Bethel Bekele DDU MBA

DETERMINANTS OF MOBILE MONEY SERVICE ADOPTION THE CASE OF COOP

BANK IN DIRE DAWA ADMINISTRATION

Chapter One Introduction

1.1. Background of the Study

Now days notably Mobile Money Services (MMS) are rising significantly very rapidly in the
developing countries there has been successful penetration of mobile money services in order to
extract the determinants of Mobile Money Services Adoption (MMSA) (Kwabena & Oscar,
2023). Over time, commercial banks recognized the potential of mobile money services and
began integrating them into their service offerings. This integration aims to leverage the
widespread use of mobile phones to provide banking services to the unbanked and underbanked
populations (Fulea & Adane, 2021).

Accordingly, Global System for Mobile Communications Association [GSMA] (2021) MMS
emerged as a response to the need for greater financial inclusion, especially in regions with
limited access to traditional banking infrastructure. Lawrence, Ebenezer and Edwin (2022)
posited the adoption of MMS has transformed the financial landscape, offering unprecedented
convenience and accessibility, particularly in emerging markets. Besides, Mahmoud, (2019)
point out MMS enable users to perform various financial transactions using mobile phones,
including money transfers, bill payments, and purchasing goods and services. The integration of
mobile money services into the banking sector has the potential to enhance financial inclusion,
reduce transaction costs, and improve the efficiency of financial services delivery (Reginald &
Obey, 2018).

On the other hand, the adoption and usage of these services are influenced by several
determinants, which vary across different contexts and regions (Mararo, & Ngahu, 2019).
Similarly, Mahmoud, Zeinab (2019) indicated that countless precarious challenging problems
backdrops Mobile Money Services Adoption (MMSA) with the most important challenges to
improve the service quality, attract and retain more customers, and reduce dealing with cash.

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Also, Sanjeewa, and Yatigammana, (2021) highlight several factors influence the adoption of
mobile money services in commercial banks, consequently these determinants can be categorized
into technological, individual, organizational, and environmental factors. According to, Mishra,
(2019) posited that, the rise of digital technologies has modernized the financial sector, with
mobile money banking service systems (MMBSS) becoming the keystone of up-to-date banking
processes. Commercial banks have progressively embraced Mobile Money -Banking Service
Systems to offer convenient, 24 hours, 7 days in a week access to a wide range of financial
services, including account management, fund transfers, payments, investments, and loans.
Moreover, they argued, this shift has been driven by several factors, Customer demand,
Competition, Technological advancements and Regulatory landscape.

Similarly, Uvaneswaran, et al., (2017); Subramanian, (2016); Dina, (2016); Addis (2020);
Tekabe, and Gadise, (2016); Abdulselam, (2019) argued that, technological improvements and
innovation, its’ own benefits and opportunities banking services, in one side endeavored to
construct client gratification over and done with provided that better services, in order to reduce
weighting time of customer banking service provided the major opportunities standings of viable
returns on the other hand, reduced human resources costs.

Several previous scholars studies conducted with regard to e-banking services encompass a wide
range of digital financial offerings, for instance, Smith and Johnson, (2023); Gupta and Patel,
(2023) posited that, e-banking, as well known as electronic banking or on-line banking has
developed a vital part of the up-to-date banking scheme. It allows customers to conduct various
banking transactions over the internet, such as fund transfers, bill payments, and account
management. The extensive implementation of e-banking has altered the method clients
interrelate with banks, offering accessibility and convenience. Though, this shift towards digital
banking also presents challenges and opportunities for commercial banks. Cheng and Lin,
(2021); Dina, (2016) opined that, swiftly and hugely emergent of IT has altered a technique of
banking businesses transactions stand complete in banking sectors worldwide, obliged to
introduction of e-banking services to their customers.

