The Ubiquity Of Mobile Phones

Published Date: 02 Nov 2017

1. INTRODUCTION

According to a recent publication by Wireless Intelligence (2012), a wholly owned subsidiary of the GSMA, the African continent is now the world’s fastest growing region in terms of mobile phone connections and represents just over 10% of the global market. The total mobile phone connections in the second quarter of 2012, was estimated to be 700 million across Africa. The same report opined that Nigeria has more than 93 million mobile phone subscribers and this represents 16% of the continent's total mobile subscriptions, thereby making Nigeria the leading country in Africa in terms of mobile phone subscription.

The ubiquity of mobile phones in emerging markets is forging a new enterprise culture. More so, there is a paradigm shift from the brick-and-mortar traditional banking system to a new wave of innovative financial service delivery using the mobile phone – money (mobile money). mMoney offers tremendous opportunities for reaching out to a majority of the poor in emerging markets who were hitherto excluded from the formal financial system.

According to the World Bank, globally, estimates of 2.5 billion people are currently unbanked. 75 percent of the world’s poor do not have any bank account, not just as a consequence of poverty, but in addition due to the cost, travel mileage, and also the documentations involved in opening a bank account. An additional explanation behind low financial inclusion is that banks almost always overlook the "long-tail" clients, who they are unable to serve viably. For banks, the top 20 percent of clients commensurate with 80 percent of their profitability; hence there is little or no economic incentive to banking the unbanked (The Boston Consulting Group, 2011). Those without access to formal banking often have to make use of informal banking channels that are extremely risky.

Nigeria trails South Africa, Botswana and Kenya in terms of the percentage of the population that is financially served, a research report released in 2012 by Enhancing Financial Innovation & Access (EFInA), has said. Figure 1.1 shows the Financial Access - Cross Country Comparisons.

From the report, many Nigerians, for numerous reasons, are unbanked and lack access to formal financial services. The main barriers to having a bank account are irregular income,.

From the report, many Nigerians, for numerous reasons, are unbanked and lack access to formal financial services. The main barriers to having a bank account are irregular income, unemployment, and distance to the bank branch, "bank proximity is of greater concern to the rural population."

mMoney could be perceived as a sustainable, scalable approach to providing secure, convenient and affordable banking services to the hitherto underbanked and unbanked segment of the Nigerian society.

The author of this thesis is not oblivious of the fact that the adoption rate of mMoney in Nigeria is still at a snail’s pace. Some of the critical factors impeding the adoption rate of mMoney would be thoroughly looked at as well as proffering solutions to these challenges.

mMoney is a global phenomenon that is changing the face of financial services most notably in emerging markets such as Kenya, Tanzania, South Africa, Philippines, Pakistan, Paraguay, and Cambodia. In this new wave of innovative banking, Kenya has an estimated 19 million mMoney subscribers with M-PESA alone accounting for 15 million users as of July, 2012.

According to a report by The Economist (2012), a survey of global financial habits by the Gates Foundation, the World Bank and Gallup World Poll found 20 countries in which more than 10% of adults say they used mobile money at some point in 2011. In Kenya, Sudan and Gabon, half or more of adults used mMoney.

Mobile banking is on the edge of transforming from an innovative driven niche service for the banked to a mass-market appeal (Deloitte Consulting LLP, 2010). Mobile banking as a self-service channel involves the use of mobile (cell) phones for payments, deposits, remittances, and account information.

In reality, the use of the mobile phone as a banking channel, has the potential to address two key challenges. Firstly, it presents an opportunity for financial inclusion for the population that is currently underserved by traditional banking services. More so, it opens up possibilities for financial institutions to deliver a plethora of services at low cost to the poor and people living in remote areas (Diniz, et al. 2011).

Branchless banking within the context of this thesis is viewed as an alternative banking channel. For the purpose of this research work, transformational mBanking and mMoney would be used interchangeably. The emphasis of this research work is driving financial inclusion in emerging markets through mMoney with particular reference to Nigeria.

3.1 Mobile and Financial Services Convergence

Globally, there is a paradigm shift from cash to digital money considering the fact that we live in a digitised global community. Mobile financial services delivery is widely perceived to be a disruptive innovation. The ubiquity of mobile phones is seen as a useful tool for bridging the financial gap between the banked and the hitherto underserved banking populace.

In a world where the use of a particular technology can serve in diverse ways, the use of mobile phones has not only fueled the means of communication but also provides access to a growing number of services. One of such services is mobile financial services, which could be seen as the convergence of the previously somewhat disconnected financial and telecoms sectors (Renub Research, 2012).

As posited by Mohapatra (2012), mobile financial services convergence is a technological innovation that is beneficial to all consumers and help them experience the power of instant gratification as well as financial and social inclusion. It aligns the convergence of technology with the financial world. The potential of mBanking has been realized due to drift from the traditional bricks and mortar to electronic channels.

Jack and Suri (2011) noted that as the developed world begins to rebuild the recently collapsed global financial system, the financial architecture in parts of the developing world is being rapidly transformed. Given the affordability of mobile phones and its suitability to be adapted as a channel for financial service delivery channel, banking via the cell phone has begun to spread across and within poor countries. The low-cost of mobile phone, and the widespread unmet demand for financial services, as captured by low rates of bank access, means that mMoney has the potential to reach remote corners of developing countries that were once neglected.

The rapid growth of mobile phone usage and the continuous rise in wireless coverage fuel expectations that access to financial services through mobile phones could transform the way financial services are provided. The emergence of the convergence of mobile phone and financial services, can potentially resolve inefficiencies that explain the large unbanked population( Prior and Santoma, 2010).

As pointed out by The Boston Consulting Group (2011), in the developing world, there are at least 2.5 billion adults who do not have access to financial services while about the same number of adults have mobile phones. This means that there could be up to 2 billion mobile phone users who could be reached through mobile financial services (MFS).

As posited by Asongu (2012), the high growth and penetration rates of mobile telephony that is transforming cell phones into pocket-banks in Africa is providing opportunities for countries on the continent to increase affordable and cost-effective means of bringing on board a large chunk of the population that hitherto has been excluded from formal financial services for decades. Such a transformation is of interest not only to banks and Micro Financial Institutions (MFIs) but also to governments, financial regulators as well as development partners who are providing support to improve the livelihoods of Africans through poverty reduction and sustained economic growth.

3.2 mBanking Branchless Approaches

As postulated by Payne and Kumar (2010), mBanking, is one of several approaches to "branchless banking," which include other tools such as ATMs, POS (point of sale) terminals, and electronic bank cards. Mobile banking (mBanking) is a subset of eBanking which in turn is a subset of electronic commerce. This could be expressed as "eCommerce >> eBanking >> mBanking >> mPayments" (Negash, et al. 2011).

