Trust: mediator between mobile money adoption and usage and financial inclusion

Abstract

Purpose Recently, a large body of research has been devoted on the role of trust in shaping different types of transactions, especially in rural financial development. Trust is a set of expectations shared by all those who engage in an exchange. Indeed, the “rule of the game” suggests that no trusting party in a transaction should act opportunistically. Consequently, this study aims to establish the mediating effect of trust in the relationship between mobile money adoption and usage and financial inclusion of MSMEs in developing countries with a specific focus on rural Uganda. Design/methodology/approach A quantitative survey-based study was used and responses obtained from 379 MSMEs located in northern Uganda were analysed using partial least square-PLS version 3.0. A semi-structured questionnaire was developed from scales and items used in previous studies referenced in internationally recognised journals to elicit responses from the MSMEs. Structural equation modelling was used to test the models to arrive at a final empirical model derived from the data. Findings The authors found evidence that trust enhances mobile money adoption and usage to increase the scope of financial inclusion of MSMEs in developing countries. Moreover, when individual effect was determined, trust also had significant and positive effect on financial inclusion. Thus, the study results imply that trust enhances mobile money adoption and usage to improve the level of financial inclusion of MSMEs in developing countries. Research limitations/implications The study used cross-sectional data to document the relationship between mobile money adoption and usage and financial inclusion and to establish the mediating effect of trust in the relationship. Future research could use relevant longitudinal data to verify other benefits of trust. Practical implications The results present trust as a significant factor for FINTECH financial services marketing and growth. Specifically, data privacy and effectiveness of the mobile telephone network is more likely to help consumers to bridge the gap between participation and non-participation on the mobile money platform. Customers’ data sent over the mobile network of providers should be protected from unnecessary access and usage by Mobile Network Operators (MNOs) staff and unauthorised persons and agents. Data protection protocols should be set by the MNOs to avoid unnecessary access and use of customers’ data. Originality/value Globally, Fintech scholars have examined the role of mobile money in promoting financial inclusion. However, there is insufficient evidence on the mediating effect of trust in the relationship between mobile money adoption and usage and financial inclusion, especially among rural MSMEs. This study invents a novel direction on the importance of trust in creating transaction efficiency by eliminating opportunism and fraud with in the Fintech ecosystem.

Behavioural Intention of Commercial Banks’ Customers towards Financial Technology Services

“…It is critically important factor in the financial services sector to improve customer long-term relationships. A reasonable explanation is that it could lower uncertainty or anxiety of the behaviour (Slade et al, 2015;Kaabachi et al, 2019) and facilitates transactions with customers (Kaabachi et al, 2019;Bongomin & Ntayi, 2019). Consumers believe that financial institutions are not behaving opportunistically at their expense when there is an opportunity.…”

“…Thus, trust is a vital predictor for the adoption of e-banking services or online banking (Kaabachi et al, 2019;Usman et al, 2020). Insecurity and perceptions of risk could be reduced for mobile money customers as they feel comfortable in makings purchases, payments and transaction together with sharing personal information when using the mobile money digital platform (Bongomin & Ntayi, 2019). It is generally related to knowledge based which derived from accumulated experience of customers' dealings with e-banking service providers (Kaabachi et al, 2019;Bongomin & Ntayi, 2019).…”

“…It is generally related to knowledge based which derived from accumulated experience of customers' dealings with e-banking service providers (Kaabachi et al, 2019;Bongomin & Ntayi, 2019). This would make them to make trust inferences (Bongomin & Ntayi, 2019). Consistent with the online shopping whereby dependence, risk characterise and uncertainty are vital components in the relationship of buyer-seller.…”

“…As the acceptance of digital distribution channels increases among customers, it is a golden opportunity for banks to differentiate by improving its efficiency in a lower return scenario (Gupta & Xia, 2018). Source: Gupta & Xia (2018, p. 219) The mobile money financial services have impacted the unbanked population in developing nations to stride in accessing financial services due to its usage and broad coverage (Bongomin & Ntayi, 2019). For instance, a financial product penetration in Asia is lower due to geographic challenges and lack of established banking habits (Gupta & Xia, 2018).…”

“…Mobile phones could significantly drive up more users into the mainstream financial system. It is expected that the intention to use mobile money could contribute an additional $3.7 trillion in global growth domestic products (GDP) by 2025 (Bongomin & Ntayi, 2019).…”