Recent studies have explored various aspects of mobile money service adoption in commercial
banks. For instance, a study by Kwabena and Oscar (2023) found that security concerns and
perceived risk significantly influence the adoption of mobile money services in Africa. Another

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study by Sidney et al., (2022) highlighted the role of digital literacy and financial education in
promoting the usage of mobile money services among rural populations. Moreover, the COVID-
19 pandemic has accelerated the adoption of digital financial services, including mobile money,
as people seek contactless and convenient banking solutions. According to Fulea and Adane
(2021), the pandemic has led to a significant increase in mobile money transactions, driven by
the need for remote banking solutions.

The adoption of mobile money services at the Cooperative Bank of Oromia S.C. (CBO) in
Ethiopia is a significant development, reflecting the broader trend of increasing mobile financial
services in the region. CBO has integrated mobile money services through its platform,
COOPay-Ebirr, in collaboration with Ebirr, a fintech company in Ethiopia. This service allows
customers to conduct various financial transactions such as fund transfers, balance inquiries, and
cash withdrawals via mobile phones. COOPay-Ebirr aims to provide convenience and
accessibility, especially for customers in rural areas who might have limited access to traditional
banking services (COOP bank’s annual for fiscal year report in 2021/22).

The bank also launched the CoopApp, an omni-channel platform that enhances the user
experience by integrating web portals and mobile applications. The CoopApp provides services
such as account monitoring, real-time transaction history, and secure access through biometric
authentication. This platform caters to both individual and business customers, offering
diversified banking solutions; including interest-free banking options (COOP bank’s annual for
fiscal year report in 2021/22). CBO's mobile money services are designed to increase financial
inclusion, particularly among underserved populations. By leveraging technology, the bank aims
to facilitate easier access to banking services, thereby promoting economic development in the
region.

In deduction understanding the determinants of mobile money service adoption in commercial

banks is crucial for designing effective strategies to promote their usage. By addressing the
technological, individual, organizational, and environmental factors, banks can enhance the
adoption and utilization of mobile money services, thereby contributing to greater financial
inclusion and improved financial service delivery. Therefore, it is upon this background
information the researcher will explore various determinants that influence the adoption of
mobile money services the case of COOP Bank in Dire Dawa Administration.

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Statement of the Problem:

The adoption of mobile money services has become a transformative force in enhancing
financial inclusion, especially in emerging markets (Zhang, & Wang, 2022). Despite the
significant potential, the uptake of mobile money services varies widely across different regions
and demographics, leading to a disparity in financial accessibility and economic empowerment.

Remarkably, various studies have investigated and reported several factors contributing to the
adoption of mobile money services, lack of trust and security concerns (Zhang, & Wang, 2022;
Mhlanga, & Mpofu, 2023), limited digital literacy (Bon, & Akkermans, 2023; Kintu, &
Muwonge, 2022) and infrastructure constraints (Aker, & Mbiti, 2023; Olabisi, & Alabi, 2023)
besides, regulatory and policy barriers (Evans, & Pirzada, 2022; Suri, & Jack, 2022) in addition
socioeconomic factors (Demirgüç-Kunt, & Klapper, 2022; Asongu, & Nwachukwu, 2023) as
well as service accessibility and usability (Tarhini, & Hone, 2022; Nkwe, 2023) conclusively, the
study established that subsequent adoption of mobile money services has an influence on the
performance of various industries.

Trust remains a critical issue, as users often have concerns regarding the security and privacy of
their financial data (Zhang, & Wang, 2022). Recent studies indicate that security threats, such as
fraud and identity theft, hinder the adoption of mobile money services (Mhlanga, & Mpofu,
2023). Ensuring robust security measures and transparency can mitigate these concerns. A
significant portion of the population, particularly in rural areas, lacks the necessary digital
literacy to effectively use mobile money platforms (Kintu, & Muwonge, 2022). This digital
divide creates a barrier to adoption and can perpetuate existing inequalities in financial access
(Bon, & Akkermans, 2023). Aker, and Mbiti, (2023) posited that inadequate telecommunications
infrastructure, including unreliable network coverage and limited access to smartphones, poses a
significant barrier to the adoption of mobile money services. This is especially prevalent in rural
and underserved areas (Olabisi, & Alabi, 2023).