Mitha (2011) posited that mBanking is actually branchless banking with a mobile phone as the underlying technology. It is used in its broad meaning to include alternative approaches allowing customers to get access to a variety of financial services from their mobile phones. In that respect, mBanking complements other channels and is comparable to online banking but with less sophisticated services.

mBanking facilitates banking convenience and perhaps make banking services cheaper for those who already have financial services (additive approach). More so, it holds out the prospect of increasing access to appropriate formal financial services by those who presently lack it (transformational approach). These two mBanking branchless approaches are not necessarily exclusive but neither are they necessarily linked (Porteous, 2006).

3.2.1 Additive mBanking Branchless Approach

The primary focus of this approach is existing bank customers. In their works (Porteous 2006; Juniper Research 2012), additive approach is associated with banks using the mobile device as an extra channel to communicate with their customers and provide services over and above existing channels that include the bank branch, call centre, ATM (Automated Teller Machine), and online banking as the fifth channel. In practical terms, this means enabling customers to manage their accounts via information and alerts, and to conduct account transactions from their mobile devices. This approach hinges on a bank-focused model tailored to meet the needs of existing and prospective banks’ customers.

3.2.2 Transformational mBanking Branchless Approach (Mobile Money)

This is the extension of financial services to those at the Base of the Pyramid (BoP) that lack access to the traditional bricks-and-mortal bank branches. Juniper Research (2012), this approach exploits the ubiquity of the mobile phone and are often led by MNOs (Mobile Network Operators) with banks or an independent organization as the case may be in Nigeria so as to integrate both the underbanked and unbanked population into the formal financial sector.

Transformational mBbanking is a form of branchless banking that disrupts existing models. It involves new technologies and new partnership models, organized in a way that each player in the value chain has an incentive to support the service at minimal cost, in order to cater to previously unbanked customers in a commercially viable and sustainable way. Branchless mBanking can be transformational if it radically impacts the output of the resulting financial system in terms of financial inclusion (Mitha, 2012).

3.3 mMoney Business Models

CGAP (2012) noted that a business model typology helps the private sector to identify and evaluate new business opportunities in their markets and helps to decide what the "play" is that makes the most sense for them. While for the regulators and policy makers, it helps them to understand the market forces that may be shaping their agenda and to understand what drives the actors in their markets and what issues need to be addressed to protect the public interest.

From recent studies of literatures on mBanking, mMoney business models can be grouped into four models - Bank-led Model, Telco-Centric Model, Neutral/Agnostic Model, and Hybrid Model.

3.3.1 Bank-led Model

In this model, the bank is the lead initiator. The bank delivers financial services through a retail agent, however using the technology for the delivery of mMoney transactions through agents who handle all customer interactions. The bank manages all third-party relationships and integrates the participating Mobile Network Operators (MNOs) in the market (Rani 2010; Okoegwale 2012). Examples of banks approved by CBN for bank-led model in Nigeria include UBA, GTBank, Ecobank, First Bank, Zenith Bank, and Stanbic IBTC.

3.3.2 Telco-Centric Model

Under this model, the MNO is the lead initiator and performs almost all the roles of a financial services provider. The bank’s role is limited to safe keeping of surplus funds. The MNO delivers financial services leveraging on its existing network infrastructure and recruited agent networks. Examples include M-PESA (Kenya), GCASH (Philippines), M-Paisa (Afghanistan), etc.

3.3.3 Neutral/Agnostic Model

In this model, an independent organization that is neither a Deposit Money Bank (DMB) nor MNO acts as the lead initiator. It provides and manages the service infrastructure needed to deliver mobile financial services to customers. Such an organization includes but not limited to switching companies and payment system service providers. The MNO provides the telecommunication network infrastructure for use by the scheme operator while the bank acts as a safe keeper of surplus funds. Examples in Nigeria include Pagatech, Monetise, eTranzact, PayCom, Parkway Project, etc.

3.3.4 Hybrid Model

This model has evolved as a result of the strategic alliance involving a bank, MNO, and an independent entity. As posited by Ketley (2010), it involves creating a shared economic interest in a distinct entity normally involving profits and losses shared according to shareholding. Examples include South Africa MTN Mobile Money (MTN and Standard Bank), Telenor and Tameer Bank (EASY-PAISA, Pakistan), and Orange and BNP Paribas (Côte d'Ivoire).

3.4 Mobile Financial Transactions Access Channels

The access channel choices deployed by a service provider play a critical role in successful acceptance and adoption of mobile commerce, mobile payment, and mobile banking solutions. The technology of the mobile devices, user’s knowledge of the mobile technology, user’s familiarity, and comfort with access channels, will impact the levels of adoption of mobile business models Goudar (2012). Some of the benchmark mobile financial transactions access channels as well as their suitability and limitations are as shown in table 3.4.

Aside Short Message Service (SMS), Near Field Communication (NFC), Wireless Application Protocol (WAP), and Unstructured Supplementary Service Data (USSD); others are SIM Toolkit (STK), Interactive Voice Response (IVR) and Mobile/Java App.

STK-based applications need the active support of the mobile operator, to install the menu (client program) and enable the encryption keys in the operator-controlled SIM card. The mobile operator needs to give access to the memory on the SIM card, which it controls, and needs to use its over- the- air (OTA) platform to provision the application onto customers’ SIM cards. The underlying bearer can be either SMS or USSD; because the interaction is through a client menu, the customer is not aware of which bearer is actually used ( Mas and Kumar, 2008).

In telephony, interactive voice response (IVR) is a phone technology that allows a person, select options from a voice menu and interact with the phone system. A pre-recorded voice prompt is played and the caller presses a number on a telephone keypad to select an option (Krugal, 2007).

Mobile/Java App offers the friendliest user interface due to its full graphics support. This requires initial download and installation of software application on a mobile device. Once installed on the phone, the application would use GPRS, USSD or SMS to carry the consumer data or instruction from the device to the service provider (Ibid).

3.5 mMoney Adoption Factors: Consumers’ Perspectives

The majority of the factors influencing the adoption of money was adapted from the theoretical frameworks of well documented and researched models such as Technology Acceptance Model (TAM) by Davis, 1989; Diffusion of Innovation (DOI) by Rogers, 1995; and Unified Theory of Acceptance and Use of Technology (UTAUT) by Venkatesh et al., 2003.

