College of Economic Management Sciences Department of Finance, Risk Management and Banking
A comparative analysis of the usage of mobile banking and alternative finance in South Africa
BY
KHULILE PRECIOUS ZUMA
Submission in fulfilment of the requirements for the degree of
MASTER OF COMMERCE
in the subject
BUSINESS MANAGEMENT
SUPERVISOR: Professor Daniel Makina
02 October 2023
ii DECLARATION
I, hereby, affirm that “A comparative analysis of the usage of mobile banking and alternative finance in South Africa” is my hard work. All the sources used have been presented and recognized with a complete list of references.
_______________________
Khulile Precious Zuma Student No: 33370648 Date:
iii ACKNOWLEDGEMENTS
Words cannot express my gratitude to a lot of people who were part of my journey. It is indeed a very emotional moment as I look back to check how far I have come. Firstly, I am grateful to God Almighty my creator, for giving me strength during challenging times of my health as I never gave up on this journey. I would like to appreciate Professor Daniel Makina for guiding me and his patience as he showed me how to travel in this journey of Masters’ research. When Covid-19 pandemic almost disrupted all that was planned regarding the methodology for this study. He advised on alternatives that I can consider to reach my destination. It was indeed not an easy journey but was worth it. I am also grateful to all the business organisations and individuals who gave me the chance to survey and interview them. Without your input I would not have been able to conduct the study.
Furthermore, I would like to thank my daughter Nonhlakanipho Motha who always encouraged me to reach for the stars and Patricia (Bongi) Nthini (a friend indeed), thank you for being my anchor and believing in me. I am also grateful to my family for all the support and understanding throughout my studying. My mother Nomusa Zuma, my sisters Zanele Zuma and Hlengiwe Zuma; my brother Khulani Zuma. They always know how much education means to me, their support is highly treasured. I would also like to appreciate my high school (FN) family for encouraging me and bringing humor in this journey.
iv DEDICATION
This dissertation is dedicated to my family.
v ABSTRACT
Transformation through technology is taking place daily in the banking arena where the consumer and the service provider have to come together. Thus the study investigated the usage of mobile banking and alternative finance in South Africa. Until recently, limited research has been done that incorporates both mobile banking and alternative finance. Thus, the study investigated, explored and compared factors influencing the use of mobile banking and alternative finance in South Africa among residents of Randburg in Johannesburg, and the surrounding areas. It explored variables that influence customers and businesses to adopt mobile finance and alternative finance. Several people and small medium-enterprises are not familiar with how alternative finance works. In South Africa they only target tenders without considering other alternative finance forms available for them to access. The study population covered 500 people, who were surveyed through a questionnaire. Participants in management and non-management from different organizations were also interviewed to get their views on the use of mobile banking and alternative finance in South Africa.
As the aim of the study was to compare the usage of mobile banking and alternative finance, and the findings showed that demographic characteristics and customer background as key in understanding users. Furthermore, gender, age, educational level and income have an impact on users making a decision to use mobile banking and alternative finance. Moreover device compatibility and access to internet were noted to be important for users to be utilizing online services of mobile banking and alternative finance. Safe and user-friendly technology increased trust for participants to learn more about how to use mobile banking and alternative finance services. Social networks played a critical role in raising awareness about alternative finance whereas banks were able to market mobile banking as institutions. Covid-19 impact was also noted to be a key contributor in increased usage of mobile banking while alternative finance use declined as small businesses closed down as most of their services lost customers. Finally, mobile banking was found to be superior when compared to alternative finance as users were noted to have clear understanding of how to use its technology. While alternative finance still need to be properly marketed and simplified to attract users. This study was noted to give useful insight to service providers where they can gauge themselves and see where improvements could be done.
Keywords: Mobile banking, alternative finance, financial technology, usage, comparative analysis, compatibility, management, non- management, unbanked, user-friendly, service providers, demographic characteristics.
vi OPSOMMING
Transformasie deur tegnologie vind daagliks in die bankwese-arena plaas, waar die verbruiker en die diensverskaffer byeen moet kom. Hierdie studie het dus die gebruik van mobiele bankdienste en alternatiewe finansiering in Suid-Afrika ondersoek. Tot onlangs is slegs beperkte navorsing met betrekking tot mobiele bankdienste en alternatiewe finansiering in Suid-Afrika gedoen. Hierdie studie het dus faktore wat die gebruik van mobiele bankdienste en alternatiewe finansiering beïnvloed ondersoek, verken en vergelyk onder inwoners van Randburg in Johannesburg en omliggende gebiede. Dit het die veranderlikes verken wat klante en ondernemings beïnvloed om mobiele bankdienste en alternatiewe finansiering te aanvaar.
Verskeie mense en klein/medium ondernemings is nie vertroud met hoe alternatiewe finansiering werk nie. In Suid-Afrika spits hulle hul eerder op tenders toe, sonder om ander alternatiewe finansiering wat tot hul beskikking is te oorweeg. Die studiepopulasie het uit 500 mense bestaan, wat vraelyste voltooi het. Onderhoude is ook gevoer met deelnemers op bestuur- en niebestuursvlakke in verskillende organisasies om hul sienings oor die gebruik van mobiele bankdienste en alternatiewe finansiering in Suid-Afrika te verkry.
Die bevindings het getoon dat demografiese kenmerke en klante se agtergrond deurslaggewend is om gebruikers te verstaan. Geslag, ouderdom, opvoedingsvlak en inkomste het ’n invloed op gebruikers se besluite om mobiele bankdienste en alternatiewe finansiering te gebruik. Verder is toestelversoenbaarheid en internettoegang ook geïdentifiseer as belangrike faktore vir gebruikers se benutting van die aanlyn dienste van mobiele bankdienste en alternatiewe finansiering. Veilige en gebruikersvriendelike tegnologie het deelnemers se vertroue verhoog om meer te leer oor hoe om om mobiele bankdienste en alternatiewe finansieringsdienste te gebruik.
Sosiale netwerke het ’n sleutelrol gespeel om bewustheid van alternatiewe finansiering te verhoog, terwyl banke mobiele bankdienste as instellings kon bemark. Daar is ook bevind dat die uitwerking van Covid-19 aanmerklik bygedra het tot ’n toename in die gebruik van mobiele bankdienste, terwyl die gebruik van alternatiewe finansiering afgeneem het omdat klein sakeondernemings gedurende die tydperk gesluit het. Laastens is daar bevind dat mobiele bankdienste alternatiewe finansiering oortref het, omdat gebruikers duidelik verstaan hoe om die gepaardgaande tegnologie te gebruik, terwyl dit steeds nodig is om alternatiewe finansiering behoorlik te bemark en te vereenvoudig ten einde gebruikers te lok. Hierdie studie het nuttige insig gebied vir diensverskaffers, en hulle in staat gestel om hulself te evalueer en te sien waar verbeterings aangebring kan word.
vii
Sleutelwoorde: mobiele bankdienste, alternatiewe finansiering, finansiële tegnologie, gebruik, vergelykende ontleding, versoenbaarheid, bestuur, nie-bestuur, ongebank,
gebruikersvriendelik, diensverskaffers, demografiese kenmerke.
