Effects of mobile banking to the performance of commercial banks in Tanzania

The study was conducted with the purpose to assess effects of mobile phone banking introduction by Mobile Network Operator (MNOs) to the performance of commercial banks in Tanzania, the performance in terms of their liquidity and profitability. The research was conducted in Dar es Salaam region to represent of the entire country and include various commercial banks such as CRDB Bank, First National Bank (T), NMB and Diamond Trust Bank (DTB) and Mobile Network Operators namely: Tigo (T), Vodacom (T), Zantel and Airtel Tanzania. Individual households were also integrated for the sake of extracting their views with regard to the subject matter. The data collected were primary and the process was done using administered questionnaires and by using SPSS data were analyzed and findings presented. The findings of the study ultimately showed that, there is the impact on performance of commercial banks regarding introduction of mobile banking system. Thus, introduction of mobile banking has triggered commercial bank performance in a way that liquidity and profitability increased eventually when commercial banks imposed counter strategies to curb the negative effects. Putting it differently, introduction of m-banking reduced liquidity and profitability of commercial banks for a concise moment during introduction time but once strategies to counter attack the invasion were employed by commercial banks, customers felt comfortable to keep on using commercial banks services as a result some customers became inactive to use m-banking services by MNOs this includes individuals owning m-banking accounts that are dormant. Since people use either one or both systems, the study recommended to commercial banks to reduce unnecessary paper work; increase number of branches, ATMs and competent teller personnel so as to tackle the problem of illiquidity, distance, bureaucracy and inconvenience, as people preferred mobile banking services of MNOs use this as their decisive factor. For Mobile Network Operators such as Tigo (T), Vodacom (T) and Airtel (T) the study suggested that, in order for them to capture market share in presence of commercial banks, they must have proper documentation of customers’ details such mobile bank ID card and try to raise the maximum withdrawal amount needed by customers and find a way to attract big businessmen and women.