The influence of mobile banking innovation on the financial performance of commercial banks in Tanzania

Mobile money financial services has been growing rapidly in most of the east African countries particular Tanzania. Most of the money transacted in the economy passes through mobile banking and Internet banking. The main purpose of this study was to determine the influence of the mobile banking innovation on the financial performance of the commercial banks in Tanzania using quarterly data for the period 2010-2014. This objective has motivated the author to research it since there has been a dramatic innovation on mobile banking technology used by most of the commercial banks in the country. The study estimated a multiple regression model using Ordinary Least Squares (OLS) approach with the dependent variable as the Return on Equity (ROE) and the independent variables as the Mobile Banking Money (MBA), Number of registered Liquidity (BL) and Management efficiency (ME). The study findings suggested that most of the variables at 5% significant level seemed to be statistically significant except for mobile banking users and bank liquidity. Also, mobile banking money, asset quality and bank liquidity had a positive influence on the return on equity while the mobile banking users, capital adequacy and management efficiency had negative influence on the return on equity. The results also suggested that the mobile banking money and the number of mobile banking users had little effect on the return on equity. Based these findings, this study recommended that there is a need for commercial banks in the country to keep the use of mobile banking and increase more efforts on the promotion of mobile phones in the country. The effect will be more pronounce over time with improved mobile banking technology and more customers will be adopting the mobile banking services. This will promote more money moving through the mobile banking services and hence promoting banks’ profitability.