). This advancement is aimed at having customers satisfied in their financial transactions at the respective financial institutions. Mobile banking is slowly gaining momentum in Kenya’s banking industry.

The banking industry in general is viewed to be driven by technological innovation, market uncertainty, and competition; this is a view by Zohra Saleem et al. (2007). Day in day out banks advertise their lending rates as a means to lure customers to borrow from them. They advertise on account holder types that are specific to customers, for example, the diva account by Standard Chartered bank that targets the women. These institutions have various ways of making money, the most common one being interest from loans borrowed from them. In the recent past, there has been a rapid shift from the traditional model of banking to the more advanced electronic banking. With this in mind, competitive banks are making significant investments in the adoption of new technology to align business strategies, enable innovative functional operations and provide extended service to their customers, to the tune of 24 hours and 7 days a week.

There is a need to advance in technology by a financial institution to service its customer’s interaction with M-Pesa (Nick & Susie, 2007). Tonny, (2009) suggests that M-Pesa was an idea whose time had come and whose implementation occurred in the right context. Banks thus need to embrace the technology as opposed to fighting it or competing with it. M-Pesa serves many as 3.6 million users; this was reported by the CEO of Safaricom as of April 2008. The growth started from just a mere 900,000 users with only 1.200 Safaricom M-Pesa agents. At the time of its inception in 2007, a total of KSh. 4 billion had been transmitted via M-Pesa as a product; this was identified by Pauline (2007). This remarkable growth follows the high number of subscribers in the Safaricom network. This diffusion of mobile use has been observed to have grown to numbers over 13 million by 2008. As figure 1 demonstrates below that this growth has been tremendous (Tonny, 2009).

Figure 1: Growth of Mobile phone and landline use in Kenya

Regardless of this M-Pesa use, it is noted that M-Pesa is still not a bank and that the money being circulated is held by the Commercial Bank of Africa and that users operate using virtual money. This necessitates financial institutions’ adoption of such a facility to propagate its mobile banking adoption. This will thus propel the technology as it shall allow for easy and a more robust way of m-transfer of money.

2.2. Factors promoting the adoption of Mobile Banking

The following factors affect the adoption of Mobile Banking among customers of the involved financial institutions.

2.2.0. Customer Trust in Mobile Banking

Mobile banking is considered to be a new concept in banking as opposed to traditional banking activities or solutions. Due to this aspect of it is a new electronic delivery channel, customers may choose not to adopt mobile banking due to security as well as privacy concerns (Laforet et al, 2005). Studies suggest that the lack of trust is one of the major reasons cited by customers as to why they do not adopt mobile banking (Kim et al., 2009; Lee & Chung, 2009). Studies on online transaction environments suggest that a great degree of trust is key for these kinds of transactions as opposed to face-to-face transactions (Grabner-Krauter & Kaluscha, 2003; Lee & Turban, 2001). Also, Aladwani (2001), argues out that trust is a key future challenge of online banking transactions. This is because this kind of transaction lacks the physical presence of a physical branch. With this absence, a face-to-face between the bank personnel and the customer as well lacks. To cope with the uncertainty that, might be found in a mobile transaction environment, trust helps reduce potential risk and fraud thus increasing the likelihood of adoption of mobile banking.

Customers need assurance that the interaction with their bank accounts via mobile banking is secure and safe. They need to identify with the impenetrability of the applications for high adoption among them.

2.2.1. Attitude and attribute towards innovation

It is noted that mobile banking can be treated as technological innovation, this is because it allows users to carry out banking transactions without the constraint of time and place and to connect banking services easily and quickly with mobile devices (Laukkanen, 2007b). Various studies suggest that user perception of innovation influences their adoption of internet-based Information Systems (IS). The attitude towards this encourages or discourages the use of these innovations by the users. Rogers, (1995) determined an innovation diffusion theory that provides a set of innovation attributes that might affect adoption decisions. These innovation attributes include relative advantage (the degree to which an innovation can bring benefits to the organization), ease of use (opposite of complexity, the degree to which an innovation is easy to use), compatibility (the degree to which an innovation is consistent with existing values, beliefs and experiences of the adopters), observability (the degree to which an innovation is visible to others), and trial-ability (the degree to which an innovation may be experimented with) (Rogers, 1995). It was noted that among the above innovation attributes relative advantage, ease of use, and compatibility were found to be the most frequently identified factors for adoption and diffusion of Internet-based technologies (Liao, Shao, Wang, &Chen, 1999; Papies & Clement, 2008; Vijayasarathy, 2004).

2.2.1. Customer Attitude and behavioral intention

Individual attitudes towards a given system influences system use intention. It affects the adoption of the system by the given user. The existence of this relationship has been supported in a variety of situations, including in the workplace using enterprise resource planning (ERP) and knowledge management programs (Calisir, Gumussoy, & Bayram, 2009; Wu & Li, 2007) and in virtual settings using technology such as Internet services (Lee, Choi, Kim, & Hon, 2007; Schubert, 2002). This relationship determines the user’s ability to reuse the system, thus his or her sentiments on the system. Since this is notable on any Information System, the relationship is expected to hold for mobile banking as well. This is especially on potential customers (or repeat customers) attitude toward mobile banking reflects feelings of favorableness and un-favorableness towards mobile banking and therefore predicts adoption (or continued post-adoption usage) intentions.

2.3. Commercial Bank of Africa

Time for more is the slogan adopted at CBA, this was to be adopted in the mobile banking development at the bank. This bank has 40,000 customers of whom high consideration was done to achieve better adoption of mobile banking to their needs. About the customer base, CBA set out to develop a mobile banking solution based on its unique user requirements that included:

  1. Ability to access high-end phones e.g. how many users have access to iPhone or blackberry
  2. Co-corporate nature of its customers who require linkage to foreign currency or minute by minute information on foreign currency.

CBA was looking to model the solution with the likes of FNB Bank in South Africa. The business model at CBA is quite different from the ones at other banks. While banks target the masses of the population, CBA targets cooperate with customers. With its unique business model, a more innovative solution is a necessity.

2.4. Case Studies

2.4.1. Mobile Banking at Kenya Commercial Bank

Kenya Commercial bank is deemed as one of the first financial institutions to roll out a mobile banking solution in Kenya, according to the Communication Commission of Kenya (2012), and the National bank being observed as a close second. Although many financial institutions are observed to be coming up with innovative ways, Moses Kemibaro suggests that the solution provided by KCB suffices to be among the best. The reasons as to why he suggests this include:

  1. The solution works on all mobile networks in Kenya
  2. It works on the mobile web
  3. You can send money directly from your bank to any mobile number in Kenya
  4. You can send money from your bank account directly to ANY mobile money service on ANY of the mobile networks in Kenya
  5. You can directly top-up mobile airtime on ANY mobile number on ANY mobile network from your bank account
  6. You can make payments directly from your bank account

These characteristics are observed to ride on mobile network availability in Kenya. The ability of all mobile networks being supported adds value to the innovation in that, apart from the already known Safaricom subscribers of over 19 million subscribers (CCK, 2012). the addition of subscribers from the other networks provides an additional market share. KCB notes that it’s not enough to have an application installed on the phone. Its access to mobile banking starts from the base of the pyramid so to speak. The solution covers access to a basic mobile web page via the mobile web portal. This still increases the customer use pool as a user doesn’t have to go through the trouble of installing and learning to use a new application, but rather access is made easier via a portal.

