1.1 Introduction
Mobile banking is defined as the delivery of banking and financial services through mobile devices such as smartphones and tablets, enabling customers to perform transactions including fund transfers, bill payments, account monitoring, and other financial activities without the need to visit a physical bank branch (Adewuyi, 2019). In the Nigerian banking sub-sector, mobile banking is becoming an essential component of the financial system, driven by rapid advancements in information and communication technology and the increasing penetration of mobile phones across the country. The introduction of mobile banking is significantly transforming traditional banking practices by improving accessibility, reducing transaction time, and enhancing customer convenience (Eze & Nwankwo, 2018).
The Nigerian banking sector is experiencing a shift toward digitalization, with financial institutions investing heavily in mobile banking platforms to remain competitive and meet evolving customer demands (CBN, 2022). As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the aim and objectives of the study. Others are significance of the study, scope of work, research hypothesis and questions, limitation of the study and definition of terms.
1.2 Background of Study
Mobile banking, often referred to as m-banking, is the provision of financial services and banking operations through mobile communication devices, particularly smartphones and tablets, allowing customers to conduct banking activities without visiting a physical bank branch. According to Adewuyi (2019), mobile banking reported that it has become a critical tool in bridging the gap between formal financial institutions and underserved populations, providing an avenue for financial inclusion and economic participation. In Nigeria, the adoption of mobile banking services has increased significantly due to the rising penetration of mobile devices, the growth of internet connectivity, and the need for convenient, accessible, and efficient banking solutions. Financial institutions in the country have recognized mobile banking as a strategic approach to expand their customer base, reduce operational costs, and enhance service delivery in an increasingly competitive banking environment (Eze & Nwankwo, 2018).
According to Ovia (2020), it was reported that mobile banking adoption in Nigeria is influenced by several factors including ease of use, reliability, security, and customer awareness. Ovia further asserted that although mobile banking presents an array of opportunities for banks and customers, it is still plagued by challenges such as system downtime, transaction failures, and inadequate security measures. These issues are not only affecting customer confidence but also limiting the potential of mobile banking as a transformative financial tool. On the other hand, the potential benefits of mobile banking, including reduced transaction costs, improved financial inclusion, and faster service delivery, affirm that the sector remains a vital area for growth and research.
Akinwale (2021) reported that frequent network disruptions, unstable internet connectivity, and inconsistent mobile money platforms are major impediments to seamless banking experiences. On the other hand, banks are continuously exploring technological innovations, such as USSD banking codes and mobile applications, to enhance reach and minimize the reliance on physical branches. According to Eze and Nwankwo (2018), it was affirmed that low digital literacy among a significant portion of the Nigerian population is another constraint to the effective use of mobile banking services. Many users, particularly in rural communities, lack sufficient knowledge and skills to navigate mobile banking platforms efficiently, resulting in hesitancy, underutilization, or errors during transactions.
According to Adewuyi (2019), it was contended that the security of mobile banking transactions is a significant concern that affects both customers and banks. Fraud, phishing attacks, unauthorized access, and identity theft are reported to be on the rise, causing many potential users to doubt the safety of mobile banking. Adewuyi further asserted that while banks have implemented security measures such as two-factor authentication, biometric verification, and encryption, the rapid evolution of cyber threats makes continuous improvement in cybersecurity strategies essential. On the other hand, enhancing user awareness regarding secure banking practices, coupled with robust regulatory oversight, is critical to maintaining customer trust and fostering the growth of mobile banking services in Nigeria.
Central Bank of Nigeria (CBN, 2022) reported that regulatory frameworks for mobile banking are essential in guiding financial institutions, safeguarding customer interests, and promoting sustainable digital financial services. The CBN has introduced policies and guidelines that encourage cashless transactions, digital payment adoption, and secure banking platforms. However, inconsistencies in policy implementation, regulatory delays, and compliance challenges are still evident, which can slow down innovation and the introduction of new mobile banking services. This study is set against the backdrop of the need to critically examine the issues, challenges, and prospects of mobile banking services in the Nigerian banking sub-sector.