viii ISIFINQO
Uguquko ngobuchwepheshe lwenzeka nsuku zonke emabhange lapho umthengi kanye nomhlinzeki wesevisi kufanele bahlangane. Ngakho-ke ucwaningo luphenye ukusetshenziswa kwebhange elingumakhalekhukhwini kanye nezinye izimali eNingizimu Afrika. Kuze kube manje, kwenziwe ucwaningo olulinganiselwe oluhlanganisa kokubili ukubhanga ngomakhalekhukhwini kanye nezinye izimali. Ngakho-ke, ucwaningo lwaphenya, lwahlola futhi lwaqhathanisa izici ezinomthelela ekusetshenzisweni kwamabhange aphathwayo kanye nezinye izimali eNingizimu Afrika phakathi kwezakhamuzi zase-Randburg eGoli, kanye nezindawo ezizungezile. Ihlole izinto eziguquguqukayo ezithonya amakhasimende namabhizinisi ukuthi asebenzise ezezimali zamaselula nezinye izindlela zezimali. Abantu abambalwa namabhizinisi amancane/amaphakathi abajwayelene nendlela enye imali esebenza ngayo. ENingizimu Afrika bagijimisa kuphela amathenda, ngaphandle kokucabangela amanye amafomu ezezimali atholakalayo kubo. Isibalo socwaningo sihlanganise abantu abangama-500, abahlolwa ngohlu lwemibuzo. Ababambe iqhaza kubaphathi nabangebona abaphathi abavela ezinhlanganweni ezehlukene kuxoxiswane nabo ukuze bathole imibono yabo mayelana nokusetshenziswa kwamabhange omakhalekhukhwini kanye nezinye izimali eNingizimu Afrika.
Okutholakele kubonise ukuthi izici zezibalo nesizinda samakhasimende bekubalulekile ekuqondeni abasebenzisi. Ubulili, ubudala, izinga lemfundo nemali engenayo kunomthelela kubasebenzisi abenza isinqumo sokusebenzisa omakhalakhukhwini uma bebhanga kanye nenye indlela yemali. Ngaphezu kwalokho, ukusebenzisana kwedivayisi kanye nokufinyelela ku- inthanethi kwaphawulwa njengokubalulekile kubasebenzisi ukuthi basebenzise izinsiza ze- inthanethi zokubhanga ngomakhalokhukhwini kanye nezinye izindlela zezimali. Ubuchwepheshe obuphephile nobusebenziseka kalula bukhulise ukwethenjwa kwabahlanganyeli ukuze bafunde kabanzi mayelana nendlela yokusebenzisa ibhange lomakhalekhukhwini nezinye izinsiza zezimali. Ubuchwepheshe obuphephile nobusebenziseka kalula bukhulise ukwethenjwa kwabahlanganyeli ukuze bafunde kabanzi mayelana nendlela yokusebenzisa ibhange lomakhalekhukhwini nezinye izinsiza zezimali. Izinkundla zokuxhumana zibambe iqhaza elibalulekile ekuqwashiseni ngezimali ezihlukile, kanti amabhange akwazile ukuthengisa amabhange ngomakhalekhukhwini njengezikhungo. Umthelela woKhuvethe uphinde watholakala ukuthi unomthelela omkhulu ekwandeni kokusetshenziswa kwamabhange omakhalekhukhwini, kuyilapho ukusetshenziswa kwezimali okunye kwehlile njengoba amabhizinisi amancane avalwa ngalesi sikhathi. Ekugcineni, ukubhanga ngomakhalekhukhwini kwatholakala ukuthi kuphezulu uma kuqhathaniswa nenye imali, njengoba abasebenzisi babenokuqonda okucacile kokuthi bangasebenzisa kanjani ubuchwepheshe bayo, kuyilapho
ix
enye imali bekusadingeka imakethwe ngendlela efanele futhi yenziwe lula ukuze ihehe abasebenzisi. Lolu cwaningo lunikeze ukuqonda okuwusizo kubahlinzeki bezinsizakalo, okubavumela ukuthi bazihlole futhi babone lapho ukuthuthukiswa kungenziwa khona.
Amagama abalulekile: ibhange elingomahamba nendlwana, enye indelka yezimali,
ubuchwepheshe bezezimali, ukusetshenziswa, ukuhlaziya okuqhathanisayo, ukuhambisana, ukuphatha, ukungaphathi, okungafakwanga ebhange, kulula ukuyisebenzisa, abahlinzeki besevisi, izici zezibalo zabantu.
x TABLE OF CONTENTS
DECLARATION ... ii
ACKNOWLEDGEMENTS ... iii
DEDICATION ... iv
ABSTRACT ... v
LIST OF TABLES ... xiv
LIST OF FIGURES ... xviii
LIST OF APPENDICES ... xx
ABBREVIATIONS ... xxi
CHAPTER ONE ... 1
INTRODUCTION ... 1
1.1 Introduction ... 1
1.2 Background to the study ... 2
1.3 Overview of the South African banking system in brief ... 7
1.4 Problem statement ... 8
1.5 Research objectives ... 9
1.5.1 Primary research objective ... 9
1.5.2 Secondary research objectives ... 9
1.5.3 Hypotheses ... 10
1.6 Significance of the study ... 11
1.7 Limitations of the study ... 12
1.8 Chapter outline ... 12
CHAPTER TWO ... 14
LITERATURE REVIEW ... 14
2.1 Introduction ... 14
2.2 Theories ... 14
2.2.1 Innovation Diffusion Theory (IDT) ... 15
2.2.2 Technology Acceptance Model (TAM) ... 15
2.2.3 Unified Theory of Acceptance and Use of Technology (UTAUT) ... 16
2.2.4 Theory of Perceived Risk (TPR) ... 17
2.2.5 Theory of Planned Behaviour (TPB) ... 17
2.3 Models on mobile banking ... 18
2.3.1 Service stages ... 19
2.3.2 Drivers of device usage ... 19
2.4 Factors influencing use of mobile banking ... 20
2.4.1 Trust ... 20
2.4.2 Attitude ... 21
2.4.3 Device compatibility ... 21
xi
2.4.4 Internet network infrastructure availability ... 21
2.4.5 Gender ... 21
2.4.6 Education level and language ... 22
2.4.7 Employment and level of income... 22
2.5 Previous studies on mobile banking ... 22
2.6 Benefits of mobile banking ... 23
2.7 Challenges of mobile banking services ... 24
2.8 The landscape of mobile banking in Kenya and Tanzania ... 25
2.9 Other African countries and mobile banking ... 28
2.10 Mobile banking around the world... 30
2.11 Alternative finance ... 30
2.12 Capital structure and theories... 31
2.13 Project bonds ... 33
2.13.1 Project bonds in Europe ... 34
2.13.2 Project bonds in Kenya and Nigeria ... 34
2.13.3 Property crowdfunding ... 34
2.14 Alternative finance taxonomy ... 36
2.15 Financial technology ... 37
2.16 Alternative finance statistics ... 38
2.17 The East African region landscape on alternative finance market ... 39
2.18 Gender and alternative finance ... 41
2.19 Small Medium Enterprises and alternative finance... 42
2.20 Benefits of alternative finance ... 44
2.21 Challenges of alternative finance ... 45
2.22 Summary ... 45
CHAPTER THREE... 47
RESEARCH DESIGN AND METHODOLOGY ... 47
3.1 Introduction ... 47
3.2 Research design ... 47
3.2.1 Mixed methods research ... 47
3.3 Research methodology ... 49
3.4 Population ... 49
3.5 Sampling technique ... 50
3.6 Data collection ... 51
3.6.1 Primary data collection ... 52
3.6.2 Secondary data collection ... 52
xii
3.7 The role of the researcher ... 53
3.8 Questionnaire ... 53
3.8.1 Questionnaire design ... 55
3.8.2 Questionnaire pretesting ... 55
3.8.3 Access to the community ... 55
3.9 Ethical considerations ... 56
3.10 Data analysis ... 57
3.11 Reliability and validity ... 58
3.12 Limitations of the study ... 58
3.13 Conclusion ... 58
CHAPTER FOUR ... 59
RESEARCH FINDINGS AND DISCUSSION ... 59
4.1 Introduction ... 59
4.1.1 Part 1: Quantitative data analysis ... 59
4.1.2 Response rate ... 59
4.2 Descriptive statistics analysis of findings ... 59
4.2.1 Demographic characteristics ... 59
4.2.2 Background information ... 68
4.2.3 Views on mobile banking ... 76
4.2.4 Views on alternative finance ... 90
4.3 Central tendency ... 113
4.3.1 Mobile banking usability measurement tool ... 114
4.3.2 Alternative finance usability measurement tool ... 117
4.4 Group differences ... 121
4.4.1 T-tests ... 121
4.4.2 ANOVA ... 121
4.5 Hypothesis testing ... 121
4.5.1 User related hypothesis testing ... 121
4.4.2 Service provider related testing ... 121
4.4.3 Relationship between mobile banking and alternative finance ... 121
CHAPTER FIVE ... 170
QUALITATIVE DATA ANALYSIS ... 170
5.1 Introduction ... 170
5.2 Demographic profile of the participants ... 170
5.3 Process of data analysis ... 171
xiii
5.3.1 Cleaning and coding process of the data ... 172
5.3.2 Trustworthiness of the data ... 173
5.4 Main themes ... 174
5.4.1 Perceptions on mobile banking and alternative finance ... 175