With the development of mobile banking, KCB’s customers are warranted for a clock system that will enable transactions of definitive types to and from the bank using their mobile phones. This system was dubbed KCB connect. KCB connect has features that include, mobile account creation, and transfer of money from one KCB account to another and from a KCB account to M-Pesa and vice versa. The KCB Group Deputy Chief Executive Group Businesses Peter Munyiri said the launch of KCB Connect will greatly transform customer interactions with their bank. Also, he notes that the key differentiator between KCB Connect and other offerings in the market is the ability of the mobile phone subscribers to open accounts on their phone and enable them to transact. He acknowledges that it is the first of its kind in Kenya and positions KCB as one of the leading technology-driven banks in this region (CCK, 2012).

This mode of mobile banking focuses on SMS as opposed to applications resident on the mobile phones. Although it might serve the needs of the target market at KCB technological advancements happen daily. In regards to the growth in the Telco’s and the technological infrastructure, KCB sooner rather than later shall be forced to adjust and develop such kind of access points, this was the sentiments of Peter Munyiri the CEO. Moses Kemibari suggests that KCB connect is somewhat the worthy contender to Safaricom’s M-Pesa (CCK, 2012). This is due to the ability of the mobile banking nature to transfer money to any mobile money transfer service. These services include the widely known M-Pesa of Safaricom, Zap found on the Zain network and Yu cash that was developed by the Esser group or more commonly known as the Yu network. Even with this advantage, KCB connect considers the unregistered user to mobile money transfer services. Frustration on transferring money too given mobile money given that you are not registered to any of the mobile money services is noted. With this ability, KCB connect allows you to transfer money from your account, as a KCB account holder with the condition that you are registered for KCB connect. The transfer can be to any network. This is a huge advantage, even though most mobile users are observed to have registered for mobile money transfer services. A final advantage noted by Moses (CCK, 2012), is that KCB connect allows for repayment services at the bank level. These repayments are for services such as bank loans, credit card bills as well as post-paid mobile bills.

2.4.2. Relationship between customer satisfaction and mobile banking adoption in Pakistan

Mobile banking is a phenomenon that is being adopted by banks all around the globe. The issues experienced in Pakistan are issues that are as well experienced in the United States in regards to the technology. In Pakistan, it is noted that customer concerns on security, the authenticity of the technology, and its reliability affect its adoption into the market. Mobile banking in Pakistan is seen to be more a future than an already developed solution to banks (Saleem & Rashid, 2010). Omwansa, (2008) notes that the enactment in 1998 by parliament, of the Kenya Communications Act (KCA, 2008), was a remarkable pacesetter as a regulator of the communications sector. With this in mind, Pakistan’s government has taken up steps to build up policies for adoption by the local banks so that the banks can take up the technology shortly.

In Pakistan, for instance, mobile banking is viewed as a relatively new concept, according to Chmielar (2002), thus it is emphasized that users/ customers do not understand the technology. With this perception, it is therefore critical to create awareness, to users, the importance of mobile banking. This can be done by highlighting the benefits that mobile banking has to them when provided by the financial institutions. With the phenomena growing the world over, mobile banking innovations are vital for financial institutions, thus are critical for adoption by account holders. For the adoption of mobile banking, mobile banking adopted needs to be technologically efficient as well as cheap (Chmielar, 2002). The cost implication regards the user and not necessarily to the bank. The user/ customer needs to find the adoptions cost-friendly to him. This acts as a retainer to the customer thus leading to reuse of the product. Other factors that mobile adoption needs include reliability and secure technological development. Customer’s adoption is highly linked with the technology being efficient and quick to understand with an easy to understand and use nature.

Financial institutions adopt a strategic adoption of technology. Several research texts have suggested that, in the banking sector, the strategic focus of banks is to remain competitive to retain as many customers as possible (Pu¨schel et al, 2010; Lewis et al, 2010). Also, the texts insist that the retention of existing customers is far more economical in comparison to getting new ones.

Conceptual Framework

The fundamental basis for this study uses a conceptual framework that summarizes the relationship between both dependent and independent variables. This is an adoption framework that helps determine factors that affect the successful adoption of mobile banking in financial institutions. The conceptual framework is as shown in figure 2.

The objective of the research is to examine the factors to consider when developing a mobile banking solution for a given financial institution. The research examines the adoption factors from both customers, as end-users, and the institution.

Figure 2: Conceptual Framework3.3. Research Design

The research design used for this study is qualitative. In this study, purposive sampling will be used to select the sample population. Data was collected from CBA walk-in customers at the branch level as well as the personnel that would be entitled to managing the system. The initiators of the project at the managerial level as well provided the necessary data for the research. This managerial personnel was credited with providing the CBA information as a business.

Technological Factor

Technological improvement is observed on a day to day basis. These improvements have advantages and disadvantages. Organizations need to keep abreast of these improvements to remain competitive in the world. The advantages follow in that better facilities are provided by the improvements, while the disadvantages might include issues of poor or non-conformance due to the complexity of the improvements. With increased technological complexity, there is a reduction in technology adoption and this proves costly to the implementing firm. Higher technological innovations accompanied by reduced complexity, on the other hand, prove profitable for adoption to the implementing organization. The reduced complexity as well increases trust from the customers thus increasing and improving customer satisfaction (Pu¨schel et al., 2010).

Traditional banking involved a tedious process of authentication and verification which demanded that the customer be present at the bank branch to be served or receive the required services. With this more time was consumed by both the customer and the financial institution therein. This led to increased cost and complexity in services, thus leading to a reduced profit by the institutions. Technological innovations have led to a reduced requirement for staff, thus reducing expenditure on staff costs like salaries and remuneration. The reduced staff is due to the less demand of branch personnel to serve, for instance during a bank transfer via mobile banking innovation. The staff requirement is shifted to information technology personnel who service queries from the users who regard technological innovations. This thus leads to a saving of time by both the customer and the financial institution (KCA, 2008). Mobile banking innovations provide entity authentication processes. This means that users should be aware that they are communicating with the intended bank before sending sensitive information, and the banks should know the identity of a customer before responding to the customer’s request.

Diffusion Theory

Rogers, (1995) came up with a theoretical construct of the perceived characteristics of an innovation. The theory defines factors that determine the adoption of an idea or innovation. According to the above theory, relative advantage, compatibility, complexity, trialability, and observability are the factors influencing the diffusion and adoption of innovations. Relative advantage, as a factor to adoption, suggest that for an innovation to be successfully adopted it needs to have an edge over the traditional way of doing things.

Compatibility, on the other hand, can be defined as the ability of an innovation to fit into a certain context. An example is provided by Omwansa (2008) when he states that M-Pesa was an innovation whose time had come. This at CBA can be attributed to the mobile banking innovation satisfying the customer needs in terms of foreign currency and exchange since most of its customer requires this for day to day running of their businesses. The complexity of innovations defines whether a product is easy to understand or use. Innovation needs to be easy to understand for it to achieve high adoption. Complex innovations usually face high resistance from users/ customers (Jonathan, 2011). This thus directly affects the innovation adoption rate.

Trialability is a factor that affects innovations that require users to first test and try product components that have never been seen before. An example would be the first test of the iPhone’s capability of having actual visual communication. This was demonstrated by Steve Jobs in 2010, he called the innovation Face Time. Since its trial and test went well its acceptance into the market was high. Observability follows trialability as a factor of adoption. Observability defines the user’s ability to use innovation with ease, following a preceding event. If a user is introduced to an interaction like popup menus, he or she will expect the same throughout the application. When this consistency is maintained usage of the innovation is easy and thus the adoption of the innovation.