As posited by Aliyu et al. (2012), the relevant factors that determined the adoption of eBanking in Nigeria are awareness, ease of use, security, cost, reluctance to change and accessibility. Likewise, Adesina and Ayo (2010) found out that users of eBanking system use it because it is convenient, easy to use, time-saving and right for their transaction needs. Privacy concerns most notably the security of the network and the system were equally of major concerns to intending users.

Dass and Pal (2011), in their findings based on existing literature on mobile financial services highlighted thirty-four adoption factors. Based on the literature, perceived ease of use/complexity was found to be the most highlighted factor followed by perceived usefulness. An overview of the stated factors influencing mBanking adoption rate is as shown in Appendix B.

3.6 mMoney in Nigeria: The Need for Financial Inclusion

As posited by CBN (2012), financial inclusion is achieved when adults have unfettered access to a wide range of financial products designed to meet their needs and at an affordable pricing. mMoney could be seen as one of the most viable channels to serve those at the BoP. As of December 2010, Nigeria had a combined total of 5,797 bank branches, 9,958 ATMs and 11,223 POS terminals.

The author is not oblivious of the fact that the first mBanking platform in Nigeria, FlashMeCash, was initiated by the defunct First Atlantic Bank in 2003. Though this product now exists under the aegis of First City Monument Bank (FCMB). Arguably, FlashMeCash is more of an additive mBanking product since it lacks visibility (absence of transaction agents outside the bank branches for "cash-in and cash-out") just like most other mBanking service offerings of other commercial banks in Nigeria.

mMoney has different value propositions in different countries. In some countries, such as Kenya and Nigeria, the value proposition for mMoney was as an alternative for payments and transfers because the existing financial infrastructure had such poor penetration (IFC, 2011a).

With over 90 million active mobile subscribers, the mobile phone has become a veritable tool in providing financial inclusion to the unbanked population in Nigeria. This is not far-fetched because while the banks have only managed to attract 25.4 million account holders in several decades, the telecoms companies have built over 90 million active mobile phone subscribers just within a decade (Oketola, 2012a).

Nigeria offers a robust terrain for mMoney growth. The fact that there is a little over 22 million bank accounts in a country of over 160 million people with the larger percentage of the population lacking access to formal financial transactions, transformational mBanking has been relatively slow to take off. In August, 2011, the Central Bank of Nigeria, in line with its cashless scheme, licensed 14 MMOs to provide financial services to the critical mass of the Nigerian populace who have been until now excluded from the traditional bricks-and-mortal banking (Maritz, 2012 and Ejaife, 2012).

The CBN licensed MMOs as of March 2013, has increased to 18. Seven of the operators are bank-led and these include GTBank, Stanbic IBTC Bank, First Bank of Nigeria, Ecobank Nigeria, and Fortis MFB, UBA/Afripay and Zenith Bank /eaZymoney. The other 11 operators operate under the aegis of an agnostic model. These include Pagatech, eTranzact, Monitise, Eartholeum, Parkway, FET Paycom, M-Kudi, Chams, Corporeti, and Teasy Mobile Money.

The CBN has deliberately steered away from a model that has an MNO as the lead initiator. This stems from concerns about potential regulatory gaps, since the MNOs are regulated by the Nigerian Communication Commission (NCC). It also reflects the CBN’s desire to ensure openness and interoperability, which may not be possible under such a model. Irrespective of the model used, the MNOs are key partners because they provide the infrastructure needed to facilitate financial transactions (KPMG, 2012).

At present, Nigeria’s economy is largely cash-based while banking penetration is low. Income levels are also low and infrastructure is a major constraint. Consequently, the bricks and mortar bank branch is not economically viable outside the major cities. The mobile phones offer an attractive alternative with over 90 million mobile subscribers dwarfing the number of bank account holders (Ibid). As revealed by Oketola (2012b), mMoney pioneers in the country have had to face teething problems exemplified by lack of agent network, technology hiccups and take-off capital, amongst others.

3.7 Transformational mBanking in Emerging Markets: Country Case Studies

3.7.1 Kenya (M-PESA)

M‐PESA is the brainchild of Vodafone and was launched in March 2007 by its Kenyan affiliate-Safaricom. M‐PESA ("M" for mobile and "PESA" for money in Swahili). MPESA is said to process more volumes of transactions within Kenya than what Western Union does globally. M-PESA’s function as a retail payment platform enables it to reach a large number of people compared with other financial services outlets in Kenya (Mas and Radcliffe, 2010).

M-PESA makes use of retail stores as cash‐in/cash‐out outlets thereby reducing deployment costs and which ultimately offers greater convenience to users in terms of accessibility of agent networks. M‐PESA’s core service offering remains largely P2P payment, this opened up a market for transactions which previously were handled largely informally – through personal trips, friends, and public transport networks. Over time, Safaricom has equally integrated institutional payments into M-PESA platform, thus, enabling salary disbursements, bill payments, and in-store purchases (Ibid).

The iconic mMoney platform, M-PESA, brings the clearest indication yet that very poor and unbanked people are adopting branchless banking services. New evidence reveals that among the Kenyan population outside Nairobi, the share of people with very low incomes (below $1.25 a day) using M-PESA has increased from fewer than 20 percent in 2008 to 72 percent by 2011. Similarly, the share of non-Nairobi unbanked people who used M-PESA rose from about 21 percent in 2008 to 75 percent in 2011. In terms of remittances, M-PESA controls 93.6 percent of the domestic remittance market with 305.7 million transactions with a total worth of 8.66 billion USD ( McKay, 2012; Berthaud (2012) ).

As of August, 2012, they were over 15 million registered M-PESA users in Kenya. M-PESA agents has equally risen from 355 in 2008 to close to 40,000 agent networks. M-PESA growth has been quite phenomenal considering that about 65 percent of the adult population in Kenya makes use of this mMoney platform. Figure 3.7.1 shows the workflow of M-PESA P2P transaction in an agent network.

In a publication by IMF (2012), the widespread use of M-PESA has helped reduce transaction costs, and facilitated personal transactions. It has also contributed to an increase in the use of services of financial intermediaries, as the demand for banking services by the low-income segment of the population expanded. The same publication by IMF highlighted four key factors explaining M-PESA’s success story-the dramatic expansion in the use of mobile phones, the inexpensive and flexible use of technology, favourable conditions for banks’ penetration of new markets, and government policies.

M-PESA is a successful value proposition that has created an alternative payment network in Kenya, making it, in terms of sheer usage, one of the most advanced markets in the world. Kenya has the world's highest rate of P2P payments familiarity at 89 percent and a reported usage level of 70 percent (MasterCard, 2012).

