AN ANALYSIS OF THE CHALLENGES AND BARRIERS IN BUILDING TRUST TOWARDS POPULARIZATION OF MOBILE BANKING IN THE CORPORATE SECTOR IN SRI LANKA

AN ANALYSIS OF THE CHALLENGES AND BARRIERS IN BUILDING TRUST TOWARDS POPULARIZATION OF MOBILE BANKING IN THE CORPORATE SECTOR IN SRI LANKA

 Introduction

In this evolving world the major technological innovations and improvement helped almost all kind of industries to gain competitive advantage in the specialized industrial field. The banking industry introduced Internet Banking which helped to do bank related transactions from anywhere with the use of a computer connected to the internet. The telecommunication industry introduced mobile internet (3G) which helped the consumer to use the internet with no use of a computer. With the introduction of internet banking customers didn’t have to stay and wait in queues for their turn to do their bank related transactions; it was just a click away. However, any new technology has constrains and limitations. In the case of internet banking, the biggest limitation is the requirement of a computer with an internet connection. This may not look a big obstacle if viewed from US and the European countries prospective, but is a definite obstacle for developing countries such as Sri Lanka and most of the other Asian countries.  Mobile banking addresses this fundamental limitation of Internet Banking, as it reduces the customer requirement to just a mobile phone. The term mobile baking comes from m-commerce which characterizes a business transaction carried out through a mobile phone connected to any mobile network which consist internet.

Mobile banking transactions could be done through Short Message Service (SMS), Wireless Access Protocol (WAP), mobile internet or through General Pocket and Radio Service (GPRS). 

Mobile banking has now become a global phenomenon. Almost every banking institution all over the world has embraced this technological system of banking due to the numerous benefits it brings both to the banks themselves and their clients or customers notable among them are convenience and time-saving in doing transactions. Mobile banking is now being considered as a strategic weapon and will revolutionize the way banks operate, deliver and compete against one another, especially when competitive advantages of traditional branch networks are eroding rapidly.

However, the issue of adoption behavior or pattern by final consumers seems to be an essential issue in the successful implementation of Mobile banking which has benefited people from jurisdiction to jurisdiction and from country to country. In some countries, Mobile banking has proven to be very reliable, effective and efficient whilst in some others, they are found to be extremely dormant due to adoption behavior. Thus, there is the need to study critically the adoption behavior of existing customers. Adoption behavior patterns depend on many variables such as educational level, attitude towards innovation, trust, feelings of security, among others.

It is mobile telephones that have transformed the Sri Lankan telecommunications sector beyond recognition. Mobile services have experienced exponential growth, from 71,000 subscribers in 1996 to 4,284,256 subscribers in June 2006 (TRCSL 2006). These growth rates did not dip even when the overall economy went through periods of lean or zero growth. The number of mobile phones surpassed the number of land phones in 2002 and by end 2005, three out of every four phone connections in Sri Lanka were mobile (CBSL 2006). Mobile banking is not that much of hype in Sri Lanka. According to the CBSL Annual report (2010) there are 22 licensed commercial banks in Sri Lanka and out of the total 22 licensed commercial banks 7 domestic (PVT) licensed commercial banks providing mobile banking. Therefore this study is mainly focus on what are the challenges and barriers in building trust for popularizing mobile banking in the corporate sector in Sri Lanka and how to overcome these barriers?

Even though Mobile banking is now a common technological phenomenon or development associated with almost every bank in the world, Sri Lanka as a country is still being saddled with a number of challenges and barriers when it comes to this system of banking. The lack of trust and security has generally reduced use of mobile banking as customers distinguish it as not being safe to do their transactions through mobile.

In general context, Sri Lankans are considered to have a positive attitude towards the concept of tangibility of goods and services provided by the service provider through tangible channels. Therefore the usage of mobile banking is comparatively low as customers have not been much keen in using mobile banking. As several studies have indicated that mobile bankers are the most profitable and prosperous segments of banks. Therefore conducting a study would help identifying the challenges and barriers of building trust which would facilitate popularization of mobile banking and solutions for the barriers in popularization of mobile banking in corporate sector in Sri Lanka.

Mobile banking has gained significant popularity in the banking sector in western countries but not in Sri Lanka. This study is being conducted to analyze the barriers and challenges faced in building trust as a key element to popularize mobile banking to corporate sector in Sri Lanka. Building trust for mobile banking would prove great benefits to internal and external stake holders and also would also be one main channel to popularize this system.

·         Licensed commercial banks

This study would be most significant for licensed commercial banks operating in Sri Lanka especially the banks which cater to the corporate banking sector. The management would have a clear identity of the long term benefits towards the bank with the build of trust in popularizing mobile banking. This would clearly identify the challenges and barriers which prevails in the current context and would enable the bank management to identify the obstacles and how to overcome this to improve their services.

·         Mobile service providers

This study would be most significant to mobile service providers in Sri Lanka which provides mobile banking as a service within their networks. The mobile service providers could identify where to improve them self and what should be improved when facilitating new technology to the country.

·         Software developing companies

This study would also be significant to software developers who are engaged in developing software’s for banking institutions and mobile service providers. This study would clearly show the level of expectation from the service provider to the end consumer. This report would also illustrate the overall requirement from the system which would enable the developer to add or altered features in mobile banking.

·         Corporate customers

The findings of this study would be beneficiary to the corporate customers who are already engaged in mobile baking and to the customers who feel it’s not safe to do mobile banking. This study would build the level of trust and confidence towards mobile banking and would result in behavioral changes of corporate customer from internet banking to mobile banking.

·         Government

This study would enable the government to measure the level of technology improvement in the banking sector and telecommunication sector, therefore provide funds to conduct study and development of this new technology which would increase the income level of the county and would help further country’s development.

·         Future studyes

Information gathered from conducting this study would help and benefit future studyers which would enable them to identify gaps and reduce them with less consumption of resources and time.

Discussion

This section presents an overview on preceding literature congregated on building trust in mobile banking. Various related study articles have been studied and is given in a summarized description which lay out in order to obtain the factors which represent the problems to conduct this study and the conceptualization could be drawn as a result.

Many studies have identified the significant impact which is created by the volatile information technology towards the banking industry around the world. Kannabiran and Naravan (2005) stated that the improvement in information technology is becoming a significant element in the future development of the banking industry.  According to Turban et al, (2006 cited in Gu, 2009) With the improvement of mobile technologies and devices, mobile banking has been considered as a salient system because of such attributes of mobile technologies as ubiquity, convenience and interactivity.”

Bradmore (1996), has noted the demanded for management information continuous to grow as organisation’s become more complex in scale and scope, as the environment becomes more uncertain as the rate of change of key business-not least technology itself accelerates (Earl, 1989:14) Competitive advantage involves providing better service through deeper knowledge of customer. The idea is that Banks have developed or learned information about their customers' needs and process can serve that customer better than their competitor can. The above studies conducted analyses on how technology has had a significant impact on the banking industry