Functional Factor

In the banking sector, the functional aspect of service provision is targeted at increasing customer’s interests and attracting new ones. Retention of the customers, on the other hand, depends on the reliability of the service provision (Saleem & Rashid, 2011). Bank customers require convenient services that are easily accessible. Timely delivery of this service is as well crucial and delay in their delivery might cause anxiety in the customers thus loss of the affected customers. To achieve high adoption reliability of the available services provided is critical. Banking is a service industry, thus relationship service between the customer and the institution is the key factor that adds value to this industry. Trust as a key issue is linked to customer service. To achieve this trust, mobile banking can include the use of Frequently Asked Questions (FAQs) and the inclusion of personnel contacts for use by the users/ customers. Simple methodology like confirmation messages adds value in terms of customer trust. SMS alerts on the other hand cater to the need of users to be kept on constant updates with the bank transactions involved. Guidance on the use of mobile banking is vital and should be provided to the customer. This is offered via IT personnel who should be on constant alert. The help center’s that are set up should fully understand the system and provide full navigation of the system in question. It is noted that feedback and complaint management is the service demanded proper user satisfaction (Saleem & Rashid, 2011). The service for customer inquiry must prove to be timely for the institution to achieve customer satisfaction and retention.

Mobile banking innovation provides functional diversification, service quality, and versatility. Also, the efficiency of customer inquiry should be provided as well. This is the factor of customer satisfaction measurement as referenced from (Cohen et al., 2006). Customers in this day and age desire quality products and services alongside value-added benefits, while banks put more effort into selling different products and services to customers (Lewis et al., 2010). In addition to this reference (Lewis et al., 2010) suggests that an improvement in communication efficiency, could have a significant impact on customer satisfaction and consequently on behavioral intentions.

System modeling and design

For the mobile application to be developed, a three tire model was adopted. The model incorporates:

  1. First Tier: Presentation logic

This will include the interface through which the users will interact directly with the system. Access to the system can be through mobile phones running the application, or through the access of the web server through a PC. This web server is the M-Commerce portal that allows for user registration details. Users are registered for mobile banking and their details are retrieved from the data storage logic which in essence is the Core Banking system. Information presentations can be text-based or image-based (graphic mode of presentation). The mobile devices to be used are android, java, blackberry, and iPhone. The web server is developed in VB.net.

  1. Second Tier: Application logic (data processing)

This tier entails the decryption of messages from the user’s requests. The decryption occurs at this level using algorithms outlined in agreement at the presentation level. Data is processed from the request and stored at the Third tier. After storage, the processing is done and feedback is sent back to the presentation logic.

  1. Third Tier: Data Storage and Data Access Logic

This tier is involved with the storage of the collected data and processed information. The requests received from the end-users are channeled and the relevant data and information are retrieved. The platform on which this is developed will be MsSQL. This is a Microsoft product and is best suitable for use since most servers at the financial institution are Windows-based.

2.6.1. Development Methodology

The developer will use the Object-oriented Methodology-Life Cycle model, in the development of the system. The diagrammatic presentation of this methodology is shown below (Wikipedia, Object-Oriented Design, 2009):


Figure 4: Object-oriented Methodology-Life Cycle model

2.6.2. Reasons for using the methodology

The object-oriented methodology was chosen because of the following main reasons:

  • Object-Oriented Methodology closely represents the problem domain. Because of this, it is easier to produce and understand designs. A clear understanding of the system is needed through investigation of the banking transactions process, to determine the various processes involved in the banking transactional system.
  • The objects in the system are immune to requirement changes. Therefore, allows changes more easily. Changes will have to be made, especially to the entities involved in the development of the system, thus this methodology was the best since it would easily for these changes to be implemented easily
  • Object-Oriented Methodology designs encourage more re-use. New applications can use the existing modules, thereby reduces the development cost and cycle time. The system will have to be re-modeled over and over during the technological changes and banking approaches. This system will as well serve a large population which also includes the growing number of customers.
  • The object-Oriented Methodology approach is more natural. It provides nice structures for thinking and abstracting and leads to the modular design.

2.6.3. Tools and Techniques in Object-Oriented Methodology

The tools used in this methodology are:

  • The Analysis Phase is intended for defining the requirements and the relationships between the required functions of the system.
  • The Design Phase takes the models and preparations of the Analysis phase and applies them in terms of the actual environment where the computer program will run, including such concerns as the computer operating system, programming language, and actual coding of the program.
  • The Testing Phase takes the program and tests it in terms of the requirements and as a total system.
  • Use Cases are part of the total process and help to bring about the proper functioning of the total system. Use cases are particular requirements of the system, specifying what users will want to accomplish with the system. For example, in an email program, one use case might be checking to see if you have mail. The use case begins as a statement of purpose and is eventually designed in terms of the particular functions that are required to complete the purpose.

2.6.4. System Design resources

Tool Use Tool Title Cost
Development tools Java, Java ME, VB, VB.net, MsSQL, JavaScript, AJAX Open Source, proprietary
Database management system PHP MsSQL, WampServer 2.0i. Microsoft SQL Open Source
Documentation and design tools Microsoft Word 2010, Microsoft Visio 2010- Beta Version Open Source
Software development tools: Adobe Photoshop CS5, CS4, Net BeansIDE Version 6.9, MsSQL JDBC Driver. Dreamweaver CS4, CS5. Eclipse Indigo

Windows Server 2000 or higher

Not applicable
Hardware Required Processor type: Intel Pentium IV, 2.0 GHz, Memory capacity: 256 MB, Hard drive capacity: 40 GB, Operating system: Windows XP Professional SP 1. Not Applicable

Table 1: Table of System Requirement Resources


Customer satisfaction should be the greatest determinant of innovation adoption. Many factors determine how a particular innovation is adopted by users. Technological advancement, even though it sits at the forefront of innovation should not be the greatest consideration in developing innovation to serve a particular market. In the development of innovations for financial institutions, great consideration should be given to the customer base in place. This is observed in that, although KCB can roll out a USSD product at first instance, for CBA it might not be the best move. KCB’s client base and that of CBA differ greatly. The differences define customer satisfaction factors to consider. Even though some, like security and reliability, will be similar others will be unique to both institutions.

Functional factors in service delivery are key as well. Services offered should be reliable to increase trust with customers thus improve the adoption rate of the respective innovations. None of the adoption frameworks mentioned in the literature review can be used alone. The factors should be considered together to achieve the highest rate of adoption. Customer satisfaction lies at the forefront of service industries, and although some aspect of this factor is physiological, most is intertwined with the core business of the institution.

New products and services are out to lure more customers. While this might be aimed at making a profit research suggests that for financial institutions retention of customers generates more profit. This is due to characteristics like; current customers pay less attention to price changes in services as opposed to new customers. Working to retain this poll of customers works better for the financial institutions. Innovations in the mobile banking sector require the retention of customers. Higher retention directly translates to higher adoption rates. Customers are satisfied with the use of mobile banking innovations if services offered are reliable, secure, and easy to understand or use. Mobile banking innovations should come in to replace traditional banking services. They serve to save time and delivery for the customers while increasing profits for the institution.

Feedback is critical for such innovations. Proper communication with users ensures an increase in their trust in the product. Trust is an essential feature in mobile banking innovation. FAQ’s provide easy was for users to provide queries for use of such innovations. This ensures that users get satisfied with the service delivery of innovations. Support centers or teams put in place for response to users should fully understand the system to achieve effective feedback to the customers. For alerts SMS’s serve as the best customer updates to achieve a smooth trust relationship.

Efficient mobile banking innovation is an important requirement for CBA. Customer needs should be well understood as well as the customer base highly respected. Understanding this ensures that customer satisfaction levels are achieved on the high. Constant improvement of the developed innovation should as well fall in place with constant interaction with the customer maintained.

An object-oriented approach to develop the mobile application model. It is the best way to model the various structures that are involved in the day to day running of the financial institutions. The Object-Oriented Methodology as well allows for easy change of the system structure in case it is required. It provides a better way to understand the problem in question hence the reason it was chosen as a methodology.

