Exploring the factors affecting the adoption of mobile financial services among the rural under-banked and its implications for micro-finance institutions

Abstract

Around two and half billion adults worldwide do not have a savings or credit account with either a traditional (regulated bank) or alternative financial institution (such as a microfinance institution). On the other hand, penetration of mobile technology had been substantial in the past few years and is expected to increase in the future. Around one billion people in emerging markets have a mobile phone but no access to banking services and it is said that by 2012 this population will reach 1.7 billion. Financial institutions, which have had difficulty providing profitable services through traditional channels to poor clients, see mobile financial services (MFS) as a form of 'branchless banking', which lowers the costs of serving low-income customers. The main objective of this study was to determine the factors affecting the adoption of MFS (including mobile banking and mobile payments) among the rural under-banked population that would help the micro-finance institutions like credit cooperative societies to reach to more people with better quality of services.