1

1.1 Background of the Study
It is no doubt that ICT has fuelled the growth and development in many sectors of the economy – social, political and financial sectors have all been impacted. The financial sector, in particular banking has moved from the times when the bank records were being kept in manual ledgers and registers to electronic records maintained, stored and available for easy retrieval at any point when needed. Technological innovations that impacted banking sector had a long way, from the times when ATMs were discovered and used for the convenience of bank customers, reducing queues in the banking halls to withdraw and deposit money and subsequently introduction of internet in the 1980s.

The introduction of the internet enabled banks to have applications which enabled their customers to access their accounts, including view of account balances, initiation of transfers and order of cheque books, booking of deposits and such services that provided convenience and flexibility to the customers. This was an era of online Banking, to be able to use such facility, bank customer should either have personal computer or laptop that is connected to the internet and that is why it was referred as Internet Banking.

Today, the new innovation in the banking sector is mobile banking; it is the use of mobile phones to make financial transactions. A number of mobile financial applications have been developed and there have been drastic increase in the usage of mobile phones to facilitate financial transactions. The earliest form of mobile financial service was SMS Banking that enabled customers to access their accounts through mobile phones by SMS messaging, though this form is still applicable in some banks; WAP technology that enables ‘mobile web’ has made it possible for the banks and non-banks to offer mobile banking in its current form.

Eric Schmidt, chairman of Google once came with slogan ‘Mobile First’ and by then most people did not understand what it was all about. Now, the time has come when it is evidently seen how the mobiles have become important tools in our day to day life. We are now dependent on our mobile phones in a number of ways from storage of personal and private information to accessing our financial information through the mobiles.

1.2 Statement of the Problem
Banks are institutions obliged to offer banking services to customers who have or have no bank accounts and similar services, traditionally this service was through physical contact between banker and customer or through cheque and other bank instruments. But in either way a customer must meet physically with banker to access service.

However development of telecommunications and computing have fuelled to the need of convenient, less costly, timely and flexible way to transact among bank customer which lead to change of banking industry platform and relationships where customers in search of queue less, flexible, timely, convenient, and costless means of banking do use of mobile banking.

Up to June 2017, there were 40 commercial banks licensed to undertake banking operations in Tanzania, out of 46 banks, 12 banks have deployed mobile banking platforms (BOT, 2017). NMB was the first to launch its mobile banking product under ‘bank based model’. Other banks, CRDB, Exim Bank, Akiba Commercial Bank, Amana Bank, Barclays Bank Tanzania, Standard Chartered Bank Tanzania, Kenya Commercial Bank Tanzania, Tanzania Postal Bank, Bank of Africa have also launched their mobile banking products. Primarily, most banks that launched mobile banking products had started with their own account holders but slowly there are opening up to non-bank account holders using ATMs as cash points. The entry of commercial banks in the provision of mobile financial services has broadened the access of mobile financial services to the bank account holders and non-bank account holders; both person to person (P2P) and business to business (B2B) money transfers have steadily increased.