Chapter 3: Research Methodology

3.1. Introduction

This research is aimed at determining factors leading to the successful adoption of mobile banking at financial institutions and mostly at CBA. It explored these adoption factors from two perspectives. These perspectives are the financial institution’s customer, who is the end-user of the product, and the financial institutions have given their great needs and strategies. As such, this chapter emphasizes data collection, processing, and analysis methods. The data collection instruments and procedures are also discussed alongside the target population and study sample. According to Zikmund, Babin, Carr, and Griffin (2010)), research methodology is an essential part of a study that must explain technical approaches in a manner that is apposite to the readers. As such, this study achieves this by addressing the research and sample designs employed in the study, data collection and fieldwork conducted for the study as well as data analysis. Furthermore, Dowson (2009) observed that research methodology is the philosophy that guides the research. Research methodology deals with the description of the methods applied in caring out the study.

Research Design

According to Dowson (2009), the purpose of the research design is to set out a description of and justification for the chosen methodology and research methods. Therefore, the study research design provides an overall plan for obtaining answers to the questions under investigation as well as handling some difficulties encountered during the process of research. This research employed a qualitative research design. It involves the description and analysis of the culture and behavior of humans and groups used for the study. Dowson indicates that qualitative research includes designs, measures, and techniques and does not use numerical data. Therefore, the data described in this study are essentially in words and illustrations that are grouped into various categories since the feelings and insights of the respondents are considered important for investigating the trends of mobile banking in Kenya.

Based on the method of data collection, this research used a descriptive research design. A descriptive survey, Lavrakas (2008) observes, is a systematic research method for collecting data from a representative sample of individuals using instruments composed of open-ended or closed-ended questions, interviews, and observations. Widely used for non-experimental studies, it enables the collection of a large amount of survey data from a representative sample of individuals sampled from the target population. Previously, a descriptive survey research design has been used in studies such as Saeed (2010) to study risk management concepts in the oil industry.

3.2. Sample Size

The sample size in this study has two levels, target population, and accessible population. A population, according to Lavrakas (2010), is any finite or infinite collection of individual elements. The sample size was based on the target population both at the institutional level where the study targeted licensed commercial banks in Kenya. Due to the inevitable constraints of time among other recourses, it is difficult to involve the entire target population in the study. As a result, the study has employed the use of a sample of 120 subjects. A sample, Lavrakas (2010) defines, is a smaller group obtained from a target population that is carefully selected to be a representative of the entire population with all the relevant characteristics. Referenced at [2] CBA has a customer base of approximately 40,000 persons. For the study, 15 employees were selected to participate in the research. From the 40,000 customer population size, a purposive sample was selected with a confidence interval of 5%. From this selected sample, about 60% had the desired characteristics. The characteristics included factors like frequency of bank branch visits, most of the 60% of respondents, were noted to visit the bank branches at least thrice a week for a banking transaction. From the above parameters a sample size of 366 was calculated as shown below. This calculator was found on the link www.nss.gov.au/nss/home.nsf/pages/Sample+size+calculator? OpenDocument

Figure 3: Sample Size Calculator

With this population size of 40,000 on a confidence level of 95% and a confidence interval of five (5), the research sample would have involved 366 respondents for the questionnaire but a convenience sample of 120 was chosen. The selection of the convenience population was dependent on the time constraint of the research as well as a budget constraint. The convenience sample was chosen to represent the population due to its characteristics. Most respondents in this category were frequent walk-in customers, thus considered to be quite homogenous for the study.

According to the Central Bank of Kenya’s annual supervision report of the year 2013, there are a total number of 43 commercial banks in Kenya and one mortgage institution. Central Bank of Kenya is the licensing institution of mortgage finance and commercial banks in Kenya hence was used as authoritative banking sector information. A total number of 3 branches were selected for the study. Upper hill branch, Westlands branch, and Wabera branch were selected. The branches were observed to have frequent walk-in customers with a rate of 3 customers being served per 5 minutes per teller. The branches were considered to be the most frequented on a day to day basis. Besides, they were selected because they have readily available information and have a higher level of information disclosure. They are also banks that have invested heavily in various mobile banking innovations available from the commercial bank annual reports.

Sampling Frame

This study sampling frame consists of three licensed commercial banks operating within the Nairobi area as of December 2014 as they appear on the Central Banks of Kenya database. The supervision report of CBK outlines the grouped number of employees in the banking sector and the employment data is disaggregated between various cadres of employees in the sector. Sampling frame, according to Gill and Johnson (2002) refers to a list of members of the research population from which random sampling may be drawn. Furthermore, Mugenda and Mugenda (2003), described a sampling frame as a list that contains the names of all the elements in a universe.

3.3. Research Instruments

The study used questionnaires based on the interview method to obtain qualitative data for analysis which was further validated from analysis results from secondary data quantitative analysis. Questionnaires Schwab (2005) defines, as measuring instruments that ask individuals to answer a set of questions to a set of the statement. Whereas closed-ended questionnaires are essential in establishing how the respondents use mobile banking services, this research used open-ended questionnaires that sought to interview to establish what people think about the service. This research acknowledges that there s no standard answers to the questions, the complex analysis of data is provided. Moreover, since it is opinions that are sought rather than numbers, fewer questioners were distributed that enables the finding of how many people use the service and their thought on the mobile banking service. Mugenda and Mugenda, (2003) acknowledges that the use of questionnaires reduces bias in qualitative studies, especially from the interviewer, the subjects have adequate time to give well throughout answers, and offers low cost in the widely spread demographics.

The use of secondary data to validate the findings is an important facet of any study. Secondary data according to Kothari (2004), is data that is already available, referencing the data which have already been collected and analyzed by a different researcher. Secondary data discussed in the literature review indicates the analysis of the existing data and the expensive part of the research project. After the analysis of primary data, secondary data provides an edge for validation of the findings of the research. The structure of both primary and secondary data to address similar study objectives improves interpretive coherence and improves both the communicative and pragmatic validity of the study results. In brief, questioners were used to conducting the research (Appendix-i). In addition to the questionnaires used interviews were carried out with the bank users who were involved in designing the mobile banking systems. The interviews were the structured type of interviews, carried out on the 15 bank users. The interview’s main aim was to interact with designers of the system as a means to understand how they perceived the system to work. The structured interview question can be found in Appendix-ii.

3.4. Validity and Reliability of Research Data

The questions in the questionnaire and interviews were objective and did not lead on to answers from the respondents. The respondents as well were requested to answer with utmost sincerity and without influence from others. The research on the other hand ensured that results obtained could be replicated on other financial institution trials. Results from the findings were used to design and implement a mobile banking system that was tried and tested in Kenya and the process for testing in Uganda and Tanzania is ongoing. The observations in the research had a direct relationship with the area of study. The observations from the research were primarily used to develop an innovation in the banking sector. The results found can be replicated to serve other financial institutions and thus develop mobile banking solutions for them. The data is thus reliable in the banking sector as opposed to the data being specific to the test application.

Data Collection Procedure

Primary data for this study was collected through the administration of open-ended questionnaires to the users of mobile banking services. Two research assistants were designed to make a follow-up of the administered questionnaire and interview. The entry points to the banks were mainly through the human resource management and finance departments. Moreover, secondary data was obtained from a robust body of existing literature on mobile banking services in Kenya as well as Central Banks of Kenya survey manuals.

