Mobile Banking Usage and Experience in Sri Lanka

The extensive usage of technology such as mobile phones and smartcard readers undoubtedly holds the promise of significantly expanding financial access to many customers who are presently unbanked or under banked by radically lowering transaction costs whilst improving convenience to the customer since it uses existing infrastructure (such as mobile phones and retails stores) and agents networks (Seneviratne, D, 2016).

In common with many other developing countries, Sri Lanka has experienced a phenomenal growth in telecommunication services during the last decade (Colombage, S, 2012). The statistical overview of the telecommunication sector and telephone penetration as at end March 2018 set out in the Figures 1 and 2 aptly illustrate the current penetration.

The number of mobile phone subscribers has increased from 71,029 in 1996 to almost 28.2 million by 2018. This implies that mobile subscription per 100 people as at March 2018 recorded 131.5 thus bearing ample evidence that there is tremendous potential to popularize mobile banking in Sri Lanka.

As a direct consequence of the rapid increase in mobile penetration and the ambitious initiatives undertaken by the financial institutions aptly supported by the regulators the volume and value of mobile banking transactions has witnessed a sharp increase in recent years as highlighted in the table and the chart below (Seneviratne, D, 2016).

The concept of experience in the current study focuses on experience of using a mobile phone, referring to “the degrees to which banks’ consumers have mobile phone usage experience” (Bouwman et al., 2008). Previous studies have proved that experience plays a vital role in the study of m-banking use. For example, prior (positive or negative) experiences of users’ with mobile services would affect their perceptions towards those services in general (Rao et al., 2007; Taylor & Todd, 1995) as well as in m-banking services in particular (Lee, & Eastwood, 2003).

The role of users’ awareness was evidenced in the literature. Awareness factor can be used to understand consumers’ perception about mobile banking (Wadhe & Ghodke, 2013). The researcher further signifies that consumer awareness has significant impact on interest to use in mobile banking and that consumers are interested because they have heard about it from somewhere and think that m-banking will allow them to do banking transactions anytime.

Yesodha, N et al., 2011 conducted a research to identify reasons for preferring mobile banking, awareness of mobile banking services and how frequently it is used by the respondents, the opinion of the respondents regarding the various problems of mobile banking etc. The author suggested that awareness about m-banking has to be provided before or once the technology is launched.

An Indian study conducted by Ahmad, & Gupta, 2015 concludes that the degree of awareness has significant influence on customers’ attitude using m-banking. They further suggested bank managers to make use of such information to develop appropriate strategies to retain the existing customers as well as to attract new customers to use m-banking services by increasing the degree of awareness.

Furthermore, a study done in Tanzania by Abdinoor & Mbamba, 2017 to investigate the factors holding back customers from acceptance of mobile banking found that lack of awareness of what these m-banking services can be used for was a major concern. The study further states that although many are aware of services, they are not viewed as financial tool but as alternative of sending money.

Alkhaldi, A, 2017, a study conducted in Saudi Arabia to determine if and to what extent customers’ mobile phone experience and their awareness of m-banking services influence their intention to use such services, concludes that awareness has direct effect on performance and effort expectancy, but not on perceived risk. However, customer awareness fails to impact the relationships of performance expectancy, effort expectancy, and perceived risk on behavioral intentions to use m-banking.

A study by Al-Somali et al., 2009 stated that user awareness could shape perceptions of ease (or difficulty) of internet banking (not m-banking) use in Saudi Arabia. Mohammadi, 2015 reported that awareness significantly affected Iranian users’ perceptions of the ease and usefulness of m-banking. According to Laforet & Li, 2005 the barriers to mobile banking adoption were lack of awareness and understanding of the benefits provided by mobile banking.