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RESEARCH PROPOSAL

CONSUMER ACCEPTANCE OF MOBILE BANKING INKARACHI

Submitted by:Laraib Murtaza

(08-0002)

Supervisor:

Sir Hassan Javid

Submitted On:

3rd December 2011

National University of Computer & EmergingScience

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Management Science Department, Karachi

Table of Contents

INTRODUCTION ............................................ 32. BACKGROUND .......................................... 43.LITERATURE REVIEW .................................. 4MCB Mobile is a quick, easy and secure way totop up mobile phone balances, transfermoney, pay bills and do so much more. MCBs

globally recognized and award nominatedmobile payments service allows existingaccount holders at MCB to conduct both nonfinancial and financial transactions such as: .. 7KEY TERMS .................................................. 94. RESEARCH QUESTIONS ............................ 115. CONCEPTUAL FRAMEWORK ..................... 116. OBJECTIVES ............................................ 11

7. STAKEHOLDERS ...................................... 128. BENEFITS ............................................... 129. LIMITATION ............................................ 1210. SCOPE .................................................. 1311. RESEARCH METHODOLOGY .................... 1311.1 RESEARCH DESIGN .............................. 1311.2 PROCEDURE ........................................ 1311.3 POPULATION ....................................... 14

SAMPLE AND SAMPLING METHOD ................ 1411.5 MEASUREMENT/ INSTRUMENT SELECTION................................................................. 1411.6 VARIABLES ........................................ 1411.7 HYPOTHESIS ....................................... 1512. SOFTWARE EMLPOYED .......................... 15

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13. REFERENCES ........................................ 16

INTRODUCTION

Mobile phone has revolutionized our behavioral patterns in more ways than one and

still continues to do so. It took more than two decades to reach the first billion mobile

subscribers, took only three and a half years to bring that number up to two billion and

not surprisingly it has taken less than 24 months to reach the three billion mark. It can

safely be estimated that in the very near future more than 80% of mankind will be able

to communicate at the press of a button.

Today we are not only using the mobile phone to communicate with others in the form

of voice or SMS, we are using it to connect to the world. Todays mobile phone is no

less than yesterdays personal computer. Indeed, computers revolutionized banking in

the last decade or so, eliminating to some extent the need for branch visits.

It has taken over 60 years for the banking industry to get approx 30 million bank

accounts. It took Telcos less than 10 years to reach 90 million customers. Bringing the

next 30 million people into the formal economy by opening a bank account can now

easily be achieved in the next 5 years.

Unlike developed economies, penetration of computers and use of internet in Pakistan

had take-up and user experience limitations. Therefore internet banking in Pakistan

was not able to achieve desirable growth in the early years. It is true that numeric

literacy in Pakistan is higher than our official literacy figure. Even your cook & driver

have learned the skills of device management that are beyond just voicecommunication from their mobiles sets. This coupled with internet now available on a

mobile phone has opened up a large resource pool that stands open for mass enrollment

in the banking sector that ultimately will prove to be a harbinger for documenting the

national economy.

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With millions of mobile users and still growing, it is only natural that the banking

sector will now begin to channel transactional and payments needs through the mobile

device including utility & other bill payments and the freedom to transfer funds

instantly (Ikhlas, 2009).

2. BACKGROUND

According to a study conducted by telecommunications analyst firm, Juniper Research,

the number of mobile phone banking (M-Banking) users will exceed 150 million

globally by 2011. This is in contrast with trends in M-Banking thus far with consumer

uptake around the world falling below the expectations of both academics and industry

specialists. This supports the notion that technological advances and service availability

do not automatically lead to widespread adoption and use (Wang, Lo and Fang, 2008).

As such, there have been repeated calls for the investigation of factors that predict or

explain the adoption, acceptance, and use of mobile services (M-Services) such as M-

Banking (Lisa Wessels and, 2009).