3.5. Application Piloting

The exploration conducted a pilot test to test the reliability and validity of the questionnaires in collecting the data necessary for the study. Kothari, (2004) writes that a pilot test is a replica and rehearsal of the main survey. The pilot test in this study did focus much on testing the research hypothesis, rather it emphasized testing protocols, sample recruitment strategies, and data collection instruments. Essentially, the questionnaires were validated through the discussion with randomly selected mobile banking service users of the three banks. Their views were analyzed and inculcated to enhance the construct and content validity of the questionnaire. Moreover, the test of reliability employed the use of ten questionnaires that were piloted with randomly selected mobile banking subscribers that were not included in the final study sample. This provided precautionary measures of avoiding bias in case they were to participate in the interview twice. The rule of thumb provides that 5%-10% of the target sample should constitute the pilot test, according to Cooper and Schilder, (2011). Therefore, the test sample was within the recommendation.

The developed application was supplied to CBA and links the provided to the respondents. The respondents were not limited to users/ customers, the bank employees were included in the tests as well. The questionnaires included responses on the app use, which covered the application installations on the respective mobile phones, usefulness in terms of functionality it provides. Usage of the application was as well analyzed to determine whether the mobile banking application was an advantage to the traditional banking that is in place.

3.6. Ethical consideration

  1. No bias will be condoned during the analysis and representation of the findings i.e. honesty will be maintained.
  2. Care will be taken during the data collection and high avoidance of careless errors and negligence will be avoided.
  3. Confidentiality will also be maintained on the information provided by any particular customer.

3.7. Conclusion

The research involved the development of a mobile banking application as a proof-of-concept that was reviewed by the selected sample application. Conclusions were made on testing the application and the responses from interviews and questionnaires analyzed. The results of the research are considered an important resource for financial institutions that would like to implement mobile shopping for their outlets.

Chapter 4: System Implementation and Testing

5.1. Introduction

The research conducted was aimed at developing a mobile banking application. This development was based on the factors that were discussed in the literature review. The designs and methodology used in developing and implementing the system are as defined in chapter 4 of this study. The developed system was tested in the Kenyan market with arrangements for testing in Uganda and Tanzania underway. The system was developed with high consideration of the bank employees thus developing a system that was tested and feedback provided by the users.

5.2. System Implementation

The system implemented would include 3 phases as defined in the system design. This emulates the three-tier system architecture. The phases are

  1. M-Commerce Phase
  2. The Link
  3. Mobile Application (resides in Android-phone, Java phone, or blackberry phone among others)

5.2.1 M-Commerce Phase

M-Commerce, according to Abbot (2006), is a business consumer transaction conducted from a mobile device. This works as the doorway to the mobile banking application. It manages all users created and all the necessary transactions that a user can afford within the system. The application uses an electronic device that permits the interaction of information that leads to the transfer of new information. It all starts with the creation of users/ customers who use the system. It is as well-known as a maker checker mechanism, where one user, otherwise known as the administrator, creates a user, and another administrator, who is a secondary admin authorizes the created users/ customer. Once the customer is created he or she can transact in the mobile banking system. With the creation of the new Mobile Banking user, the base number of the account is required. This base number ties the user to the account that he or she holds at the bank site. This is as well done during the process of creating mobile users/customers.

A specific user allows for various transactions on his account, this is done via setting some options as allowed on the M-Commerce. This follows for example that a single user might allow for M-Pesa transactions while another might not allow. These are the kind of specifications that accompany a new user creation on the M-Commerce end.

Figure 5: Maker login to the M-Commerce

Figure 5 shows a screenshot for logging in to the m-commerce phase. This is the first stage to get into m-commerce and carry out the various functions which include creating mobile banking users. The diagram shows the log-in details of a secondary administrator where the initials are entered to access the account. During account creation, the primary administrator sets the secret log-in details of a secondary administrator and provides the username and the password. As such, the account owner can access the banking services through the mobile phone by accessing the account through the mobile phone.


Figure 6: Select the Base account Number

Figure 6 shows a screenshot for base account selection. This selection is done as a means of getting account details for a specific user who is to be created for the mobile banking platform. The base account selection is from the accounts stored at CBS. With the successful selection of an account, the creation continues. The primary administrator in charge of creating the m-commerce user accounts accesses the CBK database and uses the base number to identify specific details of a customer. At this point, the base number provides a platform for selecting the log-in details of the customers using their account numbers.


Figure 7: Continue with new user registration

Figure 7 indicates the additional details got from the selection of the base accounts. These are the total details that are registered in the CBS for the account holder of the selected base number. The details are accessed with the help of a specific base number. In the account, both the primary and the secondary administrators can access the account details. This figure shows a final m-commerce account created. The account provides numerous options for the primary administrator who can then create users of the account. It also provides specific details of a particular client that are necessary for securing m-commerce account identity.


Figure 8: Confirm the user certified options

Figure 8 requires the maker’s approval of the selected details. This is to escalate the process of mobile banking user creation, to the checker level. This authenticates the process and ensures that the account selected for mobile banking is the intended account.


Figure 9: Specify the user option for using credit cards

Figure 9 shows the addition of various functionalities that are supplied for mobile banking. This functionality is the credit card functionality that allows the created user to access his or her details regarding credit cards held for his or her accounts. The administrator screen shows various options that administrators can use to manage the account.


Figure 10: Finalise on the mobile banking user creation

Figure 10 shows the finalization of a mobile banking user account creation. This screen escalates to the checker having to approve the creation of the mobile banking account. Having matched the user account details, this third last step where the system counter checks the account details in the process of creation of user account. This is a primary administrator screen that provides the information to the administrator that the account has been created.


Figure 11:Confirm on created mobile banking user details

Figure 11 is the final mobile banking user creation module screen. It involves the checker finalizing the account creation of the mobile banking account. After this, a created mobile banking user will be able to access the mobile application on their phone and perform various transactions on it. The final account provides various user details and options for accessing various financial services through the account. Once the account is active, the user can now withdraw, deposit, and perform other financial transactions through the mobile phone.


Figure 12:Finalise on user created by the maker, awaiting Checker to log in

Figure 12 is the confirmation screen for the mobile banking account creation that appears after the checker confirms/ approves the account created. The account user is now provided the access to the account through the mobile phone. A menu is created on the mobile phone of the user that provides the option of accessing the account. However, the user will have to enter verification details such as a personal identification number (PIN) to be able to access the account. This procedure is aimed at increasing the security of the account details of the user.

With this confirmation screen, the user is now able to access the functions on the mobile applications. The mobile application phase follows next. The transactions sent from mobile phones go through a link that processes them and gives back feedback to the user. The link is not a physical device and thus acts as a switch and is not visible to the user.

5.2.2 The Link

This section works as a link between the M-Commerce system and the Mobile Application. It supplies all user details to the mobile phone and manages transactions between the two. It has special message formats that allow for a handshake between the two applications, thus simulating the user’s account on the mobile phone. It works as a service only visible to the system that it resides on. This is usually the Windows server 2000 or any higher version that is available for the system use. The link allows the user to view account activities and balances, view recent transactions, and check deposits. The link serves to relay the information in the bank to the mobile phone application of the user. Besides, the user can transfer funds between commerce bank accounts and view print images of paid checks.

For its optimal operation, the Link requires an uptime of twenty-three hours. This is maintained by a team of the support team that checks the hosting location to observe the system usage. The link requires constant management and maintenance to smoothen the services of m-commerce.

5.2.3 The Mobile Application

This is the mobile application that is available to bank customers. It is the presentation face of mobile banking to users. Feedback is demonstrated to the user after the requests are done via the phone application. After the creation of the account and activation of the link, CBA customers, through the mobile banking application can access the CBA banking services that provide the customers with easy access to the account at any time anywhere.