3.7.2 Cambodia (WING)

In January 2009, Australia and New Zealand Banking Group Limited (ANZ)-one of the largest banks in the Asia-Pacific region launched WING, a mMoney service in Cambodia. ANZ launched WING for middle and low-income customers, the most of whom were previously unbanked. Only 5 percent of households in Cambodia had an account with a financial institution (Ghuliani, 2010).

In Cambodia, as in most emerging markets, it is not cost-effective to place bank branches or ATMs in rural areas, and it is impractical for people to travel to major cities such as Phnom Penh or Siem Reap to conduct financial transactions. Cambodia is largely a cash economy with about 500,000 of Cambodia’s 14 million population having a bank account. However, an estimated three million Cambodians own mobile phone. Increasing migration from rural areas to the capital Phnom Penh, and many workers in the city regularly send money home to support family in rural areas (ANZ, 2010; Ghuliani, 2010).

As of July 2010, WING had more than 150,000 registered customers in Cambodia. The social impact of WING has been impressive. About two-thirds of previously unbanked customers were women. Research suggests that women tend to reinvest 90 percent of their savings in the health and education needs of their families, creating a virtuous cycle that leads to long-term prosperity. Generally, customers reported using 20 percent fewer informal financial services and 60 percent of WING’s customers earn less than US$3 per day, while 30 percent earn less than US$1.50 per day-indicating that WING is meeting the needs of middle- to low-income people, its target customer base (Ghuliani, 2010).

WING was mooted to fill the large gap in formal banking services available in Cambodia. It was also meant to offer a cheaper, safer mechanism for movement of funds. However, the country also presented barriers to developing a mobile banking system. One of these was the low (though growing) level of cell phone usage. At the time WING was launched, only about 20 percent of Cambodia‘s population owned a cell phone (IFC, 2011b).

Three key features of WING provided easier access to the product: the operator-agnostic design, availability to non-customers, and low-cost transaction alternative. While WING offers a lower price than other money transfer practices in Cambodia, it still has difficulty in getting people to change their old habits (Ibid).

In November, 2011, WING was officially bought over from ANZ by a UK-based mobile communications outfit-Refresh Mobile. The brand name ‘WING’ according to Refresh Mobile would continually be used considering the impact WING has had on the hitherto unbanked Cambodian populace. WING remains one of the largest financial services provider and the foremost mMoney platform provider in Cambodia with an estimated customer-base of 350,000 users as at the end of 2011.

WING is delivering on its community goals with greater than 50 percent of customers unbanked while 48 percent are from outside Phnom Penh. WING has made significant changes to Cambodian rural dwellers small business activities, local cultural norms, social well-being, and financial management habits. The study identified the societal impacts of WING as a banking platform used to improve the livelihoods of the previously unbanked who were usually the poor in the Cambodian society (Watson, 2012; Fang, 2012).

Studies indicate that WING has the highest financial distribution footprint in Cambodia. It reported an average of 5 million transactions per month in 2011, rural dwellers accounted for 60 per cent of WING customers. WING is connected with all active MNOs in Cambodia and has 100 percent geographical coverage (ATN, 2012; Watson, 2012). Figure 3.7.2 shows the WCX network in the Kingdom of Cambodia.

Ten per cent of WING’s 400,000 customers would be classified as affluent or middle-class and some even kept a couple of thousand dollars on their WING account. Near-field communications (NFC) technology will be the next addition to WING’s mobile platform for initiating smaller payments (Pellechi, 2012).

3.7.3 Pakistan (EASYPAISA)

Pakistan with a population estimate of 180 million people has only 12,700 bank branches with 16 million bank accounts. It is widely believed that 88 percent of the Pakistan population does not have access to formal financial services. This is particularly worrisome in rural areas, with only 2,500 banking branches servicing 105 million people. That is, an average of 42,000 Pakistanis per branch (Fundamo, 2012).

In 2009, Telenor Pakistan, one of Pakistan’s largest mobile operators, partnered with Tameer Bank to launch EASYPAISA, the largest mMoney initiative in the country. EASYPAISA began offering customers the option to utilize well priced, secure, and efficient financial services at the corner store without the need to open a bank account. Customers of EASYPAISA can easily access services from their mobile phone account. EASYPAISA has grown from 2,500 to 16,000 agents throughout Pakistan. It has more access points than the entire banking sector combined (Kalsoom, 2012; Business recorder, 2012).

While EASYPAISA was uniquely designed to provide the poor access to finance, early adopters of branchless banking seem to be a mix of different income classes, since those customers usually understand the value of and use of mMoney, often resorting to it for convenience purposes. However, this does not mean that the intended low-income customers are not serviced (Kalsoom, 2011).

Pakistan was hit by devastating floods in July 2010. Using EASYPAISA made it possible for donations to be made to relief organizations. EAISYPAISA account holders made donations directly from their mobile wallets and anyone could walk into one of the agents to make donations. In March 2011, 1.3 million customers processed 1.9 million EASYPAISA transactions and $39.2 million in transaction flows. So far, 39 million transactions have been carried out through EASYPAISA, moving 805.5 million USD through the system since the service was launched in 2009. In a short time, EASYPAISA has become a household name and is making it possible for millions of people to use mobile financial services (Kendall, 2011a; Business Recorder, 2012; Fundamo, 2012).

Assuming EASYPAISA follows a similar trajectory, we could anticipate that it will continually widen access to financial services for the unbanked population. This offers promising evidence that EasyPaisa could be an effective vehicle for increasing financial inclusion among Pakistan's poor and unbanked populations. The inclusion of the previously unbanked population in the conventional financial system is creating ample opportunities for people to not only save for investment or tough times but also an efficient payment system devoid of productivity loss (Kendall, 2011a; Business Recorder, 2012). 

EASYPAISA and Pakistan-based Adamjee Life Insurance Company Limited, have partnered to launch a free life insurance coverage for EASYPAISA clients. The insurance product will help meet EASYPAISA’s vision of financial inclusion for all. Also, EASYPAISA is in partnership with Employees Old-Aged Benefits (EOBI) to offer money transfer services to thousands of pensioners across Pakistan. This represents the first ever Government-to-Persons (G2P) payment system through branchless banking. The project will enable 300,000 pensioners to collect their pensions from easily accessible EASYPAISA outlets (Yasir, 2011; Newmann, 2012).