3.LITERATURE REVIEW

Emergence of Mobile Banking In Pakistan

Our country has experienced an excelling growth for both mobile and banking sectors

since their de-regulation; today we are witnessing mergers of their products and

services. According to State bank of Pakistan, growth and turnaround in Pakistans

banking sector has been remarkable and unprecedented in recent years. Classified as

Pakistans and regions best performing sector, the financial sector assets have risen to

over $185 billion, its profitability is exceptional and at an all-time high, non performing

loans (NPLs) are at an all-time low, credit is fairly diversified and bank wide system

risks are well contained. Almost 81% of banking assets are in private hands. Similarly

mobile sector in Pakistan has observed an enormous growth with a subscribers base

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reaching above 100 million, growing at 12 to 15%, which was only 5 Million in 2004-

05.

Despite the rapid growth presently there are only 25 million bank accounts in the

country making a 14% of adult population with an access to formal banking services. If

the opportunity relationship is mapped between the numbers of bank account i.e. 25

million versus the number of mobile subscribers i.e. 102 million there exists a

comprehensible window of facilitation for un-banked population of the country mostly

living in rural and remote area. This window of facilitation could be transformed into a

realization though mobile banking services.

Five mobile phone companies have brought the entire country under comprehensive

network coverage, with steady growth in number of mobile phones subscribers that is

already well above hundred million with licensed and regulated financial service

providers to devise and introduce innovative cost effective means of introducing new

segments of banking. (Mobile Banking Market Dynamics for Pakistan , 2009).

The mobile banking activities have already gone to a rise in the country. The major

service providers in the new market of mobile banking in Pakistan are Easypaisa bu

Telenor, Muslim Commercial Bank, Omni accounts by United Bank and Mobilink is

the new entrant to the market of mobile banking (Bold, 2011).

EASYPAISA BY TELENOR:

Easypaisa Mobile Accounts are actual bank accounts and work just like a normal bank

account. This service is available only for existing and new Telenor subscribers.

Easypaisa Mobile Account can be opened from any Telenor Sales and Service Centers,

Telenor Franchise or Tameer Bank branch. Telenor subscribers will now be able to pay

bills, transfer money and use many more services from their own mobile phones,

anytime, anywhere. Once an easypaisa Mobile Account is opened, users can go to any

of the thousands of easypaisa shops and Tameer Bank branches in Pakistan to 'Deposit

Cash' into or 'Withdraw Cash' from their easypaisa Mobile Account.

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PRODUCT FEATURES:

Instant access to your Mobile Banking Account anytime, anywhere Any

Telenor current or new subscriber can open a Mobile Account. No prior Bank

Account is needed; anyone with a Telenor SIM can avail and use this service

Send money to any person with a valid NADRA CNIC or to any other

easypaisa Mobile Account. Utility bills can also be paid instantly from an

easypaisa Mobile Account

Cash Deposit into a Mobile Account or Cash Withdrawal from any Mobile

Account can be done at many easypaisa merchants in more than 450 cities in

Pakistan

The following transactional limits apply to all easypaisa Mobile Account, as

regulated by the State Bank of Pakistan. Rs. 10,000 per day, Rs. 20,000 per

month and Rs. 120,000 per year. These limits apply on both credits and debits

in a Mobile Account

A customer can only keep a maximum of Rs. 60,000 in his easypaisa Mobile

Account at any time

Sunday or Monday you can do transactions any day, anytime from anywhere.No more travelling, or no more waiting in long queues

Secure Encrypted Transactions based on GSM standards and State Bank of

Pakistan regulations

Dedicated customer helpline / support available 24/7 (Emadpide, 2010)

Muslim Commercial Bank:

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MCB Mobile is a quick, easy and secure way to top up mobile phone balances, transfer

money, pay bills and do so much more. MCBs globally recognized and award

nominated mobile payments service allows existing account holders at MCB to

conduct both non financial and financial transactions such as:

Fund Transfers:

You can send money to anyone using MCB Mobile, by providing the complete 16-digit

MCB account number or the 13 -digit ATM card number of the beneficiary.