Evans, and Pirzada, (2022) theorized that the regulatory environment plays a pivotal role in
shaping the adoption of mobile money services. Policies that are restrictive or lack clarity can
impede market entry and innovation. Conversely, supportive regulations can foster a conducive
environment for the growth of mobile money services (Suri, & Jack, 2022). Economic disparities
influence the ability and willingness to adopt mobile money services (Demirgüç-Kunt, &

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Klapper, 2022). Lower-income individuals may find transaction fees prohibitive, while cultural
and social norms can affect the perception and usage of mobile money (Asongu, & Nwachukwu,
2023). The ease of use, availability of services, and customer support quality significantly impact
user adoption (Tarhini, & Hone, 2022). User-friendly interfaces and accessible services tailored
to the needs of diverse populations can enhance adoption rates (Nkwe, 2023).

A study focusing on selected commercial banks in Ethiopia (including Commercial Bank of

Ethiopia, Awash Bank, Dashen Bank, United bank and Abyssinia Bank) identified these factors
as critical in influencing mobile banking adoption (Mulualem, 2015; Gizachew, 2016; Fulea and
Adane, 2021; Worku, 2017). It highlighted that perceived usefulness, perceived ease of use,
attitude towards technology, and security/privacy are particularly significant. The study also
noted that while technological self-efficacy and awareness are important, they did not have a
significant impact on adoption in this context. These insights underscore the multifaceted nature
of mobile money service adoption and the need for a holistic approach that addresses
technological, individual, and institutional factors to promote wider usage among customers.

Hanna, (2022) analyze factors influencing the effectiveness of mobile banking adoption in
Ethiopia. The findings of the study show that trust and perceived ease of use were the most
significant determinants. Social influence also played a crucial role. We inference building trust
and demonstrating the ease of use of mobile banking services can significantly enhance adoption
rates. Edget Tamiru, (2021) examine the determinants of mobile banking adoption in Jimma
Town, Ethiopia, using multiple regression analysis to identify the significant predictors of mobile
banking adoption the study found that perceived usefulness and trust were the most significant
factors affecting mobile banking adoption. Security concerns and cost were significant barriers.
We deduced that increasing the perceived usefulness of mobile banking services and building
customer trust are essential to enhancing adoption rates.

While previous studies have provided valuable insights into the adoption of mobile money
services, there remains a significant gap in understanding the interplay of various determinant
factors specific to the commercial banking context. Most research has focused on the importance
of factors such as trust, perceived usefulness, ease of use, and awareness in the adoption of
mobile money services in Ethiopia. This study aims to bridge this gap by investigating the
determinant factors affecting the adoption of mobile money services in commercial banks

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comprehensive studies examining the combined influence of technological, individual,
organizational, and environmental factors on the adoption of mobile money services by that
COOP Bank in Dire Dawa Administration are limited. The study aims to provide a
comprehensive understanding of the various factors influencing the adoption of mobile money
services among customers of Cooperative Bank of Oromia in Dire Dawa City. By addressing
these research questions and objectives, the study will offer valuable insights for the bank to
develop effective strategies to promote the usage of mobile money services, thereby enhancing
financial inclusion and service delivery.

Research Questions

1. Technological Factors
 How do technological attributes such as perceived ease of use and perceived usefulness
influence the adoption of mobile money services by customers of Cooperative Bank of
Oromia in Dire Dawa City?
 What is the impact of security and privacy concerns on the adoption of mobile money
services among these customers?
2. Individual Factors
 How do demographic characteristics (age, gender, income, education) affect the adoption
of mobile money services by the bank's customers?
 To what extent does digital literacy influence the use of mobile money services among
customers in Dire Dawa City?
3. Organizational Factors
 How does the readiness and commitment of Cooperative Bank of Oromia in
implementing mobile money services affect customer adoption?
 What role do marketing efforts and customer education play in enhancing the adoption of
mobile money services?
4. Environmental Factors
 How do regulatory frameworks and policies impact the adoption of mobile money
services in Dire Dawa City?
 What is the effect of socio-economic conditions in Dire Dawa City on the adoption of
mobile money services?