5.4.2 Factors of mobile banking and alternative finance ... 184
5.5 User experience ... 196
5.5.1 Hacking ... 197
5.5.2 Connectivity issues ... 197
5.6 Future projections ... 198
5.6.1 Durability ... 199
5.6.2 Improved financial systems ... 199
5.6.3 Decrease in the usage of bank cards ... 199
5.6.4 Improved cyber security ... 200
5.6.5 Tech-savvy consumers ... 200
5.6.6 No physical presence ... 201
5.7 Summary ... 201
CHAPTER SIX ... 204
CONCLUSIONS AND RECOMMENDATIONS ... 204
6.1 Introduction ... 204
6.2 Summary and overview of the study ... 204
6.3 Summary of the findings ... 205
6.3.1 Common factors between mobile banking and alternative finance ... 206
6.3.2 Understanding how service providers react to customer needs, especially for alternative finance ... 207
6.4 Theories guiding the study ... 210
6.5 Recommendations ... 212
6.6 Delimitations and areas of future research ... 213
References ... 215
xiv LIST OF TABLES
Table 3.1 Qualitative research interview questions ... 54
Table 4.1 Table Demographic characteristics summary ... 60
Table 4.2: Comparison of where participants heard about MB and AF ... 92
Table 4.3: Gender and age participation on MB usability ... 114
Table 4.4: Mobile banking usability measurement tool overall outcomes ... 115
Table 4.5: Gender and age participation on alternative finance usability ... 118
Table 4.6: Alternative finance usability measurement tool overall outcomes ... 118
Table 4.7: Group statistics between gender and mobile banking ... 122
Table 4.8: Independent samples tests between gender and mobile banking... 123
Table 4.9: Group statistics between gender and alternative finance ... 123
Table 4.10: Independent samples test between gender and alternative finance ... 124
Table 4.11: Descriptive Statistics between age and mobile banking ... 1364
Table 4.12: Homogeneity of variances test between age and mobile banking ... 1365
Table 4.13: ANOVA between age and mobile banking ... 137
Table 4.14: Robust tests of equality of means between age and mobile banking ... 137
Table 4.15: Multiple comparisons relationship between age and mobile banking ... 138
Table 4.16: Descriptive statistics between age and alternative finance ... 1387
Table 4.17: Homogeneity of variances test between age and alternative finance ... 139
Table 4.18: ANOVA between age and and alternative finance ... 139
Table 4.19: Multiple comparisons tests between age and alternative finance ... 149
Table 4.20: Descriptive Statistics between race and mobile banking ... 1499
Table 4.21: Homogeneity of variances test between race and mobile banking ... 15030
Table 4.22: ANOVA relationship between race and mobile banking ... 15030
Table 4.23: Robust tests of equality of means between race and mobile banking ... 130
Table 4.24: Multiple comparisons relationship between race and mobile banking ... 131
Table 4.25: Descriptive statistics between race and alternative finance ... 131
Table 4.26: Homogeneity of variances test between race and alternative finance ... 132
Table 4.27: Robust tests of equality of means between race and alternative finance ... 132
Table 4.28: ANOVA relationship between race and alternative finance ... 132
Table 4.29: Descriptive Statistics between highest educational qualification and mobile banking ... 133
Table 4.30: Homogeneity of variances test between highest educational qualification and mobile banking ... 133
Table 4.31: Robust tests of equality of means between highest educational qualification and mobile banking ... 134
Table 4.32: ANOVA relationship between highest educational qualification and mobile banking ... 134
Table 4.33: Descriptive statistics between highest educational qualification and alternative finance ... 134
Table 4.34: Homogeneity of variances test between highest educational qualification and alternative finance... 135
Table 4.35: ANOVA relationship between highest educational qualification and alternative finance ... 135
Table 4.36: Group statistics between between account holding and mobile banking ... 16236
Table 4.37: Independent samples test between account holding and mobile banking ... 16336
xv
Table 4.38: Group statistics between account holding and alternative finance ... 1637
Table 4.39: Independent samples test between account holding and alternative finance ... 137
Table 4.40: Group statistics between internet access and mobile banking ... 138
Table 4.41: Independent samples test between internet access and mobile banking ... 138
Table 4.42: Group statistics between internet access and alternative finance ... 139
Table 4.43: Independent samples test between internet access and alternative finance ... 139
Table 4.44: Group statistics between knowledge about mobile device and mobile banking .... 140
Table 4.45: Independent samples test between knowledge about mobile device and mobile banking ... 140
Table 4.46: Group statistics between knowledge about mobile device and alternative finance ... 141
Table 4.47: Independent samples test between knowledge about mobile device and alternative finance ... 141
Table 4.48: Group statistics between mobile banking and mobile banking importance ... 142
Table 4.49: Independent samples test between mobile banking and mobile banking importance ... 142
Table 4.50: Group statistics between mobile banking importance and alternative finance ... 143
Table 4.51: Independent samples test between mobile banking importance and alternative finance ... 143
Table 4.52: Group statistics between knowledge about alternative finance and mobile banking ... 144
Table 4.53: Independent samples test between knowledge about alternative finance and mobile banking ... 145
Table 4.54: Group statistics between knowledge about alternative finance and alternative finance ... 145
Table 4.55: Independent samples test between knowledge about alternative finance and alternative finance... 146
Table 4.56: Descriptive Statistics between accessing alternative finance platforms and mobile banking ... 147
Table 4.57: Homogeneity of variances test on accessing alternative finance platforms and mobile banking ... 147
Table 4.58: ANOVA relationship between accessing alternative finance platforms and mobile banking ... 148
Table 4.59: Comparison of the cost of using mobile banking and alternative finance ... 148
Table 4.60: Group statistics between mobile device and mobile banking ... 149
Table 4.61: Independent samples test between mobile device and mobile banking ... 149
Table 4.62: Group statistics between mobile device and alternative finance ... 150
Table 4.63: Independent samples test between mobile device and alternative finance ... 150
Table 4.64: Comparison of trust between mobile banking and alternative finance ... 151
Table 4.65: Descriptive Statistics between between employment status and mobile banking . 152 Table 4.66: Homogeneity of variances test between employment status and mobile banking 153 Table 4.67: ANOVA relationship between employment status and mobile banking ... 153
Table 4.68: Multiple comparisons of relationships betweenemployment status and mobile banking ... 153
Table 4.69: Descriptive statistics between internet access and mobile banking ... 154
Table 4.70: Homogeneity of variances test between internet access and mobile banking ... 155
xvi