Figure 13: The application Icon

Figure 14:Log in screen

Figure 13 shows a screen with the mobile application icon that users use to access the mobile banking application. When the application is launched it shows a start screen that prompts the user to login into the application (Figure 13). Through the smartphone play store, the customer downloads the application, which then displays on the screen. Figure 14 mobile application icon is shown that when the user clicks on it, it leads to a CBA login prompt. The login prompt leads to figure 14 that provides the user with login fields. These fields are phone numbers and PINs.

Figure 15: Login Credentials input

Figure 16: Menu Screen after successful login

A successful login is demonstrated in figure 15, where the user can access the various functionalities provided by the mobile banking application. The login screen is a security verification that the user enters the login details. The provided username and password correct entry and pressing “done button” would then lead to figure 16 that displays the banking service provided at CBA. The first menu item is Banking Services and it leads to figure 16 which allows the user to select either balance inquiry or mini statement request. Both options lead to screens that supply the user with accounts held at the bank. Users select the account as shown in the list in figure 17. Response from a balance request is viewed in figure 19.

Figure 17: Banking Service Menu Options Figure 18: Check the Balance

The screenshot in figure 17 shows one of the nifty features of the clean simple design of the application. After a successful login, the user can check the balance for CBA banking checking, credit, and savings accounts. Moving the phone icon to the balance inquiry option leads to figure 18 that shows the balance. The mobile banking application sends signals to the m-commerce banking services through the link that allows the user to view account balance and mini statement among other activities.

Figure 19: Awaiting balance response Figure 20: Balance Response

The above figures (19 & 20) show the final steps of the checking account balance by the user. “Please wait” means that the mobile banking application is sending information to the m-commerce account in the CBA accounts. Through the link, the information is relayed and the balance is shown on the screen. Checking account balance any time anywhere is one of the advantages of mobile banking enjoyed by the customers. The customers can easily access their account balances for free and for 24/7.

Figure 21: Funds transfer Menu Options Figure 22: M-Pesa Funds Transfer

Figure 21 above indicates the Funds transfer menu list items. The selection of the M-Pesa menu option leads to figure 21 that allows for user input. Other funds transfer menu items lead to figure 22 for between my CBA accounts option and figure 23 for other CBA accounts transfer.

Figure 23: Between My CBA Accounts Transfer Figure 24: Other CBA Accounts Transfer

Figure 25: Error Message on transfer Figure 26: Customer Service Menu Options

Figure 26 shows the transfer service of mobile banking applications. The user can send money to any account within the commercial banks. The application provides the application to transfer money instantly to another account. The user enters verification details such as account number, amount, debit account, and PIN and then presses the submit button. The message will rely on the mobile phone of the user indicating specific details of the money transfer. The procedure is cheap and efficient as it can be done anywhere and free of charge. Figure 26 describes the customer service menu options of the application. It provides the user with an option of checking statements, PIN requests, and Bankers cheque. Error feedback on the input query is demonstrated in figure 24. Figure 26 is the resultant screen that follows the Airtime Purchase selection option. The Airtime request form for users’ input is demonstrated in figure 27.

Figure 27: Airtime Request Options Figure 28: Airtime Request Form

In figure 27, the user is provided the option of requesting airtime from the bank account. Airtel and Safaricom are network providers. For instance, if the user intends to buy Safaricom airtime, pressing on the Safaricom icon would lead to figure 28. The user then provides details of airtime purchase by choosing the account in which the airtime is to be requested, and provides PIN, and then presses request airtime. The message will then rely on the account user indicating the amount of credit requested and other details.

Figure 29: Unregistered Menu Option Figure 30: My Settings options

Figure 29 shows the unregistered menu options of a user. However, in figure 30, the screenshot provides an option of PIN change for the user. The user can change Pin by requesting the change and the user provides the referred new PIN and it is sent via the link that the administrator allows effecting the PIN change. When a user has not registered for a mobile banking option a feedback message is demonstrated on the mobile device screen as shown in figure 28. Figure 29 demonstrates the mobile application settings that allow for the applications pin change as per your request. Information services are as indicated in figure 30. Figure 31 is the Forex exchange menu with a listing of various foreign exchanges

Figure 31: Information Services option Figure 32: Forex Rates Options

Figure 31 indicates the menu of m-commerce applications on the mobile phone of the user. The menu is under the information tab. The information menu provides various services such as showing the nearest branch locations, Forex Rates, and ATM locations of the subscriber. In figure 32, the screenshot indicates the available currencies for the m-commerce application. Tapping one of the desired tabs would provide information on exchange rates of the particular currency concerning Kenyan currency.


Figure 33: Requesting Forex Rate Figure 34: Forex Rates Result

Figures 33 and 34 show various exchange rates of specific country currency. The exchange rate services enable an instant check of currency rates and fund transfer from one currency to the other depending on the location of the user. Contact numbers are also provided through the application that the user can use to contact the administrator in case of any queries. Mobile banking services provides 24 hours of services a day 7 day a week and is very convenient for the subscribers. The scheme facilitates the convenience of checking exchange rates of various currencies, fund transfer to other banks even during the off working hours. All transactions are followed by instant SMS confirmation that shows the type of services required by the user.

Figure 35: Contact Centre Information

Figure 35 is the final screenshot of this application it indicates the contact information available for use by the users. This function provides for user feedback or user query clarification.

Chapter 5: Findings of the Research

6.1. Application Test Results

After system tests, data was collected on the application’s usability, usefulness, and usage. This data was collected via a questionnaire. The sample questionnaire is in Appendix-ii. The questionnaire provided followed the last section that required the respondents to download an application and carry out tests on it.

6.2. Results from Questionnaire

The following were the results of the questionnaire provided. The analysis and conclusions on the same are found in the preceding chapter.

6.2.1. General Information

Gender Findings

Most respondents were male, though age is a sensitive aspect; males were very willing to take part in the analysis. This can as well be attributed to the account holder’s gender. Given that the questionnaires were handed at the bank when customers were coming in to be served, most of them come in customers were male. The rest neglected to answer. This is as shown in the pie chart below. Essentially, the chart shows that the subjects reached for an interview, 63 % of male and 37 % female respondents completed the questionnaires. Pie-charts are one of the most convenient methods of data presentation as it is easy to develop and interpret.

Age Group

Most respondents were in the age bracket of 25-34. This indicates that the age that is more conversant with this technology falls in this bracket. The 65+-year-olds were very few regarding their use of mobile banking.

Have you used another mobile banking service before?

Most users have had interaction with other mobile banking services. 13% percent of the 57% credit KCB is the mobile banking service that they have interacted with before.

6.2.2. Mobile Phone and Mobile Banking Usage Information

What type of phone do you use?

Most respondents used android phones as their phone type. The following category was on iPhone with java phones following closely and the least users had Blackberry phones.

Internet Connection on mobile phones

All users had an internet connection on their mobile phones. They suggested that the internet was part of their daily routine.

Do you use Mobile money for money transfer?

All users use mobile money transfer services like M-Pesa, zap, yu cash. They suggested that these services complemented other banking transactions, as they were able to send money to other parts of the country with ease.

What would you prefer, a mobile banking phone application or USSD for banking transactions?

The user’s suggestion followed that the use of a mobile application with a reliance on USSD might be advantageous in that mobile application at times fail in delivery due to issues like internet access. These users were 12%. Most users, 72%, suggest that mobile app’s as a banking application offer them full support while 16% rely on USSD as their major mobile banking option.

What issues have you encountered with the use of Mobile Banking?

Most users credit reliability as the number one issue. They suggest that at times they are not sure whether the transaction has gone through and they have to call the bank to confirm. This was confirmed by 40% of the respondents.

6.2.3. Application Installation

It was easy to set up the application for initial use on the phone. This was from the conclusion on the chart below. It was found that 89% of the persons supplied with the link had a somewhat straightforward way of installing the application for first use. The other 11% suggested that the application at times was not supported by the device and that it failed to install. Some even were forced to revert to USSD use as opposed to mobile applications.