In a CGAP survey covering 327 EASYPAISA customers at 10 locations spread across both rural/semi-urban and urban population, about 41 percent live on less than $2.50 per day, while 69 percent live on less than $3.75 a day. Of the users surveyed, over 90 percent rated EASYPAISA as highly effective. Around 88 percent found the service easy to use; two-thirds of the respondents are repeat users; 65 percent use the service to send money home at least once a month. It also revealed that 45 percent of EASYPAISA users lack access to bank accounts, suggesting that EASYPAISA has already achieved relatively strong penetration amongst the poor and unbanked population (Kalsoom, 2011; Kendal, 2011a; Business Recorder, 2012). The income profile of the survey data is as shown in figure 3.7.3.

The critical success factors of EASYPAISA include a market with a highly mobile penetration but yearning for financial inclusion, a proactive mobile operator, and an operator with a banking licence (Fundamo, 2012).

A BCG study reviewed by Business Recorder (2012) and Hussain (2012), pointed out that 35 percent of the Pakistani adult population could be mobile financial services users by 2020, reducing the number of unbanked 20 percent by 2020 and increasing financial inclusion to 41 percent. This could ultimately fuel business activity which in turn could create additional one million jobs and a rise in GDP by 3 percent.

3.7.4 Philippines (SMART Money)

The emergence of the Philippines as an early pioneer in mobile financial remittances reflected the needs of overseas Filipino workers (OFWs) to send remittances home. OFWs sent home approximately US$18 billion in remittances in 2008 (approximately 11 percent of GDP). Many OFWs also came from provinces where formal financial infrastructure was limited and payments have been often cash based. The high SMS literacy rate of the Filipino mobile users (75 percent of the population are mobile phone subscribers and send a billion text messages daily) would make it a natural candidate for implementing mMoney.

mMoney was also seen as a means of reaching deeper into rural areas without costly investments in infrastructure, while reducing the cost of payment services. Out of 1,635 municipalities in the country, only 610 have banks and only 27 percent of Filipinos has access to formal financial channels (The Philippine Star, 2011; IMF, 2012).

In 2001, SMART Communications partnered with Banco de Oroa, a Filipino commercial bank, to launch "SMART Money". SMART Money remains the archetype mMoney service in the world. The service, which uses SIM Tool-Kit, enables customers to buy airtime, send and receive money domestically and internationally via mobile, and pay for goods using a prepaid card which is tied to a 16-digit mobile phone account. The cash can be withdrawn from the phone account at either an ATM or one of the many SMART encashment centres. (GSMA, 2009; Kim, 2011).

The spread of SMART Money’s ‘money-in, money-out’ (MIMO) network played a key role in the adoption of the service. SMART Money has partnerships with the Philippines’ top banks and ATM consortia, collaboration with local and international remittance companies and access to millions of MasterCard establishments. The transaction volume processed in 2009 amounted to 2 billion USD (CGAP, 2010; The Manila Times, 2012).

SMART Money has on avearge 79 percent more active, previously unbanked clients than the largest MFI in the same country has among its microcredit clients. In the Philippines, one in ten unbanked mMoney clients has already stored an average of US$31 in his or her mobile wallet. Clients report that this amounts to one-quarter of their household savings ( Pickens, 2009).

In 2010, SMART Money was introduced to 48 island communities, mostly in the Visayas and Mindanao. These communities with a population of close to two million inhabitants, have limited or no access to banking services. Working with local MFIs, SMART Money made it possible for residents of these communities to send and receive funds through "money-in-money-out" (MIMO) encashment centres (Reyes, 2010).

There are over 8.5 million Filipinos using Smart Money. In 2010, SMART Money facilitated PHP 13.5 billion (USD 320 million) worth of transactions within remote communities that used to have limited or no access to financial services. SMART Money provides Filipinos anywhere in the archipelago with simple, secure, affordable and convenient means to send and receive cash, even without the availability of banks and ATMs in their communities. In 2011, SMART Money- the country’s first and largest electronic wallet service posted a 133% surge in online transactions. The surge in online purchases indicates that SMART Money users see it as a convenient and safe online payment tool (The Philippian Star, 2011; Smart, 2012).

The experience of the Philippines has shown that the central bank can effectively support innovations in mobile technology to increase financial inclusion by working with MNOs, while developing prudential regulations. It shows that a good mix of market-led initiative and also an enabling regulatory framework could be an effective means of increasing access to financial services. The further expansion of mobile financial services has the potential to cut high costs of financial service delivery in areas of low population density with limited transport infrastructure (IMF, 2012). Figure 3.7.4 shows the usage of mMoney services by the unbanked in the Philippines.

4. Political Factors influencing mMoney

The Nigerian political landscape has been relatively stable since 1999 nevertheless government policies and economic reforms to creating an enabling business environment have made little progress due largely in part to policy inconsistencies, corruption, and bureaucratic bottlenecks.

Religious intolerance most notably the infamous Moslem sect-Boko Haram in Northern Nigeria as well as the kidnapping menace in the South-East and South-South geopolitical zones of Nigeria have had a negative toll on the political landscape.

It suffices to state that the menaces so far have not only led to colossal loss of lives and wanton destruction of properties worth millions of US dollars but also taking a toll on investment climate in the affected regions. Of course, the Nigerian government is making concrete efforts in contending with these menaces by way of stakeholders’ engagements to finding a lasting solution to these security threats but so far little has been achieved.

In the World Bank’s Doing Business Report of 183 economies, Nigeria’s overall ranking was up from the 137 in 2011 to 133 in 2012. Nonetheless, Nigeria fared better when compared to the average ranking of 137 for sub-Saharan African countries (AfDB, et al. 2012).

There have been ongoing economic reforms in the country most especially as it applies to both the telecoms and financial sectors of the Nigerian economy. In 2009, the Central Bank of Nigeria (CBN) came up with a mobile payment framework, which is aimed at transiting the the largely cash-based economy to an electronic-driven cashless economy.

More so, the National Financial Inclusion Strategy as part of Nigeria Vision 2020 is solely aimed at making Nigeria one of the largest economies in 2020 by increasing access to finance to the BoP.

Unfortunately, it is rather worrisome that the country is yet to have any legislation bordering on electronic payments or cyber crimes. Sources indicate that the National Assembly is making frantic efforts in trying to harmonize all the bills on electronic transactions so as to come up with a robust legislation and in tandem address all grey areas associated with the conduct of electronic-based transactions as well as cyber crimes.

In March 2011, the Nigerian Communications Commission (NCC), commenced SIM card registration, which was aimed at having a national database of all SIM card users in the country. NCC has equally secured the approval and gazetting of the Quality of Service (QoS) Regulations of the Federal Ministry of Justice, which empowers the NCC to take some severe measures when MNOs are found wanting most especially in of quality of service (Okeke, 2012).

