Factors impacting the adoption of m-banking: understanding brand India’s potential for financial inclusion
| DOI | https://doi.org/10.1108/JABS-11-2015-0191 |
| Pages | 22-40 |
| Date | 03 January 2017 |
| Published date | 03 January 2017 |
| Author | Madhurima Deb,Aarti Agrawal |
| Subject Matter | Strategy,International business |
Factors impacting the adoption of
m-banking: understanding brand India’s
potential for financial inclusion
Madhurima Deb and Aarti Agrawal
Madhurima Deb and
Aarti Agrawal are both
based at the Indian
Institute of Management
Kashipur, Kashipur, India.
Abstract
Purpose –The purpose of this study has been to understand brand India’s potential for financial
inclusion in the future. As, digital channels like mobile banking (m-banking) are likely to provide better
coverage and more cost-effective services to the unbanked population of India. Conventional banking
might not be cost-effective for low-ticket-size transactions, hence financial inclusion, which is on the
“Digital India” agenda of the Government of India (GoI), might not be feasible. However, to understand
brand India’s potential for financial inclusion in the future, it would be essential to understand Indian
customers’ attitudes toward m-banking, especially those who have not yet adopted it. This would bring
out the potential of m-banking as a channel to drive financial inclusion based on customers’ intentions
to adopt it. Until every Indian has access to a wider range of financial services, there cannot be financial
inclusion. Similarly, until every Indian adopts digital channels to access a wider range of financial and
non-financial services, the GoI’s initiatives for “Digital India” cannot be realized. Furthermore, a review
of the literature suggests that there are very few studies concerning m-banking worldwide and still fewer
in the context of India.
Design/methodology/approach –The present study used IBM SPSS and Amos software to test the
conceptual model developed using secondary data.
Findings –The findings of the study suggest that subjective norm, output quality and personal
innovativeness have impacts on the perceived usefulness of, and attitudes toward, the ultimate
adoption of m-banking.
Originality/value –The paper is the original work of the authors. An attempt has been made to integrate
all the existing literature on m-banking to develop a complete model for the technology’s adoption.
Keywords e-commerce, m-banking, Technology acceptance
Paper type Research paper
Introduction
To stand out from the crowd and capture significant mind shares and market shares, nation
branding has become essential. Global economic forces have made nation branding more
important than ever (Jaffe and Nebenzahl, 2001). For example, what distinguishes the West
from the rest of the world in general, and Asian markets in particular, are the stability,
technical know-how, legal protections and freedoms enjoyed there. Promoting nations as
brands can help to improve bilateral trade, attract foreign direct investment, improve the
goodwill of nations and increase feelings of national pride or patriotism (Ham, 2008).
Although there are multiple ways of branding a nation, the present paper focuses on one
area: the state of m-banking adoption in an emerging nation like India.
Digital channels like m-banking are likely to provide better coverage and more
cost-effective services to the unbanked population of India. Conventional banking might
not be cost-effective for low-ticket-size transactions, hence financial inclusion, which is on
the “Digital India” agenda of the Government of India (GoI), might not be feasible. Financial
Received 18 November 2015
Revised 25 February 2016
19 April 2016
Accepted 19 April 2016
PAGE 22 JOURNAL OF ASIA BUSINESS STUDIES VOL. 11 NO. 1, 2017, pp. 22-40, © Emerald Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-11-2015-0191
inclusion refers to the provision of a wide range and variety of financial services in the most
cost-effective manner to the entire population of India. At present, only 47 per cent of
people in India have access to different banking services. Financial inclusion cannot be
achieved until the entire population has access to wider varieties of banking services.
Furthermore, merely offering wider varieties of banking services, especially wider varieties
of technological services, will not be sufficient to realize the GoI’s drive to create a “Digital
India”. The aim of the “Digital India” program is to empower every citizen of India digitally
and to achieve a leadership position in information technology (IT) for the betterment of
health, education and banking services (as envisaged by the GoI in their “Digital India”
2019 vision document). It is clear from the vision document that the objective behind
branding the nation as “Digital India” is to achieve a leadership position for India in the field
of IT. Once India is in this primary, competitive position, it is proposed that its advantage
should be utilized to provide better health, education and banking services.
Focusing on banking services, it is essential to understand that providing wider varieties of
such services in a cost-effective manner to every citizen of India can be realized by offering
technologically advanced services, which are cost-effective, i.e. m-banking services. What
is more challenging is to ensure the adoption of these services by all Indian citizens. To
ensure adoption, it would be essential, as an initial step, to understand the willingness of
people to adopt technologically advanced services like m-banking. Taking such a step, in
the form of primary research, would provide specific insights into the reluctance of Indians
to adopt m-banking (if such feelings exist). Policymakers could then work toward
overcoming such reluctance and any barriers to adoption, which would lead to ensuring an
optimum level of take-up of such technologically advanced channels and the realization of
the GoI’s vision of achieving a leadership position in IT under the “Digital India” banner.
In view of the above, it is essential to understand Indian customers’ attitudes toward the
adoption of technologically advanced services such as m-banking, especially those who
have not yet adopted it. This would clarify the potential of m-banking as a channel for
driving financial inclusion based on customers’ intentions to adopt m-banking. Until every
Indian has access to a wider range of financial services, there cannot be meaningful
financial inclusion. Similarly, until every Indian adopts digital channels to access a wider
range of financial and non-financial services, the GoI’s initiative for creating “Digital India”
cannot be realized.
Shift from e-commerce to m-commerce
With the explosion of the internet, India’s was expected to become the third largest
internet-accessing population after China and the USA and it is likely to become the second
largest internet user by head of population by the end of this year, with 330–370 million
people online. Comparing India with a superpower like the USA, and a South Asian
counterpart like China, showcases its competitive strength based on technological
advancement.
India has shown tremendous growth in its m-commerce sector. According to research by
Gartner, worldwide payments made by mobile users reached $245.2 million in 2013 and
they were predicted to reach $450 million by 2017. From the regional viewpoint, transaction
values in the Asia-Pacific region will reach $165 billion in 2016 (Gartner Inc., 2013). In India,
30 per cent of shopping queries are derived from mobile terminals (Bapna, 2014). It was
predicted that in the USA and Europe, $67.1 billion worth of purchases would be likely to
be made using smartphones during 2015 (BusinessInsider, 2013); as a result, the value of
m-commerce was about to overtake e-commerce by 2015 (Mobilepaymentstoday, 2011)
and the sales of mobile device units were expected to grow by up to $42 billion by 2018
(Bricker, 2014).
The m-commerce market is expected to grow at a compound annual growth rate (CAGR)
of 71.06 per cent in the period 2012-2016 (TechNavio, 2013). An Internet and Mobile
VOL. 11 NO. 1 2017 JOURNAL OF ASIA BUSINESS STUDIES PAGE 23
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