Technology nowadays became part of the lifestyle of every person

Technology nowadays became part of the lifestyle of every person, especially those who are part of the millennial generation. It became part of their habit, started from the moment they open their eyes until the moment they close it. It is part of their system as a person, in which it will be a big difference if there will be an absence of it.

A mobile phone is the most used technology. It is a tool that most of the people used to lighten up their work in life. People used this as their buddy, that helps them not only for communication, but also for planning purposes, storing memories, and many more. While mobile phones are becoming in demand, innovators came to the idea that it will be a great help to boost customer retention rates and business performance in various industries.

One of the industries which joined the innovation of incorporating technology in their business is the banking and finance, where they maximize the use of technology not only for the convenience of their employees but also of their customers. As the time passes by, starting with phone banking, to internet banking, and now, banking and finance explore and introduce to their customers, the mobile banking.

Mobile banking is one of the services provided by a bank or a financial institution, which allows its customers to transact economic activities without having them go personally to the bank because their mobile phones permit them to do so. Mobile banking is powered by an application, provided by the bank or the financial institution, which launched the same. It is available 24 hours that a customer may use at any moment, at their convenience.

Project objective

This project aims to:

  • Define mobile banking, customer retention and business performance
  • Determine the benefits of mobile banking
  • Identify the impact of mobile banking on customer retention rates
  • Identify the impact of mobile banking to business performance

Project SCOPE

The scope of the study is circling to the concept of mobile banking that is relative to the customer retention rates and business performance. The project is limited only to the industry of banking and finance. Literature related to the project objectives are scrutinize based on its relativity to the topic and its timeline. This project will only include studies and research from the year 2000 until the present.

Literature review

Mobile banking was first introduced by a company called paybox supported financially by Deutsche Bank way back 1999. It was first named as SMS banking. Through its emerging role in the banking and finance industry, various innovators adopted its concept and improved it to the point that it became working and part of banking customer service (UKEssays 2015).

When cellphones turned into smartphones and began to mimic the abilities of a computer, banks been able to launch a mobile application which let the customers transact their financial activities through their mobile phones. From the start of SMS banking way back in 1999, it took until 2007 for big banks in the United States to successfully develop a mobile application that fits what the customer needs in today’s trends. In the year 2002, there is an attempt to introduce the first mobile application, however, due to its poor service, enrollees withdrew their registration and uninstalled the app on their mobile phones.

Thus, only in 2007, that a remarkable mobile application successfully launched and accepted by the market. In the year 2008, smaller banks also adopted the mobile banking, and later started to penetrate the target market, until such time that it reached the peak of its popularity. By the year 2012, in a report conducted by the Board of Governors for the Federal Reserve, it was noted that 21 percent of all smartphone owners were using mobile banking.

It was also pointed out that 44% of the users belong to the age group of 18-29 and the second to the most significant percentage which is 36% who belong to the 30-44 age group. The numbers noted are expected to increase as more people rely on smartphones and tablets, and the bank is continuously innovating to satisfy more their customers (Morrison 2010).

Mobile banking means an act of making financial transactions remotely using a mobile device. Starting the year 2000, mobile banking has emerged its capabilities, starting from the usual text messaging services to the point where the customers could transact their financial activities on their own, such as fund transfer, instruct payroll based transactions, access or redeem loyalty coupons and many more. The innovated use of mobile banking became more improved when its mobile infrastructure has adapted to and align with various technologies such as imaging, GPS / GRPS, RFID, and other functionalities that could perform the same as internet banking could provide (Vaidya 2011, pp. 301-312).

Mobile banking offered their customers a new way of transacting their financial activities. By using their smartphones and other mobile devices, they could access their bank accounts and negotiate their financials anytime, anywhere. Based on the current marketplace for customers, they were demographically categorized as generation X and millennials, in which they are more after of convenience, which found out that spending their time more on internet world that could be now explored using their gadget buddy, a mobile phone.

It was being noted that a mobile banking application to catch the market’s attention, must be:

  • Simplified Account Access – clarified log in procedures, that a fingerprint could access.