Table 6.71: ANOVA test between internet access and mobile banking ... 155 Table 4.72: Multiple comparisons between internet access and mobile banking ... 156 Table 4.73: Descriptive statistics between internet access and alternative finance ... 156 Table 4.74: Homogeneity of variances test between internet access and alternative finance . 156 Table 4.75: ANOVA test between internet access and alternative finance ... 157 Table 4.76: Multiple comparisons between internet access and alternative finance ... 157 Table 4.77: Descriptive statistics between mobile banking services improvement in South Africa
and mobile banking ... 158 Table 4.78: Homogeneity of variances test between mobile banking services improvement in
South Africa and mobile banking ... 158 Table 4.79: ANOVA relationship between mobile banking services improvement in South Africa
and mobile banking ... 159 Table 4.80: Descriptive statistics between alternative finance services improvement in South
Africa and alternative finance ... 159 Table 4.81: Homogeneity of variances test between alternative finance services improvement in
South Africa and alternative finance ... 159 Table 4.82: ANOVA test between alternative finance services improvement in South Africa and
alternative finance... 160 Table 4.83: Descriptive statistics between mobile banking services improvement in South Africa ... 160 Table 4.84: Homogeneity of variances test alternative finance services improvement in South
Africa and alternative finance ... 161 Table 4.85: Robust tests of equality of means between alternative finance services improvement
in South Africa and alternative finance ... 161 Table 4.86: ANOVA test between alternative finance services improvement in South Africa and
alternative finance... 161 Table 4.87: Group statistics on the relationship between alternative finance importance and
mobile banking ... 162 Table 4.88: Independent samples test on the relationship between alternative finance importance
and mobile banking ... 162 Table 4.89: Group statistics on the relationship between alternative finance importance and
alternative finance... 163 Table 4.90: Independent samples test on the relationship between alternative finance importance
and alternative finance ... 16463 Table 4.91: Descriptive statistics on use of alternative finance and mobile banking ... 16564 Table 4.92: Homogeneity of variances test on use of alternative finance and mobile banking 164 Table 4.93: Robust tests of equality of means on use of alternative finance and mobile banking ... 16665 Table 4.94: ANOVA test on use of alternative finance and mobile banking ... 1665 Table 4.95: Descriptive statistics on alternative finance forms and mobile banking ... 166 Table 4.96: Homogeneity of variances test on alternative finance forms and mobile banking ... 1676 Table 4.97: ANOVA relationship between alternative finance forms and mobile banking .... 16766 Table 4.98: Descriptive statistics on alternative finance forms and alternative finance ... 167 Table 4.99: Homogeneity of variances test between alternative finance forms and alternative
finance ... 1687
xvii
Table 4.100: Robust tests of equality of means between alternative finance forms and alternative
finance ... 1687
Table 4.101: ANOVA relationship between alternative finance forms and alternative finance . 168 Table 4.102: Multiple comparisons between alternative finance forms and alternative finance ... 168
Table 5.1: Demographic profile of interviewees ... 171
Table 5.2: Thematic analysis (Braun & Clarke, 2006) ... 172
Table 5.3: Coding example ... 173
xviii LIST OF FIGURES
Figure 4.1 Gender of the respondents ... 611
Figure 4.2 Age group of the respondents... 622
Figure 4.3 Race of the respondents ... 633
Figure 4.4 Marital status of the respondents ... 644
Figure 4.5 Educational qualifications of the respondents ... 655
Figure 4.6 Residential area of the respondents ... 666
Figure 4.7 Household size of the respondents ... 666
Figure 4.8 Employment status of the respondents ... 677
Figure 4.9 Household income of the respondents ... 68
Figure 4.10 Account holding for the respondents ... 68
Figure 4.11 Banking institutions of the respondents ... 69
Figure 4.12 Account types ... 70
Figure 4.13 Computer use ... 70
Figure 4.14 Place where computer use was learned ... 71
Figure 4.15 Internet access ... 72
Figure 4.16 Frequency of accessing the internet ... 72
Figure 4.17 Quality of internet signal ... 73
Figure 4.18 Possession of mobile device ... 74
Figure 4.19: Accessibility of mobile devices ... 74
Figure 4.20: Internet access on mobile device ... 75
Figure 4.21: Respondents’ knowledge about mobile banking ... 76
Figure 4.22: Information on mobile banking ... 77
Figure 4.23: Previous use of mobile banking ... 77
Figure 4.24: Reasons for not using mobile banking ... 78
Figure 4.25: Importance of mobile banking ... 79
Figure 4.26: Reasons for using mobile banking ... 79
Figure 4.27: Do you transact using mobile banking ... 80
Figure 4.28: Frequency of mobile banking usage ... 81
Figure 4.29: Mobile banking services user preference ... 81
Figure 4.30: Other transacting means besides mobile banking ... 82
Figure 4.31: Service at the branch ... 83
Figure 4.32: Respondents preference place to obtain a loan ... 84
Figure 4.33: Alternative options of where to get a loan ... 85
Figure 4.34: Mobile banking as a time saver ... 86
Figure 4.35: Mobile banking versus branch banking ... 86
Figure 4.36: Suitability of mobile banking vs lifestyle ... 87
Figure 4.37: Ease of use of mobile banking ... 88
Figure 4.38: Cost effectiveness of mobile banking ... 88
Figure 4.39: Safety of mobile banking ... 89
Figure 4.40: Mobile banking services improvement in South Africa ... 90
Figure 4.41: Knowledge about alternative finance ... 91
Figure 4.42: Information on alternative finance ... 92
Figure 4.43: Social networks ... 93
Figure 4.44: Previous usage of alternative finance ... 93
Figure 4.45: Reasons for non-usage of alternative finance... 94
xix
Figure 4.46: Importance of alternative finance ... 95
Figure 4.47: Alternative finance for bridging personal needs ... 95
Figure 4.48: Alternative finance for bridging business needs ... 96
Figure 4.49: Ways to access alternative finance platforms ... 97
Figure 4.50: Reasons for using alternative finance ... 98
Figure 4.51: Frequency of alternative finance usage ... 99
Figure 4.52: Understanding of alternative finance platforms ... 100
Figure 4.53: Alternative finance preferred platforms ... 101
Figure 4.54: Thundafund platform knowledge ... 102
Figure 4.55: Jump Start platform knowledge ... 102
Figure 4.56: Trust in alternative finance platforms ... 103
Figure 4.57: Reasons for not trusting alternative finance platforms ... 104
Figure 4.58: Ease of use of alternative finance platforms ... 105
Figure 4.59: Reliability of alternative finance platforms ... 105
Figure 4.60: Service efficiency of alternative finance platforms ... 106
Figure 4.61: Frequently visited and utilised alternative finance platforms ... 107
Figure 4.62: Safety of using alternative finance platforms ... 107
Figure 4.63: Cost effectiveness for using alternative finance platforms ... 108
Figure 4.64: Ease of use of alternative finance platforms ... 109
Figure 4.65: Alternative finance vs business style fit ... 110
Figure 4.66: Alternative finance and personal lifestyle fit ... 110
Figure 4.67: Alternative finance as a time saver ... 111
Figure 4.68: Friendliness of alternative finance lenders versus bank officials ... 112
