Relationship Between Mobile Banking and Savings of Micro and Small Enterprises in Gikomba Market of Nairobi City County, Kenya

Abstract

Mobile telephony penetration has been quite tremendous around the globe in last decade, with more households in the developing economies having mobile phones than bank accounts. Mobile banking platforms have greatly evolved with the advent of bank-integrated financial services allowing mobile phone users to access the financial services anywhere and at any time. The study was based on Innovation Diffusion Theory (IDT), which emphasize that firms apply the theory to remain competitive. The objective of the study was to establish the relationship between mobile banking and savings of MSEs in Gikomba market. The descriptive design was used to study and analyze the variables while the study population consisted of MSEs in Gikomba market. The study established that mobile banking was a safe place to save; transaction time was fast and quick and mobile banking had the capacity to save without others' knowledge. The study concluded that there was a positive relationship between mobile banking and MSEs‟ savings. That MSEs were using mobile money for different business purposes including sales transaction, efficiency in purchase of stock, receiving payment, payment for goods and services, money transfer and increasingly using it for savings, which significantly influenced their business growth. The study recommended that Communication Authority of Kenya (CAK), which regulates mobile money services, and the Central Bank of Kenya (CBK), which regulates the banking industry, should formulate clear regulations to ensure smooth running of mobile money services. Such measures will guarantee safety of mobile money services and eliminate risk as a barrier to adoption and usage among MSEs