(Beneficiary does NOT have to be a registered MCB Mobile user).

You can also send money using the beneficiarys mobile phone number registered with

MCB Mobile. (Beneficiary needs to be a registered MCB Mobile user)

Purchase Top-ups for Prepaid Connections:

You can now conveniently purchase prepaid airtime and top-up the credit in your or

someone elses mobile phone for all of following mobile connections:

Mobilink

UFone

Zong

Warid Zem

Telenor

Pay your Postpaid Mobile bills:

You can forget about the hassle of paying your post-paid mobile bills through customer

service centers. Pay your post paid bills through MCB Mobile conveniently at anytime

for any of all mobile companies.

Pay your Utility Bills:

MCB Mobile allows you to make payments for a host of utility companies, schools and

clubs among other recurring payment services. Currently supported companies are:

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KESC - Karachi Electricity Supply Company

HESCO - Hyderabad Electricity Supply Company

SSGC - Sui Southern Gas Company

SNGPL - Sui Northern Gas Pipeline

PTCL - Pakistan Telecom Communications Limited

IESCO - Islamabad Electric Supply Company

Make Your MCB Visa Credit Card Payments:

You can now make your MCB Visa Credit Card payments easily through this service.

You have the option of paying a minimum payment, more than minimum or the full

amount.

Maintain Favorites:

Registered MCB Mobile users can manage their favorite payees i.e. add or remove

utility companies or individual account holders to whom payments and fund transfers

are made frequently.

Report a Lost ATM card

Registered MCB Mobile users can report their card as lost using the service. The ATM

card will automatically be de-activated for a period of 24 hours.

Make Donations:

You can make donations to your favorite charities through this service in a matter of

seconds. Donations to the Prime Ministers Fund of Internally Displaced Persons are

being accepted. More charities will be added in the near future.

UNITED BANK OMNI ACCOUNT:

UBL introduces yet another first-of-its-kind service in Pakistan; UBL SMS Banking is

the First Complete Mobile Payments Solution ever to be launched in the country.

This means that you can now buy, pay and share real money using the SMS facility on

your mobile phone. It is now amazingly easy for you to buy your prepaid talk time

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minutes, view your utility bills and even pay them off through your mobile phone. With

simply an SMS, you can now send and receive actual money from friends and family.

With UBL SMS Banking you don't need a special SIM, GPRS connection not even a

bank account. Major features of UBL Omni account are: (Pakistani, 2011)

Buy prepaid cards of all service providers in Pakistan

Share and send money.

Send flowers and cakes.

View your current account.

Pay your utility bills.

MOBILINK SMS BANKING:

Mobilink connection is not just meant for communication. It is now a complete banking

solution for our valued customers. Mobilink GSM has joined hands with leading Banks

of Pakistan to bring your bank accounts at your finger tips. By using your Mobilink

connection, you would be able to remain updated with your account details anywhere,

anytime. With leading banks like Citibank, MCB Bank, SCB, UBL and EGIBL, we

strive to assure that we serve as many of our valued customers as possible with this

convenient service. (Mobilink, 2011)

KEY TERMS Mobile banking

Perceived ease of use

Compatibility

Perceived cost

Perceived risk

Mobile banking: Mobile banking (also known as M-Banking, mbanking, SMS

Banking) is a term used for performing balance checks, account transactions, payments,

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credit applications and other banking transactions through a mobile device such as

a mobile phone or Personal Digital Assistant (PDA). The earliest mobile banking

services were offered overSMS. With the introduction of the first primitive smart

phones with WAPsupport enabling the use of the mobile web in 1999, the first

European banks started to offer mobile banking on this platform to their customers.

