An Investigation of the Impact of Mobile Money Services on the Profitability of Commercial Banks in Zambia

Abstract

This paper sought to determine the impact of mobile money services on the profitability of commercial banks in Zambia. The study was guided by three objectives; (i) To examine the level of use of mobile money services in Zambia; (ii) to assess the measures of financial performance in the banking industry and (iii) to establish the relationship between the use of mobile money services and financial performance of the banking industry. The study applied both qualitative and quantitative research approaches mainly descriptive correlation design. The target population comprised of workers in all the commercial banks, mobile money operators (MMOs) and regulators and bank experts from Zambia Information and Communications Technology Authority (ZICTA) and Zambia Institute of Bankers (ZIOB) located in Lusaka central business district. A sample of 156 respondents was chosen using purposive sampling techniques to select retail, operations, customer service and finance department employees from banks and MMOs and two experts from ZICTA and ZIOB as key informants. Data were collected using questionnaires administered via Google forms sent to WhatsApp contacts and email addresses of respondents. Data were and analyzed using SPSS statistical packages to generate descriptive statistics (mean and standard deviations) and inferential statistics (regression analysis). The findings of study were presented in form of means, standard deviations, Pearson’s linear correlation coefficient and linear regression analysis. According to the findings of the study, it was indicated that there is generally a high level of use of mobile money services in the banking industry observed from a high level of reliability and accessibility to the services (Means of 3.71 and 4.17 simultaneously). The findings also indicated that there is a high level of financial performance reflected by a high level of profitability (Mean=4.52) in the banking industry, a high level of loan supervision (Mean=3 .85) and relatively high revenue sources (Mean=4. 11) for the banks. It was also indicated that there is an insignificant relationship between mobile money services use and financial performance in terms of profitability of banking industry (Sig. Value=0.2l2). It was also indicated that there is an insignificant relationship between mobile money services use and loan portfolio management of the banking industry (Sig. value=0.605). Finally, it also indicated that there an insignificant relationship between mobile money services use and revenue of banking industry (Sig. Value=0.435). The study thus recommends that commercial banks in Zambia which have not yet collaborated with MMOs should adopt the use of mobile money services on their platforms as it is highly reliable, accessible and reduces congestion in bank premises by customers who come to make transactions. This will help to boost financial performance in the banking industry.