Mobile Banking Technology in Ethiopia:

Adoption and implication for Financial Service Inclusion.

Abstract

The purpose of this study is to investigate the perceived factors that hinder mobile banking adoption by using a survey data and forecast its adoption rate using a secondary data from the National Bank of Ethiopia. The survey data was collected randomly from 100 respondents who have bank account and visits the bank in March 2018 and the secondary data time span was from 2010 to 2018. To realize the objective, the study adopts innovation diffusion theory and structural equation modelling for adoption. The study result reveals that, the perceived relative advantage of mobile banking, the perceived complexity of mobile banking usage, observability, trialability, perceived analog complement and trust on provider of mobile banking services, are found to be significant in influencing the decision to adopt mobile banking technology in Ethiopia. In addition, the forecasted cumulative mobile banking users for the coming seven years i.e. by 2025 will be 2.3 million users with 1.27% penetration rate. Some of the policy implications are that; banks (both public plus private) has to promote and create awareness via explaining relative advantage of mobile banking adoption compared to other banking channels, create trust building campaign on mobile banking providers, improves analog complement such as mobile phone service language, and other regulations. Lastly, the concerned body such as banking industry shall provide some incentive which favor mobile banking adoption, at least up to some minimum threshold level, which can sustain adoption rate and increase banking service inclusion for those who are traditionally banked and unbanked.