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5. Cultural and Social Factors
 How do cultural attitudes and social influences impact the adoption of mobile money
services among customers of Cooperative Bank of Oromia?
Objective of the Study

General Objective of the Study

The main objective of the study will be examined the Determinant Factors of Mobile Money
Service Adoption in Cooperative Bank of Oromia S.C, Dire Dawa City.

Specific Objectives of the Study

1. Technological Factors
 To analyze the influence of perceived ease of use and perceived usefulness on the
adoption of mobile money services by customers of Cooperative Bank of Oromia in Dire
Dawa City.
 To evaluate the impact of security and privacy concerns on customer adoption of mobile
money services.
2. Individual Factors
 To assess the impact of demographic characteristics (age, gender, income, education) on
the adoption of mobile money services.
 To determine the role of digital literacy in the usage of mobile money services among
customers in Dire Dawa City.
3. Organizational Factors
 To investigate how the readiness and commitment of Cooperative Bank of Oromia in
implementing mobile money services affect customer adoption.
 To evaluate the impact of marketing efforts and customer education on the adoption of
mobile money services.
4. Environmental Factors
 To assess the influence of regulatory frameworks and policies on the adoption of mobile
money services in Dire Dawa City.
 To examine the effect of socio-economic conditions on the adoption of mobile money
services among the bank’s customers.

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5. Cultural and Social Factors
 To analyze the impact of cultural attitudes and social influences on the adoption of
mobile money services among customers of Cooperative Bank of Oromia.
Significance of the Study:

The study is expected to contribute significantly to enhancing financial inclusion in Dire Dawa
City. By identifying the determinants that affect the adoption of mobile money services, the
Cooperative Bank of Oromia can develop strategies to overcome barriers and encourage more
people to use these services. This is particularly important for reaching unbanked and
underbanked populations, providing them with access to essential financial services such as
money transfers, savings, and payments.

The findings of the study will provide valuable insights for the management of Cooperative Bank
of Oromia to better understand customer needs and preferences regarding mobile money
services. This knowledge can inform the bank's strategic planning and policy-making, helping to
tailor services that meet the specific demands of their customers. Improved understanding of
adoption determinants will allow the bank to enhance customer satisfaction and loyalty.

This study will add to the growing body of academic literature on mobile money service
adoption, particularly in the context of commercial banks in developing countries like Ethiopia.
By focusing on Dire Dawa City, the research provides context-specific insights that can be
compared with findings from other regions, contributing to a more comprehensive understanding
of mobile money adoption in different environments.

Overall, this study is significant as it aims to provide a comprehensive understanding of the

factors influencing the adoption of mobile money services in Dire Dawa City. The insights
gained will not only benefit the Cooperative Bank of Oromia in improving its services and
expanding its customer base but also contribute to broader efforts to enhance financial inclusion,
economic development, and technological innovation in Ethiopia.

Scope of the Study:

Geographical Scope the study will be conducted in Dire Dawa City, located in eastern Ethiopia.
This area was chosen due to its diverse population, economic activities, and the presence of the

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Cooperative Bank of Oromia. Dire Dawa City provides a relevant context for examining the
adoption of mobile money services in an urban setting with a mix of both banked and unbanked
populations.

Institutional Scope the focus of this study is on the Cooperative Bank of Oromia S.C. This bank
is one of the leading financial institutions in Ethiopia, known for its efforts to enhance financial
inclusion through innovative banking solutions, including mobile money services. The study will
specifically analyze the bank's mobile money service offerings, customer adoption rates, and the
factors influencing this adoption.