The move by the NCC to protect the rights of GSM subscribers by way of reimbursements enforced on defaulting operators in addition to the planned suit by some subscribers would go a long way in boosting the trend of consumerism in Nigeria (Halliru, 2012).

Despite the fact, that the Federal Government of Nigeria is constantly making efforts to creating an enabling business environment for both local and foreign investors, corruption and lack of accountability amongst public office holders both past and present remain the biggest bane of economic development. In a recent publication on corruption perceptions index by Transparency International, Nigeria ranked 143 out of 183 countries.

The Jonathan Goodluck-led administration as part of his ‘transformative’ agenda has promised to fight corruption and equally lead by an example as well as mobilize resources for the Nigerian anti-graft agencies - ICPC and EFCC. The government is equally promising to remove unnecessary tax burdens on newly startup companies, incentivise the ailing manufacturing industry, and boost agricultural production through subsidization of agricultural inputs.

Economic Factors influencing mMoney

Based on a 2011 estimate, the Nigeria’s GDP was estimated at 273.042 billion US dollars. A publication by the National Bureau of Statistics (NBS), shows that the GDP growth rate accelerated from 6.17 percent in the first quarter of 2012 to 6.48 percent in the third quarter of 2012. The Nigerian economy is largely crude oil based, hence, international shocks on oil market prices have an adverse effect on the nation’s foreign exchange earnings, albeit, the nation’s budget is heavily financed by petrodollars.

The Nigerian economy is riddled with systemic inefficiencies and lacks transparency coupled with a harsh entrepreneurial environment. Over the past three years, Nigeria’s economic freedom score has witnessed a steady fall from 56.8 in the 2010 index to 55.1 in the 2013 index, the Nigerian economy is assumed to be the 120th freest in the world.

The unemployment rate in Nigeria has been on the upswing. It rose from 5.3 percent in 2006 which incidentally was the all-time low since the history of Nigeria to 23.9 percent in 2011. The inflation rate in Nigeria was estimated at 11.70 percent in October of 2012 . Based on a 2011 estimate, the Naira exchanged for 153.9 to 1 USD. The commercial bank prime lending rate as of December, 2011 was 16.02 percent (CIA, 2012; The Heritage Foundation, 2012; Trading Economics, 2012). The Nigerian economy is expected to grow in real terms by at least 7 percent between 2013 and 2015 ( see table 4.1.2).

In a similar trend, analysis of contributions to GDP in the first half of 2012 indicated that there were declines in the contribution of the agricultural sector by 0.79 percentage points year on year, as well as declines in the crude petroleum and natural gas sector by 1.17 percentage points. Some sectors which recorded positive increases of their share to GDP include telecommunication and post (1.39 percentage points), wholesale and retail (0.42 percentage points), building and construction (0.15 percentage points) (NBS, 2012).

Nigeria indeed is a paradox of a wealthy nation with pauperized citizenry. In spite of the economic growth rate, about 68 percent of the Nigerian population lives below the poverty line of less than 1.25 US dollar per day (Purchasing Power Parity). Agriculture remains the largest contributor to the nation’s GDP as well as the largest employer of labour given that a majority of Nigerians lives in both rural and semi-urban areas.

Rising inflation and unemployment rates have not helped matters in Nigeria. The majority of those who are unemployed are between the ages of 17- 44. A mass army of employable youths continually roams the roads and streets of the urban centres without jobs and this in a way has fuelled crime wave in urban centres as well as a high dependency ratio within the country.

So far, current government policies for curbing the high unemployment rate have recorded little or no success in terms of employment generation. In a similar fashion, the cost of doing business in Nigeria remains high due to inadequate with dilapidated infrastructure as well as endemic corruption and bribery most notably amongst serving public office holders.

More so, rising interest rate and instability in the exchange rate have had its negative impact on the private sector. Given the peculiarity of the Nigerian economy as highly import dependent, albeit as a nation, her chief export remains crude oil. The unpredictability in the exchange rate has not only led to imported inflation in the country but also capacity under-utilization since most companies can no longer produce at optimum capacity due to rising input prices.

Access to funding remains low due to high prime lending rate by commercial banks which stood on the average of 22 percent as of December, 2012. More so, loan requirements of financial organisations are quite bureaucratic and unrealistic to meet up by SMEs and other micro-enterprises and which in tandem stifles private sector growth.

The Nigerian population is estimated at 170 million (as of July, 2012) with an active population of 97 million people, presents a huge marketing opportunity for private enterprises to tap into as long as the government is able to create an enabling environment for private enterprises to thrive as well as attract the inflow of FDIs. Higher and sustainable GDP growth rates as well as robust economic policy instruments to combat the two-digit inflation and unemployment rates could lead to increased private consumption and ultimately bring the much-needed real economic growth impact on the average Nigerian.

The service sector has been a major contributor of the country’s economic growth, and most subsectors under this group posted a double-digit growth in 2011. In particular, the telecommunication sector recorded some 30% growth. This sector, together with the banking sector, has created a considerable amount of high-paying job positions, fuelling the expansion of the middle-income population in recent years (HKTD, 2012).

The government’s priority seems to be shifting towards boosting the nation’s Human Development Index (HDI) which is currently put at 0.459 by encouraging public-private partnership investments as well as donor agencies in these critical areas- health, education, employment generation, and provision of social infrastructure. Over time, the share of spending in these critical areas in the federal budget has been on the rise. The government is poised at pursuing a growth inclusive economic model which would bring succour to majority of Nigerians especially the BoP.

The present government has equally made giant strides in the provision of power supply and has unbundled the Power Holding Company of Nigeria (PHCN) to about 18 successor companies which are all privately managed. The rationale behind this is to ensure the nation enjoys relatively stable power supply as well as ‘light-up’ rural areas which were previously without electricity.

Social (Sociocultural) Factors influencing mMoney

Nigeria with a surface area of 924,000 square kilometres is the most populous country in sub-Saharan Africa with an estimated population of 170,123,740 million (CIA World Factbook , 2012). It is a country of diverse sociocultural settings and it is made up of more than 250 ethnic groups spread across 36 states and the Federal Capital Territory, Abuja. There are three core ethnic groups in Nigeria - Hausa, I(g)bo, and Yoruba. Aside the fact that English Language is the official language; Hausa, I(g)bo, Yoruba and Pidgin English are widely spoken across the length and breadth of Nigeria.