6.3. Results from Interviews

From the interview questions asked during the interviews with the bank staff, the following was could be drawn, understand how the uptake of mobile banking strategy is perceived. First, CBA as a bank has a fully dedicated team for the mobile banking project. The team is responsible for the mobile banking strategy and its mission is to make mobile banking a reality, and as stable as possible to satisfy customers and business requirements. It was clear that the bank is re-strategizing and taking up mobile banking as a strategy for their goals. They fully appreciate the need for a mobile banking requirement and that they understand that banking needs are more technological due to the improved and increased mobile telephony in Kenya.

The interview depicts that the respondent views themselves at the forefront of technology and that fully embracing it is the only way. They attribute themselves to the likes of FNB Bank in South Africa and they would intend to have an application that works somewhat the same way. They attribute FNB banks as a game-changer and that their application serves their customers stably. With this in mind, they endeavor to achieve an innovation that will be emulated by the rest of the market.

CBA identified difficulties in this innovation; among the difficulties was a lack of skilled personnel in developing such a solution in the region. They sort out to get a local enterprise that can service the innovation request but many lacked the skill in doing so. Many Requests for Proposal (RFP’s) were called and many applied but most dint fulfills the requests.

A changing Information Technology (IT) stage was as well mentioned as one of the difficulties. The IT field changes were diversely and were yearly. For this, a solution that was above time was to be implemented. This was the message that was got from the CBA staff on the project. The many changes led to new requests sent to the selected IT firm

Another difficulty was the diverse devices out in the market, this were the devices that the population used. The devices were large in number and CBA was quite aware that not all devices could be catered for as the application would not work optimally on some devices. With this CBA is set out to advise the clients on the proper devices to use and that if a device is not in the provided list then the user would have to rely on USSD as the alternative innovation.

Chapter 6: Discussion of Results & Findings


The results from the research suggest that mobile banking has a future at CBA and that the management at CBA has taken steps to ensure that mobile banking uptake by the customers is maximized and that the mobile banking innovation fully addresses the business needs, as well as the customer, needs. From the results, conclusions could be drawn on factors that hinder mobile banking in the bank and the solutions that are expected by the clients. A key finding from the research is that mobile banking is a critical service in the banking sector. Therefore it can be concluded that it is vital for the customers in the banking industry to adopt mobile banking.

The findings as well indicate that mobile banking requires technologically efficient as well as cheap, reliable, and secure technology development. In addition to this customers need to be encouraged to use this innovation. This can be achieved via advertisements in the media, and through customer education at the branch level. From the findings, one can suggest that there is a certain level of expectation from the customers that have to be satisfied.

The study supports the hypothesis that compatibility, ease of use, competence, and relative advantage has a positive effect on mobile banking. This is because they were observed to be the issues surrounding the relationship between customers using mobile banking innovation with innovation. The hypothesis that mobile banking in other financial institutions can be replicated at CBA, is supported as well. CBA uses case studies to identify successful mobile banking innovations. An example of the study is FNB bank whose application is provided at https://play.google.com/store/apps/details?id=za.co.fnb.connect.itt&feature=search_result.This is among the application that CBA emulates in its mobile banking strategy.

M-Pesa is a major player in influencing mobile banking at banks/ financial institutions. CBA notes that the mobile banking strategy cannot work without linkage to M-Pesa from a customer’s account and linkage from M-Pesa to a user’s account. They advise that this is a very important relationship in that it links money transfer to account access. The relationship has an advantage in improving profit at the bank level. One can suggest that it is not possible to fight M-Pesa at the financial institution level but rather embracing it is critical by financial institutions.

M-Pesa has greatly influenced the way banks do their business, as seen in the majority of users who embrace it in their day to day lives. Although it surfaces as a money transfer other users prefer to leave huge amounts of money on M-Pesa than to withdraw it. An example would be a respondent who admitted that M-Pesa has saved him a huge amount of money in a recent event. This event involved car hijackers who forced him to hand him the money he had with him which amounted to around 70,000/= having transferred an amount equivalent to 800,000/= onto M-Pesa. Most respondents were shy to speak about the activities in regards to their storage or transfer of money, this can be attributed to the cultural dynamics of our society but none the less, they admitted that M-Pesa added value in their day to day activities.

M-Pesa use is quite spread in Nairobi but it emanates to money transfer mostly to other areas of the country. This has to lead to developments as such cases were never heard of. One had to travel to the central town to achieve such facilities. Since the population in Kenya has embraced technology, particularly mobile telephony security is not a major concern to the users of the system. They believe in M-Pesa so to speak in that it has been a secure system in transferring their money and in keeping it safe and sound. Given the inception of Mshwari that has contributed greatly to a large growth in M-Pesa trust has grown, this is because this facility has even brought about the loan application and delivery via the phone, it is truly a blessing as was said by Wambui Ndu’ng’u one of the respondents to the questionnaire.

M-Pesa has grown too diverse heights and banks need to devise a better way of working with this technology. CBA in itself has embraced its dream; it wanted to develop a mobile banking solution that serves its market. It has achieved this but through Mshwari it has achieved more. The strategies followed by M-Pesa include mass marketing and this shake the market; top the extent that banks have embraced this example. Although the system at CBA has had glitches here and their improvements are being made day to day to achieve a robust self-sustaining system as was suggested by Arthur Gichuru the project lead of Mobile Banking.

Review of research based on Research objectives

With the objectives stated at the beginning of the study, it is imperative to discuss the research findings with the set objectives in mind. In consideration of the results from data collected from the questionnaires and the interviews, we could infer that the study was able to achieve the set out objectives.

To begin with, banks the world over have come up with innovative ideas for their mobile banking solutions. KCB has had a first in regards to mobile banking. This can be replicated at CBA since it was observed that 100% of the respondents used mobile/ money transfer services. The KCB application greatly relies on the ability to transfer money from one account to M-Pesa (one of the money transfer services) and vice versa. This thus proves that among the Kenyan developments in mobile banking CBA can replicate the developments and use them in its own mobile banking innovation. This will definitely encourage adoption due to the functionality being relevant to the users.

It was noted that different factors affect the adoption of mobile banking and these factors being both dependent and independent on the organization/ financial institution. From the suggested framework of factors affecting adoption, various considerations which include, security, the understanding ability of the application, were put into perspective. These were considered as important in regards to the increasing adoption of a mobile banking application.

Figure 36: Conceptual Framework

From the research findings, 40% disagreed with the premise that the mobile banking application was reliable. 57% strongly agreed the application was reliable while 3% were not sure about the application’s reliability. On the application’s security features, given that the application involved the exchange of sensitive data, 88% considered that the applications were secure, 10 found the application was not that secure. This can be attributed to at times the transactions failing but with response reversion of account transactions within a maximum period of 24 hours. 2% of the respondents were not sure about the security offered by the application.

Accordingly, 95% of the users of the application felt that they fully understood the application and that it was encouraging and beneficial to use. Some respondents suggested that they understood the menus in regards to what they wanted to achieve at the end of the transactions. 4% found the application to be un-understandable. This was in that they found it hard to find some menus that they needed to access. With understanding the ability the users as well responded to the question of whether the application was easy to use. 81% agreed to the application being easy to use in that the menu layout is satisfactory and quick straight forward. 7% were not for the idea, and they suggested that the application was not very easy. 12% were not sure whether the application was easy to use or not. With this is clear to assume that the diffusion theory has a way of affecting the adoption of the mobile application.