Compatibility: It can be defined as the degree that engaging in M-Banking is

perceived as being consistent with consumers lifestyle and current need. Research on

mobile transaction services reveals that as many as two-thirds of the financial service

transaction needs of respondents remain unfulfilled because traditional channels do not

offer the ubiquity provided by a mobile channel. Thus, it has been found that high

compatibility leads to an increased chance of technology adoption (Lisa Wessels and,

2009)

Perceived cost: An examination of current research in the area of M-Banking

revealed that perceived cost, which is defined as the extent to which a person believes

that using M-Banking will cost money, has a significant negative effect on intention to

use M-Banking and its related technologies. A similar construct, monetary sacrifice,

has also been examined by Kim, Chan and Gupta, who found that it negatively affects

perceived value and thus, consumer intentions of mobile Internet adoption. Given thatthe cost of accessing mobile and wireless service has traditionally been higher than that

of accessing wire-based Internet, this suggested that financial considerations, including

the cost of a web-enabled mobile phone, and service and communication fees, will

influence consumer intentions to use M-Banking.

Perceived risk: Consumer'slevel ofuncertaintyregarding the outcome of

purchase decision, especially in case ofhigh priced item such as a car, or

a complex item like a computer or now a days M-commerce and M-banking.

Consumers attempt to reduce theiranxiety by collecting more information and by

seeking the recommendations of apeer group or anentity (personor consumer

advocacy group) considered an expert on the subject matter. Manufacturers

and marketerstry to reduce this riskwith reassuring guaranties, by obtaining the

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backing or recognized groups oropinion leaders, or by hiring a well known and

respected spokesperson.

4. RESEARCH QUESTIONS

What are the factors that influence consumers attitude and intention to

use Mobile banking in the context of Karachi?

5. CONCEPTUAL FRAMEWORK

6. OBJECTIVES

The major objectives of this research are following:

To determine the number of people availing the facilities of mobile banking.

To examine the key factors engaged in the motivation of their mobile banking

usage.

Ease OfUse

CompatibilityAttitudetowardMobile-Banking

Perceived Risk

Perceived cost

Intention toUse Mobile-

Banking

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To discover the aspects which cause hindrance to use mobile banking?

7. STAKEHOLDERS

The basic stakeholders of this research would be all the persons that are currently using

mobile phones in their daily routine. Few of the identified stakeholders are as follows:

1) Mobile service users.

2) Banks and Telcos involved in M-banking

3) Students and researchers.

8. BENEFITS

This research is going to be beneficial in many ways such as:

1) The end users can convey their point of view regarding the service quality

received by them in Mobile Banking.

2) The mobile bank service providers will be able to know how they can improve

their services in order to satisfy the customers.

3) The hindrances and holdups in consumers mind to use M-banking can be

examined.

4) Services can be improved by eliminating these hindering factors.

9. LIMITATION

The limitations of the research can be following:

Time limitation

Difficulty in the collection of primary data.

The research is employed only on the City of Karachi.

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10. SCOPE

The research will be conducted under the following framework:

City: Karachi

Industry: Telecom companies and Banks offering mobile bank services.

Population: People of Karachi who are currently possessing cell-phones.

11. RESEARCH METHODOLOGY

11.1 RESEARCH DESIGN

The type of the study will be Quantitative, since it will measure the relationship

between the variables.

11.2 PROCEDURE

The study will be conducted through the following methods:

1. Keeping in view the factors a questionnaire will be made.

2. Pilot testing of questionnaire will be done.

3. Data would be gathered from different stratum through questionnaires.

4. Data will be then recorded using software like excel etc.

5. Interpretation of the data and results would be analyzed by using different

methodologies.

6. Hypotheses will be then proved or disproved.

7. Conclusion and recommendation would be provided.

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11.3 POPULATION

The total population of Karachi is approximately 15,329,545 of which most of the

people are the users of mobile phones. The population of my research would be all

those people in the city of Karachi who possess mobile phones.

SAMPLE AND SAMPLING METHOD

The sample size of my research would be 384 and there will be a margin of error + 5

with a confidence level of 95%. The survey would be done in the places where people

familiar to the mobile banking services will likely be available such as:

Parks

Malls

Beaches

Supermarkets

11.5 MEASUREMENT/ INSTRUMENT SELECTION

a) PRIMARY:

Primary data would be collected through questionnaires which would be structured and

survey.

b) SECONDARY:

Secondary data would be collected from different articles, magazines, research papers

and other sources on internet.