Thematic Scope of this study will explore various determinants that influence the adoption of
mobile money services. These determinants are categorized into: Technological Factors:
Perceived ease of use, Perceived usefulness and Security and privacy concerns, also Individual
Factors: Demographic characteristics (age, gender, income & education), Digital literacy and
Personal innovativeness, besides Organizational Factors: Bank readiness and commitment,
Marketing efforts and Customer education initiatives in addition Environmental Factors:
Regulatory frameworks and policies and Socio-economic conditions in Dire Dawa City as well
as Cultural and Social Factors: Cultural attitudes towards digital financial services and Social
influence and trust in mobile money systems.

Methodologically, the study employed a quantitative research approach. Furthermore the study’s
objectives will be quenched via descriptive and explanatory (causal research) research designs
will be utilized and multiple regression models is ordinary least squares (OLS) regression model
will be used for data analysis. More specifically, the study will be used ANOVA to test the
dispersion of samples to make inferences on the means of measurement parameters of
independent variables and the dependent variable. Finally the research will be conducted in Dire
Dawa within one and half month from _______ to First week _______________ 2024.

Organization of the study

The primary section of chapter 1 contains a general preface of the study including the discussion
of background, the problem statements, Research quires and objectives of the proposal,
hypotheses of the study, importance of the study findings, scope and organization of the
proposal. Chapter 2 “incorporate the pertinent literature review to the study. It includes concepts

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and theoretical literature review, empirical literature review and conceptual framework”. Chapter
3 “comprises methodology: the type and design of the study, proposal sampling technique &
sample size, data collection and analysis and quality of instruments reliability & validity tests as
well as ethical-considerations shall be included”. Chapter 4 & 5 “data analysis and summary of
main data” In addition, the last comprises Time schedule and budget frame in detail.

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 Chapter Two Review of Related Literature

Concepts and Definitions

Understanding the factors that influence the adoption of mobile money services is crucial for
improving their uptake and usage. The following concepts and definitions outline the key
determinants that have been identified through various studies.

1. Technological Factors

**Perceived Ease of Use**: This refers to the degree to which a person believes that using a
particular system would be free of effort. In the context of mobile money services, perceived
ease of use can significantly influence adoption, as users are more likely to adopt technologies
they find easy to use (Davis, 1989).

**Perceived Usefulness**: This is the extent to which a person believes that using a particular
system would enhance their job performance. For mobile money services, perceived usefulness
reflects the belief that these services will provide significant benefits, such as convenience and
efficiency in financial transactions (Venkatesh & Davis, 2000).

**Security and Privacy Concerns**: Security concerns relate to the potential risks associated
with the unauthorized access to or misuse of personal and financial information. Privacy
concerns involve the apprehensions regarding the control over personal data. Both security and
privacy are critical determinants of mobile money adoption, as users need to trust the service to
use it (Zhou, 2011).

2. Individual Factors

**Demographic Characteristics**: These include attributes such as age, gender, income, and
education level. Studies have shown that these characteristics can influence the likelihood of
adopting mobile money services, with younger, more educated, and higher-income individuals
being more likely to adopt such technologies (Donner & Tellez, 2008).

**Digital Literacy**: This refers to the ability to effectively and critically navigate, evaluate,
and create information using a range of digital technologies. Higher levels of digital literacy are
associated with a greater likelihood of adopting mobile money services (Parvin, 2013).

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**Personal Innovativeness**: This is the degree to which an individual is open to new ideas
and is willing to try out new technologies. Individuals with high personal innovativeness are
more likely to adopt mobile money services (Agarwal & Prasad, 1998).

3. Organizational Factors

**Bank Readiness and Commitment**: This involves the preparedness of a bank to implement
and support mobile money services. It includes having the necessary infrastructure, technology,
and human resources in place. A high level of readiness and commitment from the bank can
facilitate higher adoption rates (Tan & Teo, 2000).

**Marketing Efforts**: Effective marketing strategies, including awareness campaigns and

promotions, can significantly influence the adoption of mobile money services. These efforts
help in educating potential users about the benefits and functionalities of the services
(Laukkanen & Kiviniemi, 2010).