1.3 Statement of Problems
Investigation revealed that one major problem is poor network infrastructure, which leads to unstable internet connectivity, failed transactions, and delays in transaction processing. On the other hand, cybersecurity threats, including fraud, identity theft, and phishing attacks, remain a significant concern for users, reducing trust and limiting adoption (Ovia, 2020).
Additionally, many users, particularly in rural areas, lack the necessary skills and knowledge to effectively operate mobile banking applications. On the other hand, even among literate users, there is often resistance to change due to cultural preferences for traditional banking methods and lack of trust in digital platforms (Eze et al., 2018).
Furthermore, the cost of accessing mobile banking services is another concern. Charges associated with transactions, data usage, and service fees are perceived as high by many customers, discouraging frequent use. Banks are promoting mobile banking as a cost-effective solution, yet the reality for many users is that the expenses involved are limiting their participation (Akinwale, 2021). It is against this backdrop that this study seeks to examine the issues, problems, and prospects of mobile banking services in the Nigerian banking sub-sector.
1.4 Aim and Objectives of Study
The aim of this study is to investigate the issues, problems, and prospects associated with mobile banking services in the Nigerian banking sub-sector. In achieving this aim, the following specific objectives were laid out as follows:
- To examine the infrastructural challenges affecting mobile banking services in Nigeria.
- To assess the security risks and cyber threats associated with mobile banking.
- To evaluate the level of digital literacy among mobile banking users and its effect on adoption.
- To identify cost and operational issues that hinder the effective utilization of mobile banking services.
- To explore the prospects and potential strategies for improving mobile banking adoption and service delivery in Nigeria.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What infrastructural challenges affect mobile banking services in Nigeria?
- What are the security risks and cyber threats associated with mobile banking?
- How does digital literacy influence the adoption and utilization of mobile banking services?
- What cost and operational issues hinder the effective utilization of mobile banking services?
- What are the prospects and strategies for enhancing mobile banking services in Nigeria?
1.6 Research Hypotheses
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis 1
- Null (H0): Infrastructural challenges do not significantly affect the adoption of mobile banking services in Nigeria.
- Alternate (H1): Infrastructural challenges significantly affect the adoption of mobile banking services in Nigeria.
Hypothesis 2
- Null (H0): Cybersecurity risks do not significantly influence customer trust and adoption of mobile banking services.
- Alternate (H1): Cybersecurity risks significantly influence customer trust and adoption of mobile banking services.
Hypothesis 3
- Null (H0): Digital literacy does not significantly affect the effective utilization of mobile banking services in Nigeria.
- Alternate (H1): Digital literacy significantly affects the effective utilization of mobile banking services in Nigeria.
1.7 Significance of Study
It is believed that at the completion of the study, the outcome of this research will guide policymakers in implementing regulatory frameworks that strengthen digital banking practices. Also, banks will be able to reduce transaction failures, improve service quality, and increase customer satisfaction.
Furthermore, regulators will be able to develop more effective policies and frameworks for digital banking oversight. In addition, customers will benefit from improved security, reduced transaction delays, and better access to financial services.
Lastly, researchers will have updated data on mobile banking trends, enabling further studies and innovations.
1.8 Scope of Study
The study focuses on mobile banking services provided by selected commercial banks in Lagos State, Nigeria, examining issues, problems, and prospects within this geographic and institutional context. The research evaluates the experiences of bank customers and considers the operational and infrastructural factors affecting mobile banking adoption in this state.
1.9 Limitations of the Study
During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
- Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.
1.10 Definition of Terms
Mobile Banking: The provision of banking and financial services via mobile devices such as smartphones, allowing customers to perform transactions remotely (Adewuyi, 2019).
Digital Literacy: The ability of users to understand, operate, and effectively use digital technologies, including mobile banking applications (Eze & Nwankwo, 2018).
Cybersecurity: Measures taken to protect electronic data, networks, and systems from unauthorized access, fraud, and attacks (Ovia, 2020).
Financial Inclusion: The process of ensuring individuals and businesses have access to useful and affordable financial products and services (CBN, 2022).
USSD Banking: A technology that allows mobile banking transactions without internet access, using specific short codes (*XYZ#) for banking operations (Akinwale, 2021).
Record Keeping:
This refers to the systematic process of documenting all financial transactions and business activities in an organized and accessible manner (Owolabi & Iyoha, 2012).
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