Figure 4.69: Alternative finance services improvement in South Africa ... 113
Figure 5.1: Main themes of study ... 174
Figure 5.2: Perceptions on mobile banking and alternative finance ... 175
Figure 5.3: Perceptions of mobile banking and alternative finance counts ... 175
Figure 5.4: Factors of mobile banking and alternative finance ... 184
Figure 5.5: Factors of mobile banking and alternative finance counts ... 185
Figure 5.6: Driving factors of mobile banking and alternative finance ... 186
Figure 5.7: Driving factors counts ... 186
Figure 5.8: Common factors between mobile banking and alternative finance ... 190
Figure 5.9: Common factors counts ... 190
Figure 5.10: Challenges of mobile banking and alternative finance ... 191
Figure 5.11: Challenges of mobile banking and alternative finance counts ... 192
Figure 5.12: User experience of mobile banking and alternative finance ... 1977
Figure 5.13: Future projections of mobile banking and alternative finance ... 198
Figure 5.14: Future projections counts ... 198
xx LIST OF APPENDICES
Appendix A: Letter to the organisations ... 237
Appendix B: Informed consent ... 238
Appendix C: Information sheet ... 239
Appendix D: Mobile banking usability measurement tool ... 240
Appendix E: Alternative finance usability measurement tool ... 241
Appendix F: Demographic characteristics of participants ... 242
Appendix G: Ethical clearance certficate ... 261
Appendix H: Questionnaire ... 262
Appendix I: Editorial certificate ... 263
xxi ABBREVIATIONS
AF Alternative Finance
ABSA Amalgamated Banks of South Africa
Apps Applications
APAC Asia Pacific and Japan
BOU Bank of Uganda
BOT Bank of Tanzania
CNN Cable Network News
CMA Capital Markets Authority CBK Central Bank of Kenya
CA Communications Authority
CGAP Consultative Group to Assist the Poor DRC Democratic Republic of Congo
EADB East Africa Development Bank Fintech Financial Technology Companies FNB First National Bank
GDP Gross Domestic Product
GSMA Global System for Mobile Association
IT Information Technology
IDT Innovation Diffusion Theory IRR Internal Rate of Return
KPMG Klynveld Peat Marwick Goerdeler
MMM Mavrodi Mondial Moneybox
MCA Merchant Cash Advance
MB Mobile Banking
MTN Mobile Telephone Network NBR National Bank of Rwanda NBFI Non-Bank Financial Institutions
OECD Organisation for Economic Cooperation and Development PEOU Perceived Ease of Use
PIN Personal Identification Number
POS Point of Service
SME Small & Medium Enterprises SARB South African Reserve Bank
SMS Short Message System
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SSA Sub-Saharan Africa
TAM Technology Acceptance Model TPB Theory of Planned Behaviour TPR Theory of Perceived Risk
UTAUT Unified Theory of Acceptance and Use of Technology
US United States
USD United States Dollar
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CHAPTER ONE INTRODUCTION 1.1 Introduction
The banking industry is transforming on a daily basis, with new developments taking place.
Consumers play an important role as they aspire for improved, economical and accessible financial services preferable on their mobile devices (Asongu, 2015). Access to banking and financial services is no longer an option but a need (Friedline, Desperad & Birkenmaier, 2018).
This is important for underserved communities to have affordable and reliable internet connectivity to access mobile banking and alternative finance platforms in order to actively participate in the economy. New players entering the market are not restricted by technology, hence embattled product offerings and services are needed by the businesses (Cooper, 2018).
In South Africa, new players include Discovery Bank, Tyme Bank and Zero Bank, which focus on certain financial needs (von Fintel, 2019).
As the financial technology sector is growing, companies which are active in mobile banking, crypto currencies and alternative financing are presently experiencing disruptions by new role players who are entering the market and providing enhanced resolutions than traditional financial service providers. This is supported by Kimber, Alderton, Vardy, Ashraf, Neufeld, Thomas, Bull &
Kotecha (2018) who noted that expertise firms are disrupting banking as super technology platforms are influencing the consumer, income, viability and risk directive. With that revealed, mobile money is continually seen as a disruptive business model in the style of start-ups in the sharing economy as it, in fact, equally interrupts and supplements traditional banking services (Peterson, 2019).The KPMG (2015) mobile banking report noted that the advancement of worldwide mobile banking use is in a remarkably swift point, with additional exponential progress anticipated in the next five to ten years.
This chapter outlines the importance of understanding the key factors that affect mobile banking and alternative finance. Section 1.2 of this chapter provides the background of the study, while Section 1.3 gives a brief overview of the South African banking system. Section 1.4 discusses the problem statement, while Section 1.5 presents the objectives and hypothesis of the study.
Section 1.6 discusses the significance of the study, including the difference that it might make in the field of research that has not been done before. Section 1.7 discusses the limitations of the study, and Section 1.8 provides the outline of the chapters to follow.
2 1.2 Background to the study
Different scholars define mobile banking from their personal perspectives. Some define mobile banking according to the device used, while others focus on service. Luo, Li, Zhang & Shim (2010) and Rahmani, Tahvildari, Honarmand, Yousefi & Daghighi (2012) define mobile banking as an innovative means of gaining access to banking services using a network, where the customer communicates with the bank using a mobile device. Tobbin (2012) has defined mobile banking as communication with an organisation that manages money, not necessarily the bank where customers transact according to their needs, while on the other hand, Lawack-Davids (2012) define mobile banking as a service provided by the bank or financial organisation that gives customers an opportunity to transact using their mobile device at any time of the day, although there may be restrictions on what can be executed in this manner since there are certain limits. Further definition by Lu, Tzeng, Cheng & Hsu (2014) is where mobile banking service is seen as a compensation system by means of movable phones as a fresh channel that offers and provides financial banking services. Munoz-Leiva, Climent-Climent & Liebana-Cabanillas (2016) also defined mobile banking as an isolated service presented by financial bodies to meet the customer desires.
Furthermore, Achieng & Ingari (2015) emphasise that the goal is about banking services reaching out to the unbanked – those without access to the bank or bank accounts and people at the bottom of the economic pyramid mostly located in rural areas. Nicoletti (2014) notes that the use of mobile banking and alternative finance by young people is crucial as they are the future. This is confirmed by the Financial Sector Deepening Report (2016) where 46 percent of young adults in Kenya have used mobile banking in 2016 and it is a sign that in each economy where technology is used, young people will use the opportunity to take part.