**Customer Education Initiatives**: Programs designed to educate customers on how to use

mobile money services can reduce resistance and increase adoption. These initiatives can include
training sessions, instructional materials, and customer support (Mattila, 2003).

4. Environmental Factors

**Regulatory Frameworks and Policies**: The legal and regulatory environment plays a
crucial role in the adoption of mobile money services. Supportive regulations that ensure
security, transparency, and consumer protection can encourage adoption (Donovan, 2012).

**Socio-Economic Conditions**: The broader socio-economic context, including factors such

as economic stability, infrastructure availability, and the level of development in a region, can
influence mobile money service adoption. Better socio-economic conditions generally facilitate
higher adoption rates (Aker & Mbiti, 2010).

5. Cultural and Social Factors

**Cultural Attitudes**: The cultural context, including prevailing attitudes towards technology
and financial services, can impact the adoption of mobile money services. In some cultures,

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traditional banking methods may be preferred, while in others, there may be a greater openness
to digital financial services (Riquelme & Rios, 2010).

**Social Influence and Trust**: The influence of peers, family, and social networks can
significantly affect an individual's decision to adopt mobile money services. Trust in the service
provider and the technology is also critical for adoption (Kim et al., 2009).

6. Cost and Economic Factors

**Transaction Costs and Fees**: The costs associated with using mobile money services,
including transaction fees, can be a major barrier to adoption, especially for low-income users.
Lower costs and affordable fees can facilitate higher adoption rates (Jack & Suri, 2011).

**Economic Constraints**: The economic conditions of potential users, such as their income
levels and financial stability, can influence their ability and willingness to adopt mobile money
services. Economic constraints can limit access to necessary technology and services (Mbiti &
Weil, 2011).

Theoretical Literatures on Mobile Money Service Adoption

Understanding the factors influencing mobile money adoption is crucial for promoting financial
inclusion. Several theoretical frameworks have been applied to explain this phenomenon. Here's
an overview of some key theories:

Technology Acceptance Model (TAM): Developed by Fred Davis (1989), TAM proposes that
perceived usefulness (belief that the service will enhance life) and perceived ease of use (belief
that the service is easy to learn and use) are the primary determinants of technology adoption. In
the context of mobile money, these factors relate to the perceived benefits of mobile money for
managing finances and the ease of navigating the service's interface.

Unified Theory of Acceptance and Use of Technology (UTAUT): Venkatesh et al. (2003) built
upon TAM by introducing additional factors. UTAUT suggests that alongside perceived
usefulness and ease of use, social influence (perception of others' opinions), facilitating
conditions (availability of resources to use the service), and perceived risk (security concerns) all

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play a role in technology adoption. This framework emphasizes the influence of social norms
and the importance of user-friendly interfaces and security measures for mobile money adoption.

Innovation Diffusion Theory: Everett Rogers' (2003) theory explains the process by which an
innovation is adopted by a population over time. The theory identifies factors like relative
advantage (perceived benefit over existing methods), compatibility (alignment with existing
values and practices), complexity (perceived difficulty of use), observability (visibility of the
innovation's benefits), and trialability (ease of experimenting with the innovation) as influencing
factors. Applied to mobile money, this theory suggests that users are more likely to adopt if they
see clear advantages, compatibility with their financial habits, and easy initial use.

The Theory of Planned Behavior (TPB): This theory by Ajzen (1991) emphasizes the role of
intention in behavior. Users' intention to use mobile money is influenced by their attitude
towards it, subjective norms (perceived social pressure), and perceived behavioral control (belief
in their ability to use the service). Mobile money providers can address these factors by
promoting positive attitudes, fostering social acceptance, and ensuring user-friendly interfaces.

Financial Inclusion Theory: This broader theoretical perspective examines the factors that
promote or hinder access to and use of financial services (Subramanian, 2016) highlights the
importance of addressing issues like financial literacy, infrastructure development, and
regulations to create an enabling environment for mobile money adoption.

Empirical Studies to be cont……………………………………….

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