Age structure for 2012 indicates that 43.9 percent of the population is in the 0–14 age group, 53.1 percent of the population are 15-64, and 3 percent constitutes those aged 65 years and above. The demographic trend reflects not only a young population but also an active Nigerian population. The population growth in 2012 was estimated at 2.55 percent. The sex ratio at birth was 1.06 males per female in 2012. Moreover, of the total population, males make up 51 percent and females, 49 percent. The annual urbanization rate is put at 3.5 percent which is expected to stay at this level till 2015 (CIA World Factbook, 2012).

Nigerians are deeply religious minded as well as superstitious in their belief systems. In Nigeria, 50 percent of the population is Muslim, Christians constitute about 40 percent, and indigenous belief is 10 percent. Nigeria by the constitution is a secular state and guarantees freedom of worship for her citizenry.

As stated on UBEC website, "the Universal Basic Education (UBE) Programme was introduced in 1999 by the Federal Government of Nigeria as a reform programme aimed at providing greater access to, and ensuring quality of basic education throughout Nigeria" (UBEC, 2012). The UBE Programme core objective is to provide free education for both primary and junior secondary school levels. The Nigerian education system is formally divided into three levels - primary, secondary, and tertiary levels.

In Nigeria, there is huge variation in adult literacy rates amongst the federating states - Lagos 80.5 percent (literacy in English) 87.7 percent (literacy in any language) and Yobe 24.2 (literacy in English) and 48.9 (literacy in any Language). Other states where literacy rates are very low, particularly in English include: Jigawa 26.1 percent, Kano 27.8 percent, Katsina 27.5 percent, and Zamfara 26.2 percent (Daily Trust, 2012). 57.9 percent of the adult Nigerian population is able to write and speak in English Language.

The Nigerian minimum wage is roughly about 120 USD monthly but this is not applicable to the private sector. Although, both consumer expenditure and annual disposable income rose from 147,043.2 million USD and 140,316.9 million USD respectively in 2011 to 148,276.6 million USD and 142,074.8 million USD respectively in 2012, the share of the poorest quintile in national income or consumption represents 4.4 percent between 2000 to 2011 ( Euromonitor, 2012).

According to NBS (2012b), "the North-West and North-East geopolitical zones recorded the highest poverty rates in the country with 77.7% and 76.3% respectively in a 2010 harmonised Nigerian living standard survey". Incidence of poverty by Nigerian geopolitical zones using different poverty measures in percentage is as shown in Appendix D.

The Nigerian society is a male chauvinistic society. The male sex wields a lot of power both in the public domain and at home. As traditions and customs demand, power and responsibility tend to be clearly differentiated along generational lines. Given the fact that Nigeria is more of a collective society than individualistic, Nigerians are quite attached to their extended families, age groups and their local communities.

Nigerians have more explicit confidence in family institutions compared to formal and organized institutions. Nigerians are strongly influenced by family and friends as well as religious, community, and opinion leaders. The Nigerian local media as well as western media perhaps due to globalization have equally played key roles in influencing the mindset of millions of Nigerians.

The emergence of social networking platforms such as Facebook, Twitter, Flickr, Linkedln, Nanaija, Nairaland, and LAGbook have all had tremendous impacts within the Nigerian community by strengthening family ties and relationships as well as building new ones. A majority of the Nigerian youths has become addicted to these social media sites because they see it as a platform for socializing and making new friends both at home and abroad.

There is an upward trend in mobility as well as Internet usage in Nigeria. An average working class citizen in Nigeria has at least two mobile phones which could either be attributed to poor network coverage or perhaps a means to show off. That Nigeria is quite a materialistic society is an understatement! A typical Nigerian youth is ‘BlackBerry phone crazy’. Recent statistics indicate that the BlackBerry phone is the most used and popular Smartphone in Nigeria.

The buzzword in mobile communication amongst Nigerian youths appears to be ‘PING’- a means through which a BlackBerry phone user communicates with another BlackBerry phone user via BlackBerry instant messaging service (BBMS), which is usually a free service as long as there is availability of Internet service. More so, it appears that in Nigeria, a chunk of the population who surf the Internet on a regular basis do so using the mobile phone. It is equally a common trend in Nigeria to send airtime - recharge cards (mobile vouchers) as gift items to loved ones and associates via SMS. The recharge cards are usually converted into discounted cash equivalents.

Nigerians habitually enjoy doing business transactions in cash and would easily prefer to be paid in cash no matter the volume of transaction rather than in cheque or electronic means, this could be largely attributed to trust deficit amongst other institutional factors. An average Nigerian perhaps due to his (her) impatience (‘sharp-sharp’) nature, hardly trusts anyone not even the financial institutions when it comes to financial dealings.

By and large, Nigerians are brand conscious consumers even though they are quite sensitive about pricing. Once, Nigerians are able to identify with a good brand, they ultimately build loyalty along that brand name and would go the extra mile of coaxing their loved ones and others to use the same brand name .

When there is consistent service failures on the part of a service provider, no matter the degree of loyalty it has built amongst Nigerian customers, the same customers would purposefully bad-mouth the service provider by going the extra mile of dissuading others from using the same service provider. This shows that Nigerians are not only brand-sensitive but also expect service providers to be much more proactive and customer-centric.

Technological Factors influencing mMoney

August, 2001 marked a watershed in the socioeconomic landscape of Nigeria. This marked the beginning of the GSM revolution in Nigeria. Prior to this period, the telephone was seen as the exclusive preserve of the rich in the Nigerian society. The Nigerian telecoms sector has witnessed tremendous growth over time. The number of active subscriber base rose from 400,0000 in 2001 to over 100 million in 2012. The compound annual growth rate (CAGR) between 2005 and 2011 stood at 38.6 percent.

Going by the current trends in the Nigerian telecoms market within the past one decade, the country is arguably one of the fastest growing telecoms markets in the globe and this is a reflection of the huge opportunities available in the Nigerian economy considering the network effects of mobile communications..

In a research by InMobi (2012), Nigeria, like many other emerging markets, remains highly mobile centric. The research revealed that for many consumers, mobile devices are the vastly preferred channel for the purposes of communication, entertainment, obtaining information and, even, online shopping. Consumer behaviour via mobile services has evolved to include buying digital and physical goods, and paying for services. Some 87 percent of consumers surveyed said that they expected to spend money on a mobile activity or purchase of some sort within the next 12 months. 63 percent of those surveyed also pointed to mobile technology as being the main influencing force behind their purchasing behaviour (Ibid).

In a similar trend, the apex regulatory body in the Nigerian telecoms sector-NCC would commence Mobile Number Portability (MNP) in the first quarter of 2013. The MNP is the process that enables mobile telephone users to retain their mobile telephone numbers when changing from one mobile network operator to another. MNP equally provides an effective means of checking anti-competitive behaviour of some mobile operators as addressing the poor quality of service (The Guardian Nigeria, 2012).