11.6 VARIABLES

Independent:

Ease of use

Compatibility

Perceived Cost

Perceived Risk

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Dependant:

Customers intention to use mobile banking

Moderating variable:

Attitude towards mobile banking.

11.7 HYPOTHESIS

H1: Attitude towards mobile banking will mediate the relationship between theantecedent (independent) factors and intention to use M-Banking.

H2: A positive attitude toward M-Banking will lead to an intention to utilize M-Banking.

H3: Perceived ease of use will have a positive relationship, mediated by attitude toward

M-Banking, with intention to use M-Banking.

H4: The perceived risk of using M-Banking will have a negative relationship, mediated

by attitude toward M-Banking, with intention to use M-Banking.

H5: Perceived cost will have a negative relationship, mediated by attitude toward M-

Banking, with intention to use M-Banking.

H6: The compatibility of M-Banking with users lifestyle and current needs will have apositive effect, mediated by attitude toward M-Banking, on intention to use M-Banking.

12. SOFTWARE EMLPOYED

Microsoft Excel, Spreadsheets, SPSS, etc

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13. REFERENCES

1. Lisa Wessels and, J. (2009).An Investigation of Consumer Acceptance of M-Banking in Australia. Queensland: Anzmac.

2. Ikhlas, A. N. (2009, August).Mobile Banking on the rise in Pakistan. Retrievedfrom mcbmobile.

3. Mobile Banking Market Dynamics for Pakistan . (2009, August 13).Retrieved from dryaseen.pk.

4. Bold, C. ( 2011, October 12).More on pakistan as a laboratory for innovationbranchless banking. Retrieved from technology.cgap.org.

5. Emadpide. (2010, september 27).Easypaisa mobile account. Retrieved fromwww.blogspot.com.

6. Pakistani. (2011, July 29). UBL Omni SMS services. Retrieved fromwww.blogspot.com:http://ubl-omni.blogspot.com/2011/07/ubl-omni-sms-services.html

7. Mobilink. (2011). Sms banking. Retrieved from www.mobilinkworld.com:http://www.mobilinkworld.com/index.php?option=com_content&task=view&id=15&Itemid=20

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APPENDIX

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Authors Methodology Sample Variables Techniques Major Findings

RajnishTiwari,StephanBuse &

CorneliusHerstatt

Questionnaire

A total of488persons in

the age-group of18 to 65years

Perceivedpreferencesand willingnessto pay for

differentfinancialservices offeredin MobileBanking.

Empiricalassessment.

A stage seems to have bereached where it is prudent include offers of MFS product portfolios. The exa

scope of the services to offered and prices to charged should be decidkeeping in mind the banspecific customer structures

HanudinAmin,RicardoBaba&MohdZulkifli

Muhammad

StructuredQuestionnaire

Randomsamplingof 250customers

Perceivedusefulness, easeof use, credibility,self-efficacy &normativepressure.

Reliabilitytesting &validityMeasureModel.

The findings in this study offinsights to commercial banin Malaysia in promoting tuse of mobile banking amobank customers. In order achieve this, it is important fcommercial banks to take in

account the factors that tstudy had found to impact the use of mobile bankin

These very factors can utilized to formulate gopromotional strategies enhancing the use of mobbanking among the clienteof Malaysian banks.

innaMattila

traditionalpostalsurvey

3000 bankcustomers

Key motivators& inhibitors forusing mobile

banking.

The size of the attribudemonstrates also timportance of it. The mo

significant predictors adoption in this case turnout to be relative advantagained, compatibility services with adopteexisting values and perceivcomplexity of the service

The proposed model is nintended to be fucomprehensive or universaapplicable.