These factors are all considered together, and since security and reliability were highly approved in the application it was observed that most respondents used the application for transactions such as funds transfer, and balance inquiry. The application developed was highly appreciated by its users. Since it satisfied the functionality factors and technological factors of the conceptual framework that was mentioned in the literature review. The application was relevant to the study as many users approved that it saved them time and that they dint have to come to the branch to do traditional banking services. The application though needs improvements to put into consideration the customer’s needs.

Chapter 7: Conclusion and Recommendations

8.1. Introduction

The research set out to identify factors of adoption of mobile banking in a banking institution, with a major focus on CBA bank. Primary sources that were used include both questionnaires and interview questions. The interviews were meant to be formal, but at times it was forced to have informal ones as more details on the development and the business were required. The questionnaire distribution was via handouts at the branch level. This proved to be effective as this was the best place to find the customers. Although a few of the customers were unresponsive most were willing to satisfy the queries that were posed in the questionnaires.

8.2. Conclusion

The data analysis on the result of both questionnaires and interview questions demonstrated several findings. Interpretations based on these findings and implications are discussed below. The findings of this study strongly support the appropriateness of using innovation attributes/factors to predict customer attitude toward adopting (or continuing to use) mobile banking. Perceived relative advantage and ease of use, suggested in the diffusion theory, were observed to have significant effects on customer attitude. Customers who have more positive beliefs about the perceived relative advantage of mobile banking formed a more favorable attitude toward adopting (or continuing to use) mobile banking. Moreover, if customers find mobile banking easy to use, they become more willing to use them to conduct banking transactions. Therefore, mobile banking firms should focus on designing both useful and easy-to-use mobile banking.

Findings on the research suggest that customers who enjoy conducting wireless banking transactions may find mobile banking congruent with their lifestyle and preferences. Therefore in a bit to attract and keep the customers, it is imperative for mobile banking firms and their innovations, not to ignore the compatibility of mobile banking and the related services, to individuals’ lifestyles and preferences. This is observed from the data on the user’s perception in regards to usefulness and understanding of the application.

The reliability of the application has a significant effect on the adoption of mobile banking innovation. If customers believe that the transactions requested are effective to supply them with their demands then they will use the application to fulfill their requests. Just as an example when one does an M-Pesa transfer it will reach the intended user, with such notion in mind the customer will keep on relying on the service for a transfer.

Many attributes for adoption are intertwined with the user, in that he must be satisfied with the service for him or her to come back to use it for another service. Technological factors are highly envisaged as a strategic tool in the execution of services, especially offered by banks, thus this sparkles a need to innovate and re-innovate. Mobile banking is highly supported and adapted at the USSD level. At this level, any mobile phone independent of whether it is a smartphone or not can perform the transactions. Although it’s a highly acceptable facility, it is very expensive. This has led to a mobile application developed to suit the needs that are satisfied by USSD. Mobile applications and mobile devices are the new frontiers in technology; banks have thus added this into their execution strategies thus shifting funds to ensure that this need is great if not fully satisfied. With technology, the cheapest ways to satisfy customers are more adoptable by customers as opposed to the expensive ones. Applications are easy to use thus leading to more adoption. Although the study was directed to a mobile application comparison between an application and the USSD was done and the conclusion on this is that with smartphone applications it is easier to have an application as opposed to the less common USSD.

The research has identified factors that have in no doubt been identify as the critical factors that help in the adoption of mobile banking in CBA and Kenya as well. These factors need to be put into consideration for the effective adoption of mobile banking. User satisfaction must be put in the limelight and business needs cannot be ignored for effective adoption. Banks re-strategize to achieve a mobile banking innovation for their customers in a bid to achieve the highest adoption of the applications.

8.3. Recommendation

The research findings have deemed a success in identifying the factors that could affect the adoption of mobile banking at CBA and in financial institutions in Kenya as well. Regarding these findings, recommendations have been proposed as well. Further research areas have been identified as well, to be able to supplement this research.

Based on a recommendation, there urgently need to be easier ways and procedures of availing the application to the users. The current model of provision of the links is quite cumbersome. There is the provision of SMS’s with the download links, for every phone type but this dictates that it was not very useful. The SMS’s sent were for every phone type thus to many SMS’s were sent. For example, an SMS for iPhone, Android, and Blackberry needed to be sent. There needs to be a better way to supply these applications and a recommendation was with the application store, this includes Google Play Store, iTunes store among others.

8.4. Suggestions for Further Research

In carrying out this research some areas were omitted, not due to negligence but rather due to of scope nature of the study. This would greatly help in understanding the subject further. These areas will deepen the research and give conclusions on various user-related issues.

One of the suggestions to this research includes the consideration of customer’s behaviors and attitudes towards using mobile banking innovations. This in addition to the already identified factors can give a further understanding of how different factors affect the adoption of mobile banking. These factors mostly relying on user responsiveness.

Future research efforts on this subject can explore alternate models and theories of innovation diffusion in the interests of understanding additional antecedents and constructs shaping customer satisfaction in regards to using mobile banking. The new areas would be an extension of this research and would enhance an understanding of success determinants for mobile banking.


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APPENDIX I: Mobile Banking Sample Questionnaire

Thank you for taking the time to answer the below questionnaire regarding mobile banking. As CBA endeavors to serve you, it endeavors to reach customer satisfaction in regards to mobile banking. This questionnaire is in a bid to achieve this. The information provided in this questionnaire shall not be shared with any third party or used for any reason other than the intended one. The questionnaire takes an average of 8 minutes to answer

General Information

Please tick appropriately

Gender: Male □ Female □

  1. Please tick you age bracket below

(18-24) □

(25-34) □

(35-44) □

(45-54) □

(55-64) □


  1. Do you use mobile money transfer services like M-Pesa, Zap, Yu Cash?

Yes □ No □

  1. What time of phone do you use?






  1. Which Mobile banking facility do you use (tick as appropriate)

Smart Phone application □ USSD Application □

  1. How did you install the application on your phone (if you have used the smartphone application)

□Over the air

□Bluetooth transfer

□Others ____________________________________

  1. Please rate the reliability of the mobile banking application at your bank.
Reliability of Mobile Banking Very Low Very High
1 2 3 4 5
  1. Please rate the Usability of the mobile banking application at your bank.
Usability of Mobile Banking Very Low Very High
1 2 3 4 5
  1. Please rate the understandability of the mobile banking application at your bank.
Understandability of Mobile Banking Very Low Very High
1 2 3 4 5
  1. Please rate the ease of use of the mobile banking application at your bank.
Ease of Use of Mobile Banking Very Low Very High
1 2 3 4 5
  1. Have you used Agency Banking for your banking transactions?

Yes □ No □

  1. What would you like to see included on the mobile phone application to add value to your transactional and banking needs? (optional)

Thank you very much for your time and answers



Thank you for your willingness to participate in this interactive forum of reviewing the factors that would hinder or encourage you to conduct shopping through the mobile phone. Kindly feel free to skip parts that you feel maybe not be appropriate for you to answer. Remember that your information will be treated as private as possible and will not be shared with any other third party or be used for any other reason except the one mentioned above.

    1. Does your organization have a dedicated mobile banking department?
    2. Have you tried implementing mobile banking before?
    3. How would you rate the organization’s general adoption of mobile technology?
    4. What difficulties have you faced when rolling out mobile banking as a strategic project?
    5. What has been the main issue inhibiting rolling out your mobile strategy if any?
    6. Do you think there is a viable business model around mobile banking at CBA?
    7. Do you think mobile banking will be a major game-changer in your institution?
    8. Do you have an in-house IT development team?
    9. Do you consider outsourcing the mobile banking project a major issue in your organization?
    10. Do you have any comments or anything you would like to add?

Thank you for your time

5/5 - (4 votes)