Streamlined Account Management – sleek account information update, with customized features such as enabling notifications for a spending limit, could communicate with the bank 24/7 and could be able to freeze the account if unusual transactions have been observed.

  • Budgeting Tools and Money Management – provide real-time charts and graphs, especially for spending habits.
  • Reliability – having the application working at its expected purpose, with minimal crashes and errors, with an easy update of installation. System downtime is also expected at the minimum frequency because it can cause frustration for the users.
  • Mobile Deposits – having the ability to capture and deposit right to the customer bank accounts and having them accessed it anytime, anywhere.
  • Bill Pay / P2P – Ability to let the customers pay billers or third party to whom they have transactions with.
  • Current Credit Score – having a civil procedure in using the application, having the customers be informed about the dos and don’ts conveniently and efficiently.
  • Fraud Alerts or Lost/Stolen – having the customers’ accounts secure from any harmful and damaging results from fraudsters. Having also the ability to stop the flow of vital information.
  • Balances on Demand – the strength of the mobile banking application to deliver the real-time balances of the customer, letting them be aware of their financial capacity, mainly if they will conduct an online purchase.
  • ATM Locator – the ability of the application to locate and suggest to the customer the nearest ATM enabling them to receive immediate cash in cases that they need substantial funds from their business.

    (Packer 2018).

On the other hand, customer satisfaction is a term in marketing in which measure how products and services supplied by a company meet the customer’s expectation. It is directly correlated with the customer retention, which refers to the company or organization effort in reducing customer defections. It is to retain the customers as many as possible, by creating customer loyalty. However, during the process of establishment of customer loyalty, it costs a company seven times less than customer acquisition.

Thus, a non-stop innovation for products and services is needed to incorporate into the company’s strategies. Successful customer strategies and techniques from different companies were noted and it includes setting of customer expectations, becoming a customer advisor, using relationships to build trust, taking a proactive approach to customer service, using of social media to build relationships, going an extra mile on the establishment of customer loyalty, and making it personal by personalizing the products and services that a Company is providing to achieve more convenience and fitted for the customers’ needs (Galleto n.d.).

In linking business performance to mobile banking, it is essential that business performance must be defined appropriately. Business performance is mistakenly measured regarding profits. But that is not the proper way as it is, because the benefit is a short-sighted gauge of success. The appropriate measure of business performance is its sustainability, which means that the business will exist in the long run, or indefinitely. Sustainability includes elements such as employees, availability of raw materials, machinery and other value-added activities, in which must always be present to achieve the existence in the long run (Appian Website n.d.).

Studies have been made to prove the relationship between customer satisfaction and mobile banking adoption. One of the studies has been made in Pakistan, and it was concluded that there is a weak positive relationship between customer satisfaction, where mobile banking is a critical service in the banking industry. It was also noted that mobile banking adoption requires technologically efficient, and affordable and with the secure technological environment (Saleem and Rashid 2011, p. 543).

In other countries, such as Tanzania, the effect of mobile banking on customer satisfaction has also been studied. It was found out that factors like customer care, service cost, the quality of mobile banking service should be given exceptional priority to make the customers satisfied with the mobile banking service. A graphical presentation is shown in Appendix I. There are also push factors for mobile banking to increase customer satisfaction, it includes saving time, less cost and convenience as shown in Appendix II.

During even the study, it was also noted that there is a difference in perception regarding the customer satisfaction between the customers and management of the banks. The Management should have known what their customer’s need to offer the right services for them and comply with what they are expecting is. When it comes to the mobile banking sector, improvement of ideas are contributed by both the management and customers, and the middle; both will meet getting their need and wants for the transaction (Shaban, 2014).

In Jordan, the bank’s customer satisfaction has been linked again to mobile banking. Researchers incorporated the dimensions of mobile banking services which are the reliability, flexibility, privacy, accessibility, ease of navigation, efficiency, and security. The results showed that the security dimension has a significant impact on the customers’ satisfaction.

Customers intended to feel more secure in using the mobile banking, to prevent their financing activities of being tracked and secure their money from being stolen by fraudsters.