Segal (2016) points out that there is no official technical definition of alternative finance. In general, alternative finance refers to financing obtained from outside sources besides traditional financial institutions such as banks and bond markets, using online platforms. Cambridge Judge Business School (2015: 7) defines alternative finance as finance channels and instruments that have come into being and that do not use normal finance systems such as regulated banks and capital markets. Makina (2017: 1) refers to alternative finance as “disruptive or distributed finance.”
Alternative finance is subdivided into merchant cash advance, factoring, online business loans and crowdfunding (Segal, 2016). These are elaborated on in subsequent sections.
3 1.2.1 Merchant cash advance
This is defined as a new type of lending in South African financial services market (Killian & Nel, 2015). Merchant cash advance (MCA) entails selling one’s future revenue and getting cash in advance for the business so as to stabilise cash flow. Shak (2017)b points out that merchant cash advance has turned out to be one of the important sources of business funding in this era, hence business owners have to understand and know how it works. Merchant cash advance has flourished as alternative finance due to the fact that it is a lump sum exchange of fast money and is a less tedious process than the traditional funding institutions application process which requires a great deal of documentation. Merchant cash advance application is done online and does not require a great deal of documentation or security. The challenge, however, is that MCA is an expensive transaction as there are fee structures in place in the transactions. To this effect, Blanco (2016) and Rubin (2015) warn users of MCA and businesses of the high cost which they might incur as the repayment might end up being doubled to more than the advance received.
1.2.2 Factoring
Factoring is another form of alternative finance where two businesses come into an agreement, where one business is a client and the other is a factor. The clients will sell its accounts which are in the form of invoices to the factor regularly (Sulaiman, 2004; Finfind, 2015). The invoices constitute the account debts which are subject to a holding fee, ranging between 10% and 25%
to cover the irrecoverable debts. The client pays a percentage of the invoice value for the accounts purchased, and monthly fixed amounts are charged to the factor, depending on the agreement entered into. According to Sulaiman (2004), developed countries accept factoring as a business practice. Major banks in South Africa offer factoring, even though this has a negative connotation in that a healthy business has no need of engaging in factoring (Sulaiman, 2004).
Factoring is an open process, and it increases cash flow, sales and profits and improves the companies’ credit rating, while at the same time reducing possible irrecoverable debts (Ferguson, 2015).
1.2.3 Online business loans
Online business loans are other forms of alternative finance where a business can access loans from online platforms (Gouda, 2016). The advantages of applying for an unsecured loan include speed since the decision is made within 48 hours, flexibility as there is no credit history checking, no security required, and the cost of the loan is low as it is offered on a short-term basis. On the
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other hand, banks always offer secured loans such as long-term loans and they conduct credit checks on consumers.
1.2.4 Crowdfunding
This is one of the popular alternative finance tools originating in the United States (US) which is also becoming popular in South Africa although it has major policy implications, particularly in this era. Brem, Bilgram & Marchuk (2017) and Makina (2020) note that crowdfunding is currently trending and has become a popular topic of research for many scholars. Belleflamme, Lambert
& Schwienbacher (2014: 4) define crowdfunding as “involving an open call, mostly using internet, for provision of financial resources, either in the form of donation or in exchange of future product, or some form of reward to support initiatives for specific purpose.” Therefore, crowdfunding is bringing together small amounts of money from several financiers using online platforms. The three well-known forms of crowdfunding in the US are donations and reward-based, peer-to-peer and peer-to-business lending, and equity crowdfunding (Segal, 2016; Venture Capital, 2020).
Both mobile banking and alternative finance require the user to have a device and access to the internet in order to connect to the application (app) or platform. For mobile banking, users need a bank application (bank app) where they can register online as users so that they can transact or acquire the information which they need. In the same way, the users of alternative finance register online on platforms so that they are able to participate when the need arises.
Banking the unbanked
According to reports from Cable Network News (CNN), mobile banking has revolutionised the lives of millions of people. According to Bouverot (2014) and Demirguc-Kunt, Klapper, Singer &
Van Oudheusden (2014), approximately two billion adult people globally do not have formal bank accounts. Technology is thus bringing change in the lives of numerous people who do not have to own a bank account. Out of the two billion, one billion have mobile phones. According to the study conducted by World Bank and Globalfindex (2013), 41% of adults in developing economies have a bank account compared to 89% of adults in high revenue-earning countries who have bank accounts, while only 20% of the adults earning less than $2.00 per day have a formal bank account. In total, it is estimated that over one billion unbanked people have mobile phones. The Global System for Mobile Association (GSMA) (2013) confirms that in June 2013, there were 60 million active mobile accounts. The nine African countries which include Cameroon, the Democratic Republic of Congo (DRC), Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe, have more people with registered mobile accounts than bank accounts.
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According to Bouverot (2014), although there is a shift to mobile banking, there is still much work to be done in making the services available to everyone. The issue is not limited to Africa. In Central Asian countries such as Kyrgyzstan, Tajikistan and Turkmenistan, only 5% of the population have formal accounts (Bouverot, 2014). This is a clear opportunity for mobile banking to cease the market. Furthermore, most people travel from rural areas to urban areas to do their banking. It can, therefore, be said that the easiest way to send money back home is through mobile banking. This shows that mobile banking is evolving and bringing the long-needed change in the lives of the people. At the same time, people and small-medium enterprises are also considering alternative finance to improve their lives.
Non-bank financial institutions
The growth in the area of alternative finance in South Africa is much needed to improve the business operations that will, in turn, boost the economy. Van der Zwan (2014) asserts that the extensive growth of the financial services sector is not only happening in the US, but that African consumers are also increasingly being exposed to these services that will be of benefit to them.
According to Shak (2017)a, good opportunities exist out there for small businesses to expand.
Alternative financing has become popular in the current era, with 75% of businesses opting for operational money from the non-banking sector. SMEs have to choose the best alternative financing options that fit their business requirements (Shak, 2017)a. According to Higenbottam (2017), the non-bank financial institutions (NBFIs) sector which is the alternative finance institutions, were not deposit-taking institutions or for transact, whereas these are important services for NBFIs as they attract customers. The Banking Association of South Africa (2015) confirms that to provide a service that involves the transfer of money, a banking license is required, which has restrictions. Banks saw NBFIs as competitive threats, hence they were unwilling to lend them money. Examples of well-developed banks that used to be NBFIs are the Capitec Bank in South Africa and Equity Bank of Kenya, as their focus was only on borrowing from the local market which had its own risks (Higenbottam, 2017). A case in point is the African Bank which has been under curatorship since August 2014. Capitec was not affected as it has a good strategy based on the deposit system.
In South Africa, there are online portals such as Jumpstart and Thundafund which deal with crowdfunding, which is another form of alternative finance as stated already. According to Makina (2017), crowdfunding is not new in South Africa. In fact, for many years, people in communities have come together in the stokvel system and put together money on a monthly basis which is then given to members on a rotational basis. Some forms of crowdfunding are marketed on social
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networks such as Facebook, Twitter and WhatsApp. The question would be, “how many owners of Small Medium Enterprises (SMEs) know about alternative finance and utilise it?” A further question would be, “why is alternative finance not well known?” Is it a question of its legality as we note that even in America, it was only in May 2016 that certain regulations were passed which govern alternative finance? One of the reasons alternative finance is not used often in South Africa is that there are no policies or regulations governing it, hence the schemes come and go.
