The Impact Of Mobile Banking On Transaction Costs Of Microfinance Institutions: A Survey Of Microfinance Institutions In Nairobi

Abstract

The aim of this research was to find the impact of the introduction of mobile banking on transaction costs of microfinance institutions in Nairobi. An experimental research design was used. The sample was drawn from the members of the Association of Microfinance Institutions of Kenya (AMFI). The respondents were restricted to members who undertake microlending and related services to avoid members like CIC which is an insurance company and a corporate member. Once the sampling frame was drawn 15 microfinance institutions (MFIs) were randomly selected. Structured questionnaires were used to collect primary data which was mainly qualitative. Secondary data was collected from the mixmarket.org website which collects financial data from microfinance institutions globally. The data was analyzed using the Statistical Package for Social Sciences (SPSS) and Microsoft Excel. The results revealed that many MFIs have realized increased volumes of transactions as a result of the introduction of mobile banking, however, there has not been any notable decrease in transaction costs for average MFIs. The conclusion from this study is that there needs to be a concerted effort done in terms of analysis of business processes before the introduction of mobile banking in MFIs for transaction costs to reduce significantly