Aside from security, accessibility also plays a major role to satisfy the customers. If the mobile banking application does not show civil procedures on users, customers are expected to uninstall the application, and worst, expected to withdraw their account from the bank and switched to other banks. The researchers found out that that the customers’ concern about using mobile banking, is to do many banking transactions anywhere and access it anytime. It was also noted that privacy is the most critical dimension from the dimensions mentioned because customers wanted to do their financial transaction in their atmosphere (Asfour ; Haddad 2014).

On the other hand, when a study made in Kenya, on the effect of mobile banking strategy on customer satisfaction in cases of commercial banks, it was noted that the users of mobile banking have been increasing tremendously. Through this, mobile banking incomes had increased and therefore resulted in increased innovation. Increased innovation leads to the increase of mobile phones in which adds to the customer satisfaction.

In simple words, there is a chain reaction and became a cycle, in which the happenings repeat until it creates a significant number of users as time pass by. The reliance on using the products of technologies became part of the people’s lifestyle and also incorporated as part of business transactions that involve commercial banks (Chirchir and Juma 2016, pp. 634-650).

In the same country, Kenya, the impact of mobile banking on the financial performance of commercial banks was also studied. It was found out that there is a strong correlation between bank performance and mobile banking.

The significance test that the researchers conducted showed that the influence of mobile banking on bank profitability was statistically significant. It means that mobile banking section of banks had increased its overall income which signifies the positive relationship between the former and its bank performance. By introducing the mobile banking to the customers, the banks created an opportunity for itself to increase more of its revenues.

This opportunity includes monetizing the value of customer analytics, delivering greater real-time access to products and services, and conducting targeted marketing campaigns based on the knowledge of consumer preferences that the bank collects. Aside from that, the introduction of mobile banking to Kenya has enhanced the banking industry by making it more productive and useful. It gives the banks the potential to expand beyond their previously known limitation as well as it provides the ability to cross-sell and sell-up products to existing customers (Mwange 2013).

Impact of electronic banking on customer satisfaction and business performance has also been studied in India. It was found out that mobile banking has something to do with the customer satisfaction and business performance. This is partly a result of online globalization, where due to the increasing use of technologies and fast competition, it forced the banks to adopt new channels.

These channels will result in gaining competitive advantage, cost reduction, improvement of financial services, enlarge customer databases to generate customer satisfaction and commitment. However, it was also noted that the online customers are hard to attract and difficult to retain because it is easy for them for switching from their online providers and searched for another one who could give them additional benefits (Abrol 2014).

Another study has been made, which proven that electronic banking which includes internet and mobile banking, is a big success around the world benefiting the banking industry. Electronic banking employed profitability and proves to be cost effective for all of its features that helped both the bank and its customers. It resulted in a positive customer attitude that by being convenient to use, the customer retention rates rapidly increase. Technology became a medium that connects the banks to its customers and eliminated the hassle of being physically present at the bank attending queuing by the latter. It made the customer do some other task, and saves time and converted it into a more productive one (Kaur 2015).


From the years of innovation in the banking and finance industry, it was noted that from the review of literature made, mobile banking has increased customer retention rates and business performance. Customers who always after for convenience especially not going personally going to the bank has been observed opening their bank accounts from the banks who also offered mobile banking services.

Mostly the customers intend to transact their financial activities without exerting so much effort because, in one click, they could do it using their mobile phones. Financial information could be more accessible to them, which could help them save their energy if going personally to the bank, but also to their decision-making activities.

On the other hand, as to business performance, the employees of the bank could be more maximized because the number of clients who personally appealed to the bank decreased. Their efforts of providing to the clients could be assigned and be sued to something else that their productivity could be used of. Banks could also save on costs such as salaries (from more tellers to fewer tellers), utility costs and space use (they could close some useful sections of the banks), and other administrative expenses.

By these, banks’ performance as a business, excelled, and they could build more innovations and changes that will surely ease up not only their performance but also catering what their customers’ needs.

Overall, the impact of mobile banking on customer retention rates and business performance is directly proportional, where if the mobile banking is improved, it increases the customer retention rates and business performance.