However, people still continue to register on those platforms as they provide alternative means of getting extra cash. Segal (2016) notes that one of the reasons people opt for alternative finance is because banks do not offer loans to small businesses. Therefore, this topic was explored to determine if there are benefits to using these channels without overlooking their weaknesses.
The aim of the proposed study was, therefore, to finds the ways of limiting the shortfall of mobile banking and alternative financing.
According to Tiwari, Buse & Herstatt (2006), mobile banking uses an academic model consisting of three interrelated concepts, namely, mobile accounting, mobile brokerage and mobile financial services. Mobile accounting is defined as the use of accounting software that can be loaded or installed on mobile devices such as cellphones and tablets. Mobile brokerage, on the other hand, entails the organisations that mediate between the buyer and the seller of stock on behalf of a business. The broker will charge a certain fee or commission from the person or business that requests the service. Mobile financial services include the utilisation of a mobile phone to access a financial facility in order to perform a financial transaction.
In this context, alternative finance operates through online market places which are reward-driven such as crowdfunding, which entails equity crowd funding, peer-to-peer lending, and reward- based and donation-based funding (Makina, 2017). The differences between these models are key as different kinds of people and organisations use them for different reasons such as the nature, form and number of financial transactions that take place. According to a study conducted in England, Scotland, Wales, Ireland and North Ireland by Baeck, Collins & Zhang (2014), alternative finance covers a variety of new financing models that have emerged outside of the traditional financial system and that often connect fundraisers directly with funders or investors through online platforms. The goal is to technologically deliver financial services. The use of peer- to-peer assistants has increased tremendously, where some of the marketing takes place on mobile platforms such as WhatsApp and Facebook (Makina, 2017).
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Alternative finance instruments that have emerged include cryptocurrencies such as bitcoin, community shares, social impact bonds and private placement (Baeck et al., 2014). Bitcoin is one of the cryptocurrencies that is popular for its safety when transacting. Furthermore, Baeck et al.
(2014) assert that people are motivated by different factors in opting for alternative finance. For example, those who raise funds through donations and reward-based crowdfunding require more control over their projects as opposed to the peer-to-peer business lending borrowers and entrepreneurs who raise funds through equity-based crowdfunding and appreciate immediate access to funding and the simplicity in using the platform. It is clear that the use of alternative finance has gender dimensions, with men mostly using it. The findings of their study further confirmed that three quarters of those who successfully raised capital using alternative finance were men, and that older people over the age of 45 tended to opt for alternative finance. The findings also revealed that financiers also tended to be older than the fundraisers. According to the findings of the study, the primary goal of other peer-to-peer borrowers was to secure funding at a reasonable interest rate, while enjoying excellent customer service. Sixty-four percent of those who raised money through donation-based crowdfunding mentioned that it was highly unlikely that they would have secured the funding elsewhere had they not turned to alternative finance. Among those who turned to reward-based crowdfunding, 53% indicated in all likelihood that they would not have obtained the funding elsewhere. This clearly shows the important role that alternative finance plays in each country.
A survey conducted by Tiwari, Buse & Herstatt (2016) revealed that the majority of mobile phone users who performed online transactions were young people who were more techno-savvy. A third of these users who, until then, used their mobile devices to perform basic transactions such as balance enquiries, were considering using them to perform more financial transactions. This shows that mobile banking was designed to cater for the needs of young people and that it is mostly enjoyed by them as opposed to alternative finance which is used mainly by the older people. This makes it necessary to bridge the gap in use between mobile banking and alternative finance, considering that mobile banking is used by people in many parts of the world with little or no infrastructure, especially those in remote and rural areas, whereas alternative finance is used mainly by informed or educated people in urban areas.
1.3 Overview of the South African banking system in brief
In South Africa, the five major banks which offer mobile applications to their customers are the Amalgamated Banks of South Africa (ABSA), Capitec, First National Bank (FNB), Nedbank and
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Standard Bank (Columinate, 2015). Research done on the South African banking system revealed that a high percentage of South Africans have bank accounts, with percentages ranging between 51 and 80 (Abbott, 2015; Kessler, Ikdal, Naidoo, Portafaix, Hendrickson, Boje & Rabec, 2017). The high percentage of customers with bank accounts hinders efforts to bring technological change in the form of mobile banking and alternative finance. With that said, 89%
of South Africans own mobile phones which provides an excellent opportunity for customers to utilise their mobile devices for mobile banking. Kessler et al. (2017) further revealed that adoption is more robust than usage. That said, the majority of South Africans in the low-income end still believe in carrying physical money, regardless of the dangers associated with it. Di Castri (2013) also confirms the pervasiveness of carrying money where customers continue to ignore the risks.
According to Chigada & Hirschfelder (2016), mobile banking plays a critical role in linking banks and low-income earners waiting to transact to make payments, save and seize investment opportunities. The five banks mentioned above have traditionally been operating as service providers, but are now under competitive pressure as they are no longer the only institutions that offer financial services to the people.
Alternative financial institutions offer customers online loans without them having to stand in the queues because they classically online-based secluded corporations bridging the gaps in service that traditional banking institutions do not offer. Such institutions include Capfin and Finchoice, where customers can obtain loans through online applications using their mobile devices.
Although big five banks also offer online loans, their process takes longer when compared to alternative finance institutions which gives the response on same day of application. Cull, Demirguc-Kunt & Lyman (2012) note that people end up in online pyramid schemes which are created as easy savings and venture opportunities which, however, cause radical and societal instability and a lack of trust in the banking sector. Today, bitcoin trading is on the rise in South Africa, and SARB can only monitor the trading as the currency is not easy to regulate. Even the major five banks in South Africa have decided to come together and make a private block-chain system to use it to guard against syndicated loans or advances (Naidoo, 2017). According to Segal (2016), in 2015, small businesses in the US were more likely to apply for finance from an online lender and more likely to get approval than they would from a traditional banking institution.
1.4 Problem statement
Although there has been evolution on mobile banking, “not much research has been done on mobile banking together with alternative finance”. Hence the need to do a comparative analysis of usage between mobile banking and alternative finance was realised. The problem
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investigated in the study is the usage of mobile banking and alternative finance by users and how service providers present themselves to attract usage. The researcher noted that much research has been done on mobile banking adoption and use world-wide. Therefore, it was important to establish if there is a relationship between mobile banking and alternative finance usage. The question here is that, “are there any people who are using mobile banking and alternative finance?” The challenge, however, is that although people have mobile devices which they can use to send money to their families, the trend of long queues at Shoprite, Checkers and Pick ‘n Pay money market is still noted as people are sending money manually. What is still causing people to use these outlets to send and receive money? Is it because they do not trust banking using their devices? Is the challenge the service provider who does not understand the customer? Is it the cost of services to use the device for mobile banking and alternative finance?
Is it the compatibility challenge of the device to access online services? There are businesses who still apply for business loans and get declined by traditional banks, who do not consider other alternative financing means for their businesses and individual needs.
1.5 Research objectives
1.5.1 Primary research objective
The main objective of this research study was to investigate and compare the perceptions of customers regarding the use of mobile banking and alternative finance.
1.5.2 Secondary research objectives The researcher determine:
the influence of customer background on mobile banking and alternative finance usage
the influence of customer demographics on mobile banking and alternative finance usage
customer attitude on the use of mobile banking and alternative finance.
awareness of mobile banking systems and alternative finance platforms
understand how individuals and businesses use technology
and check the effectiveness of the services by service providers in relation to the cost charges.