Lisa

Wessels &JudyDrennan

Web based

survey

3000 email

invitationsfromwhich 314responseswerereceived

Perceived

usefulness,ease of use,need forinteraction, risk& intention touse mobilebanking.

Pearson

product-momentcorrelationcoefficients

The first condition

mediation posed was satisfisince all the independevariables are significanrelated to the dependevariable at the p

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condition of mediation. Lastthe third condition mediation is also fulfilled sinthere is a significarelationship between M aDV (r=.856, n=311, p

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security of personal and financial information, mobile phone going off line whilst banking, etc.

11. I feel that conducting my bankingbusiness on my mobile phone would besecure

Antecedent Beliefs CompletelyAgree

MostlyAgree

SlightlyAgree

NeitherAgree/Dis

agree

SlightlyDisagree

MostlyDisagree

ComDi

12. I know that mobile phone banking willhandle my business correctly

13. I feel that conducting my bankingbusiness on my mobile phone would besafe

14. I think there is little danger that anythingwill go wrong if I use mobile phone

banking

The following questions aim to determine the perceived financial cost of using mobile phone banking. Some people think that mobile

banking would be expensive to use, while others think that the cost of mobile phone banking would be reasonable.

15. It would cost a lot to use mobile phonebanking

16. I think that the internet access cost ofusing mobile phone banking would behigh

17. There are financial barriers (e.g. internetaccess cost) to me using mobile banking

This set of questions measure how compatible mobile phone banking is with your lifestyle and needs. For instance, a person who likes

shopping might find that mobile phone banking allows them to check their balance and transfer money before buying an item, or som

who is always on the run may find that being able to do their banking away from a computer fits well with their lifestyle and their nee

anytime, anywhere access.

18. Using mobile phone banking would fitmy lifestyle

19. Using mobile phone banking would fitwell with how I like to do my banking

20. Using mobile phone banking would becompatible with most aspects of my

banking activities

These questions measure your general attitude toward mobile phone banking. Some people may have a positive attitude toward mobi

phone banking, whilst others may have a negative attitude.

21. How good or bad do you feel aboutusing mobile phone banking?

Very Good Good SlightlyGood

Neutral Slightly Bad Bad Ve

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22.How pleasant or unpleasant do you thinkit is to use mobile phone banking

VeryPleasant

PleasantSlightly

PleasantNeutral

SlightlyUnpleasant

UnpleasantUnp

Antecedent Beliefs CompletelyAgree

MostlyAgree

SlightlyAgree

NeitherAgree/Dis

agree

SlightlyDisagree

MostlyDisagree

ComDi

23. How much would you say you wouldlike or dislike using mobile phone

banking?

StronglyLike

LikeSomewhat

LikeNeutral

SomewhatDislike

DislikeStD

These questions relate to whether you intend to use mobile phone banking in the future. Some people believe that they will use mobile

banking, whilst others believe that they will not.

24. When you have banking to do, how

likely are you to use mobile phonebanking?

Very Likely Likely

Somewhat

Likely Neutral

Somewhat

Unlikely Unlikely U

25. To the extent possible, I would takeadvantage of mobile phone banking formy banking activities.

CompletelyAgree

MostlyAgree

SlightlyAgree

NeitherAgree/Dis

agree

SlightlyDisagree

MostlyDisagree

CoD

26. Given that I have access to a web-enabled mobile phone, I predict that Iwould use m-banking.

CompletelyAgree

MostlyAgree

SlightlyAgree

Neither

Agree/Disagree

SlightlyDisagree

MostlyDisagree

CoD

Demographic Information (Please circle the most appropriate box)

The following questions relate to your demographic information. Please remember that there is no way to identify you from this infor

27. Gender Male Female

28. Age 15-25 26-35 36-45 46-55 56-65 65+

29. EducationSecondarySchool Year 10

SecondarySchool Year 12

TAFEUnder-

graduateDegree

Post-graduateDegree

Other

30. Which state or territorydo you live in at themoment?

WA ACT NT NSW QLD SA TAS