ASSESSING THE INFLUENCE OF DIGITAL BANKING IN PROMOTING FINANCIAL INCLUSION AMONG RURAL DWELLERS IN CAMEROON

CHAPTER ONE

INTRODUCTION

Background of the Study

Within the changing environment of the financial industry, digital banking has become a crucial tool for promoting financial inclusion, fundamentally changing how people can access financial services. The expansion of internet-based financial services has facilitated a shift in the accessibility, efficiency, and convenience of banking facilities, making them more readily available to a wider range of individuals. However, the influence of digital banking is significant, providing not only improved service provision but also a potential means to incorporate the marginalised and financially excluded groups into the official financial system (Cnaan et al., 2023). Digital banking, encompassing mobile banking, online banking, and other electronic financial services, presents a viable solution to bridge the financial inclusion gap. According to Thathsarani & Jianguo (2022),financial inclusion refers to the ease with which individuals and businesses can access different types of financial services. On the other hand, digital banking as well as mobile money services, in particular, have seen significant adoption in various parts of Africa, including Cameroon. These services allow users to perform financial transactions using mobile phones, thus bypassing the need for physical bank branches (Williams, 2017). Beyond that, the penetration of mobile phones in Cameroon has been remarkable, with the majority of the population having access to mobile devices. This widespread adoption of mobile technology creates a conducive environment for the proliferation of digital banking services. Mobile money platforms such as MTN Mobile Money and Orange Money have already established a foothold in the country, offering services ranging from money transfers to bill payments and savings (Bongomin et al, 2016). 

The significance of digital banking extends beyond the convenience of online transactions, with deeper economic and societal ramifications. It has a crucial impact on economic progress by enabling more effective financial transactions, enhancing savings rates, and broadening credit availability. These services are essential for managing personal finances and can have a substantial effect on the economic welfare of individuals and communities. On the other hand, in rural communities, the prevalence of financial and digital illiteracy, limited access to convenient transportation, and concerns about fraud deter individuals from depositing their savings in commercial banks (Bradley & Patrick,2017). Instead, rural residents choose to save their money in their homes or in cooperative societies rather than using banks for the secure storage of their valuables. One further factor contributing to the limited use of digital banking technologies among rural residents is the low prevalence of smartphones, which can be attributed to the expensive nature of mobile phones in the country (Adepetun, 2021). Moreover, rural residents are hesitant to embrace and utilise  digital banking technologies due to the rising prevalence of cyber-enabled fraud, including debit card hijacking, account hacking, digital identity theft, and impersonation of bank personnel. Despite banks' claims that  digital banking is safer and more secure, these threats have instilled fear among rural dwellers. Nevertheless, banks in Cameroon still have significant difficulties in providing banking services to customers, particularly among rural residents who constitute a large portion of the unbanked population in the country.Moreover, it is crucial to consider the potential consequences of increasing the digital gap, as disparities in the availability of digital technology might worsen pre-existing inequalities, resulting in further marginalisation of disadvantaged people. Notwithstanding these obstacles, the capacity of digital banking to promote financial inclusion and empower economically disadvantaged populations is unquestionable. Therefore, a survey will be conducted in order to assess the influence of digital banking in promoting financial inclusion among rural dwellers in Cameroon.

1.2 Statement of the Problem

Cameroon, with a population of over 26 million people, is characterized by a significant rural populace, accounting for approximately 44% of the total population (World Bank, 2022). In recent years, digital banking has emerged as a powerful tool in promoting financial inclusion, particularly among underserved populations in rural areas. However, many of these rural dwellers face substantial barriers to accessing financial services, including geographical isolation, lack of financial literacy, and limited infrastructure. Traditional banking services are often concentrated in urban centers, making it challenging for rural residents to access essential financial products and services. Financial inclusion, the process of ensuring access to financial services for all individuals and businesses regardless of their socio-economic status, is crucial for economic growth and poverty alleviation. Additionally, a recent study by Kantar (2018) has argued that the idea of digital inclusion is explicitly missing in the government digital projects and policy strategies. It therefore remains unknown whether digital financial technologies (fintech) and digital services ensure financial inclusion in the rural areas. Hence, it is in the light of these that the study seeks to assess the influence of digital banking in promoting financial inclusion among rural dwellers in Cameroon.

 1.3  Objectives of the Study

The main purpose of this study is to assess the influence of digital banking in promoting financial inclusion among rural dwellers in Cameroon. Specifically, the study will;

Determine the current level of digital banking adoption among rural dwellers in Cameroon.

Investigate the factors preventing rural dwellers from adopting digital banking services.

Evaluate strategies to enhance the adoption of digital banking among rural dwellers in Cameroon.

1.4  Research Questions

The following questions have been prepared for the study:

What is the current level of digital banking adoption among rural dwellers in Cameroon?

What are the factors  preventing rural dwellers from adopting digital banking services?

What strategies can enhance the adoption of digital banking among rural dwellers in Cameroon?

1.5 Research Hypotheses

H0: Digital banking has no significant influence in promoting financial inclusion among rural dwellers in Cameroon.

Ha: Digital banking has a significant influence in promoting financial inclusion among rural dwellers in Cameroon.

1.6 Significance of the Study

Rural dwellers stand to benefit the most from improved financial inclusion through digital banking. Enhanced access to banking services will help them save money, access credit, and manage their finances more effectively.Additionally, the government will use the research findings to formulate policies that encourage the adoption of digital banking and support financial inclusion initiatives. Moreover, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the influence of digital banking in promoting financial inclusion among rural dwellers in Cameroon.

1.6 Scope of the study   

The scope of this study is boarded on the influence of digital banking in promoting financial inclusion among rural dwellers in Cameroon. Empirically, this study will to determine the current level of digital banking adoption among rural dwellers,investigate the factors preventing rural dwellers from adopting digital banking services and evaluate strategies to enhance the adoption of digital banking among rural dwellers.

Geographically, the study will be delimited to residents of Eastern regions of Cameroon.

1.7 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Digital banking: refers to the use of electronic platforms and technologies to provide banking services.

Financial inclusion: is the process of ensuring access to affordable, timely, and adequate financial services for all individuals, particularly those who are underserved or unserved by traditional banking systems.

Rural dwellers: individuals living in areas outside of urban centers in Cameroon.