The major risk that comes with mobile banking is the security factor (Kadušić, E., Bojović, P., & Žgalj, A., 2011). Customers can now access their account information with the tap of a button on their mobile devices’ screens. In as much as this has made transactions faster and more effective, it has exposed account owners to the risk of their account data leakage. Third parties with malicious intent may access these online bank accounts with stolen details or details extracted from the victims themselves without their knowledge through social engineering. A criminal may also peep a victim’s screen while they are logging in via their mobile devices and get their details. The details may also be stolen when unenlightened customers use unprotected Wi-Fi networks. In this day and age of technological advancement, anything is possible. 

The rapid growth of the mobile banking industry in itself is a risk. Mobile experts state that if this pace is kept, mobile devices will soon become the key channel for transactions, therefore, gaining more users. This increase in mobile users will in turn increase the security risks.

How has mobile banking affected the financial performance of commercial banks?

With the popularity of mobile money transfers, the amount of money moved through mobile banking apps has increased thus increasing banks’ profits significantly. Mobile banking has made access to loans easier, faster and more convenient (Gant, A.L., 2012). This has increased the number of loan borrowers thus earning the banks profits in the form of loan interest. Mobile banking has improved commercial banks’ liquidity positions by increasing their cash reserves through increased deposits and savings (Kithaka, E.D.W.I.N., 2014). The emergence and growing popularity of mobile banking pushed banks and financial institutions to work of their management policies to come up with techniques that would make them compete favorably with the players in the telecommunications industry thus improving their management efficiency. With the emergence of mobile banking, banks have become keener on their asset quality in terms of the quality of their loans. Asset quality is a key component in assessing the credit risk levels of a firm. In conclusion, there has been a recorded improvement in the financial performance of commercial banks in Kenya following the invention of mobile banking (Mutua, R.W., 2013).

References

Gant, A. L. (2012). Effects of mobile banking on microfinance institution performance in Kenya (Doctoral dissertation, Georgetown University).

Kadušić , E ., Bojović , P., & Žgalj , A. (2011). Consumer adoption-risk factor of mobile banking services. International Journal of Economics and Management Engineering, 5(8), 951-956.

Kithaka, E. D. W. I. N. (2014). The effect of mobile banking on the financial performance of commercial banks in Kenya (Doctoral dissertation, University of Nairobi).

Laukkanen , T. (2017). Mobile banking. International Journal of Bank Marketing.

Murugesan , S. (2013). Mobile apps in Africa. IT Professional, 15(5), 8-11.

Mutua, R. W. (2013). Effects of mobile banking on the financial performance of commercial banks in Kenya (Doctoral dissertation, University of Nairobi) .

Njenga, A. D. K. (2009). Mobile phone banking: Usage experiences in Kenya. unpublished MBA thesis of the Catholic University of Eastern Africa.

Ntseme , O. J .  , Nametsagang , A., & Chukwuere , J. E. (2016). Risks and benefits from using mobile banking in an emerging country. Risk governance & control: financial markets & institutions, 6(4), 355-363 .

Ontunya, N. P. (2006). A survey of consumer adoption of mobile phone banking in Kenya (Doctoral dissertation, University of Nairobi).

Wambari, A. (2009). Mobile banking in developing countries (a case study on Kenya).