It was hoped that the proposed study assist in discovering new areas of focus for future research in mobile banking and to ascertain if: “has there been an improvement in the lives of the people since mobile banking was introduced?” In the South African context, there is a great
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need to raise an awareness on alternative finance and mobile banking, especially among the disadvantaged groups and people in rural areas.
The study attempted to answer the following questions which were grouped into two categories:
Users related questions:
Is there a relationship or common factors between mobile banking and alternative finance?
What are the existing practices of customers in South Africa (Randburg area) relating to transacting online using mobile devices?
Are mobile device owners using mobile banking and alternative finance platforms to access financial services?
Which channels could be followed to explore alternative finance?
Is technology user-friendly and satisfying to the users? Do they know how to operate the technology?
Are the mobile banking and alternative finance services cost effective?
Service providers related questions:
How do service providers, especially in the area of alternative finance, present their services to the users?
Who do they target and what are the challenges they face in trying to get the users to use alternative finance and mobile banking?
What are the challenges that traditional banks and other institutions faced in the use of mobile banking and alternative finance in South Africa?
1.5.3 Hypotheses
Drawing from the objectives of the study, the following hypotheses were tested:
H1: User related hypothesis
H1 A: Customer demographic characteristics have an effect on the use of mobile banking and alternative finance.
H1 B: Customer background has an effect on the use of mobile banking and alternative finance.
H1 C: Customer attitude has an effect in the use of mobile banking and alternative finance.
H1 D: User-friendly technology has an effect on the use of mobile banking and alternative finance.
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H1 E: The cost of using technology has an effect on the use of mobile banking and alternative finance
H1 F: The kind of device has an effect on the use of mobile banking and alternative finance.
H1 G: Trust has an effect on the use of mobile banking and alternative finance.
H2: Service providers related hypothesis
H2 A: Service providers of mobile banking and alternative finance understand the demographic characteristics of the customer and how they influence the use of the services offered
H2 B: Service providers understand the customer needs through background with regards to the use of mobile banking and alternative finance.
H3: There is a relationship between mobile banking and alternative finance.
1.6 Significance of the study
The researcher proposed a study on a comparative analysis of the significance of mobile banking and alternative finance, and used the selected methods to clarify or expand on the phenomenon under study, including the methodologies that were used in conducting the study. This was against the background that technology is booming in South Africa compared to other African countries such as Kenya, Uganda, Rwanda, Nigeria, Egypt, Zimbabwe, Botswana, Tanzania and Ghana, following world trends. Based on previous studies, there is no literature which combines mobile banking and alternative finance in a single study as these issues have been studied separately. The study also helps to establish which age groups, gender and income earners (low or high) use mobile banking and alternative finance, and how these services can be improved.
The findings of the study make a huge contribution by urging people and organisations to consider accessing alternative financing using the available online platforms. Using alternative financing might contribute positively to individuals and organisations by increasing the country’s gross domestic product (GDP). Therefore, the study gauged the level of awareness of individuals and SMEs on mobile banking and alternative finance and the usage thereof. The findings of study might help enlighten consumers or users and SMEs on alternative finance and bring innovations that address the various concerns which consumers and SMEs have on alternative finance. This study creates a conducive climate for alternative finance to expand to other demographics and areas of the community, encouraging more participation from women, young people and low-
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income groups who might not be able to get help from formal banking institutions. The study further ascertains the long-term impact of alternative finance as opposed to short-term results.
The methods used are discussed in Chapter Three and the results analysed in Chapter Four and Chapter Five based on the data obtained from the sample, and conclusions were drawn.
1.7 Limitations of the study
The main limitation of the study was that the study focused only one part of Johannesburg – Randburg and the surrounding areas due to time and financial constraints. Therefore, the chosen sample is not representative of the larger population as questionnaires were distributed to the available and willing customers from the five major banks which were selected. Only officials in the management positions from these institutions were interviewed, hence the researcher did not get the perspective of other staff members regarding the subject under study.
1.8 Chapter outline
The chapters in this study are organised as follows:
Chapter One: Introduction
This chapter started with an introduction of the study and was followed by the background which addressed concepts in both mobile banking and alternative finance. A brief overview of the South African banking system is given. The problem statement and objectives of the study were also provided, followed by the significance of study and limitations.
Chapter Two: Literature review
This chapter discusses the different theories developed by other research scholars and how they contribute to mobile banking and alternative finance in South Africa and the world over. The findings of the previous research are highlighted.
Chapter Three: Methodology
This chapter expands on the methodologies that were adopted in conducting the study, following the research objectives highlighted in this chapter and the goals of the study. The study sampled is discussed, including how data was collected and analysed, and the ethical issues for this study.
The chapter also addresses the challenges faced during the data gathering process.
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Chapter Four: Quantitative data analysis research findings and discussion
This chapter presents and analyses the quantitative data obtained from the questionnaires. The findings are discussed in relation to the previous studies.
Chapter Five: Qualitative data analysis research findings and discussion
This chapter presents and analyses the findings based on the qualitative data collected through interviews from the sample. The findings are discussed in relation to the previous studies on the topic.
Chapter Six: Conclusion and recommendations
This chapter draws conclusions based on the findings of the study. Recommendations are also made based on what the study did not achieve and on the significance of the study in contributing to the existing body of knowledge.
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CHAPTER TWO LITERATURE REVIEW 2.1 Introduction
The constant evolution in information technology brings new automated developments that impacts on how the society operate. These automated developments have brought improvements in technology use in different sectors of the economy. These improvements in all business arenas bring advances knowledge, creating new opportunities for users and providers of services. Among those areas is online channels to access banking and alternative financing.
Hence this chapter discuss previous literature on mobile banking and alternative finance to address the research objectives of this study. The first part of this chapter begins by discussing different theories and models relating to mobile banking technology, including the factors influencing the use of mobile banking. The theories assist in guiding and simplifying the results of research. Previous studies on the benefits and challenges mobile banking and alternative financing are also discussed. The landscape of mobile banking in Kenya and Tanzania, without excluding other African countries, with a brief overview of mobile banking around the world, is discussed. Part two of this chapter discusses alternative finance. Capital structure, the theories on alternative, incorporating project bonds as an alternative for project finance are also discussed.
Alternative finance taxonomy with a brief on financial technology, alternative finance statistics, followed by the East African landscape on alternative finance market are also discussed. Further, the role of gender in alternative finance, the SMEs’ discussion on alternative finance and property crowdfunding are discussed, including the benefits and challenges of alternative finance. The exploration of literature helps the researcher with grounding and better understanding of how to address the objectives of the research. Finally, the conclusion is drawn.
2.2 Theories
Theories are critical in research as they guide in describing, explaining and predicting the behaviour of the phenomenon under study. Hence the researcher deemed necessary to discuss and incorporate theories that guide this study. Theories create better understanding and acceptance of new technology by consumers. The theoretical input by Delone and McLean model founded in 1992 where information quality, system quality and service quality was noted to lead to the intention to use and user satisfaction is beneficial to the user (Delone & MacLean, 1992).
This interrelatedness is one of the crucial elements of influencing users to use mobile banking and alternative finance. This theory still contribute in today as human beings use information that benefits and satisfy the integral need within them (Sirsat & Sirsat, 2016). If the data provided by
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the service provider is current, easy to appreciate and thorough, it encourage the users to improve their goal to use and the of fulfilment mobile banking.