Specifically, the Nigerian telecoms sector seems to be gaining traction on a monthly basis. The Nigerian teledensity was 78.82 percent in November 2012, up from 68.68 percent in January, 2012. Private investments in the telecoms sector between 2006 and 2010 are estimated at 14,384.1 million USD.

While mobile technology has witnessed exponential growth in terms of usage in Nigeria, the same cannot be truly said of Internet and PC penetrations in Nigeria. Though the number of Internet users in Nigeria rose from 23.98 million in 2008 to 51.62 million in 2012 (Euromonitor, 2012), the broadband speed is still relatively slow when compared to other countries in the world.

Nigeria was ranked at the 112th position with a scorecard of 3.2 out of the 7-point maximum scale in the global Networked Readiness Index (NRI). The index provides a veritable tool for assessing technology competitiveness based on ubiquity, usability, affordability, reliability, speed, and skill amongst other factors.

In the 2012 survey conducted by EFInA on access to financial services in Nigeria, 93.7 percent of adults who have a bank product conduct their transactions in a bank branch while transactions through ATM, mobile phone, Internet, and POS were 60.2 percent, 2.4 percent, 0.9 percent, and 0.8 percent respectively.

In a bid to leverage the usage of electronic channels for financial transactions, the nation’s apex bank-CBN has made plans to increase ATM and POS terminal penetration from its current state of 11.8 units per 100,000 adults and 13.3 terminals per 100,000 adults respectively to 88.5 ATMs per 100,000 adults and 442.6 POS terminals per 100,000 adults in 2015.

Moreover, in a survey conducted by NBS in 2011 amongst Nigerian household on total access to ICT by device in Nigeria. The result shows that the most widely used devices are radios and mobile phones. The distribution of ownership of various ICTs shows that more than a third own radio, while about a quarter own TVs, as well as PCs and internet access devices. The distribution of ownership and access to ICT is as shown in Appendix E.

What is even much more worrisome from the survey report is the sharp digital divide between rural residents and urban residents. The rural dwellers had 58.5 percent access to mobile phone compared to their compatriots in the urban areas with 84 percent access. For PC access, the urban population had 12.6 percent while it was 2.4 percent in rural areas. Similarly, access to Internet services was 11.6 percent in urban areas while it was 1.6 percent in rural areas.

The survey report (p. 18) went further to state that "ICTs are continuously evolving and, in many cases, a single device (mobile phone) could perform the function of all others, obviating the need to own multiple devices. This fact may be responsible for the high percentage of mobile phone access, even though a higher percentage of the population have access to the radio. Furthermore, considering the poor electricity supply situation in the country coupled with national poverty levels, PC and internet access are still relatively expensive in most parts of the country, hence the low levels of access and ownership."

In Nigeria, R&D is abysmally low and given the import-dependent nature of the Nigerian economy, the Nigerian public and private sectors rely heavily on foreign technologies for survival. Although, the Nigerian government has been consistently harping on local content as a way of encouraging innovation amongst indigenous industries, yet government’s spending on R&D remains low. The expenditure on R&D as a percentage of the Nigerian GDP was estimated to be 0.22 percent in 2007.

Overall, mobile communication is gaining increasing usage in Nigeria. This presents prospects for growth in the area of mobile commerce and the Nigerian economy as a whole. However, there is a great need for firms and other business stakeholders to look more inwardly critically on value creation most especially as it applies to using mobile phones to serving the Nigerian critical mass.

4.2 mMoney Adoption Barriers, Challenges and Consumer Behaviour in the Nigerian Society

The analysis of this section is based on stakeholders’ perspectives bearing in mind that adoption barriers, challenges and consumer behaviour provide the yardstick to assess the progress, anticipated impacts, and sustainability of mMoney in Nigeria. The author of this thesis is not oblivious of the fact that due to the Nigerian macroeconomic environment dynamics, the facts herein stated on the research work is not an exclusive list but for the purpose of academic work, some of the major factors would be highlighted and briefly discussed.

4.2.1 Trust

According to Tobin (n.d.), "trust is defined as a measure of the consumer’s level of assurance that the service will be provided with minimum possible hindrance." Perceived trust is widely believed to have influence on consumers' behavioural intentions. Trust in this research work does not only involve assurance of the system but also the measures that have been put in place to combat fraud and theft incidences considering the Nigerian context. The Nigerian business environment suffers from trust deficit and this has rubbed off negatively on the financial sector as well as the MNOs.

Nigerian banks in recent years have suffered from near collapse that it took the intervention of CBN to inject public funds into some of the ailing banks and about three of the banks were nationalized in the process not forgetting the fact that more than 30 percent of the Nigerian Microfinance Banks (MFBs) folded up in 2010. All these events have dampened customers’ confidence in the financial sector. The MNOs suffer a similar fate due to service delivery hiatus; pockets of thousands of mobile subscribers have at least two active lines due to mistrust of MNOs services and this is largely attributed to poor QoS. It does not portend well for the high uptake of mMoney amongst the unbanked since the core of any financial service delivery is built on customers’ trust.

The Nigerian financial system has a well documented history of how players in the financial sector have not only engaged in unethical practices but also misappropriated depositors’ funds.

Depositors have suffered untold hardships resulting from their loss of money. There is no gainsaying the fact that this has lowered depositors’ confidence in the Nigerian financial institutions even though the Nigerian financial system is beginning to show signs of good corporate governance. It is rather obvious that both the financial sector and MNOs suffer reputational crises and as such many people who have heard about mMoney are still hesitant about using this innovative banking service. A few views on trust as expressed by respondents based on the author’s survey are itemized below:

4.2.2 Perceived Risk (Security Concern)

Situating perceived risk with mMoney transactions, perceived risk may be defined as consumers' belief that using mMoney would most likely expose them to certain dangers which might have an adverse effect on their finances and privacy.

Consumers' desire to minimize risk supersedes their willingness to maximize utility and thus their subjective risk perception strongly determines their behaviour. This is especially true for the adoption of innovations, as consumers lack experience with the new product and find themselves in a situation of high risk (Bauer et al, 2005; Tobbin, n.d.).

Risks within the context of this research include operational risks (some agents might run away with depositors’ funds, liquidity crisis, transactional errors), and consumer privacy (data security). The regulatory body is equally worried about proactive measures to put in place to check money laundering and terrorism financing by using tiered KYC. Some of the deep concerns expressed by respondents from the author’s survey are as follows:

4.2.3 Awareness, Affordability, and Acce