Effect of Mobile Money on the Demand for Retail Banking in Zambia: Case Study of Zanaco in Lusaka

Abstract

This paper examines how mobile money affects the demand for retail banking in Zambia, focusing on ZANACO in Lusaka. Driven by the rise of mobile money services from MTN Zambia, Airtel Money, and Zamtel Mobile Money, Zambia saw over 20 million registered mobile money users by the end of 2022. Using data from 376 respondents and regression analysis, the study found a strong negative relationship between mobile money usage and traditional banking (r = -0.72, p < 0.05). Cost effectiveness and safety emerged as key factors influencing customers' preference for mobile money. While mobile money reduces reliance on traditional banking for small transactions and bill payments, retail banks remain vital for lending and large transactions. The study recommends that ZANACO enhance digital banking services, improve mobile banking security, and explore partnerships with telecom operators to maintain competitiveness.