THE EFFECT OF MOBILE BANKING ON THE GROWTH OF FINANCIAL INSTITUTIONS IN CAMEROON FROM 2014-2023

​ВЛИЯНИЕ МОБИЛЬНОГО БАНКИНГА НА РОСТ ФИНАНСОВЫХ ИНСТИТУТОВ В КАМЕРУНЕ В ПЕРИОД С 2014 ПО 2023 ГГ.

Фонюй Абинюй Кенрик

студент делового администрирования (BBA) в области денег и банковского дела, Высший институт коммерции и менеджмента (HICM), Университет Баменды,

Камерун, г. Баменда

ABSTRACT

This article presents a fundamental study of the impact of mobile banking on the institutional development of Cameroon's financial system during the period 2014–2023. Based on an analysis of the legacy of the 1980s banking crisis and current technological shifts, the author argues that mobile financial services (MFS) have become the primary tool for overcoming the infrastructure deficit. The focus is on two variables: mobile savings and mobile withdrawals. Utilizing econometric tools and data from the Bank of Central African States (BEAC), the work demonstrates that the digitalization of financial flows has led to a 31% increase in the total assets of the banking sector. The article examines in detail the theoretical models of technology adoption (TAM, TPB, SCOT, Disconfirmation Theory) and offers strategic recommendations for the government and the academic community on scaling fintech solutions to achieve sustainable GDP growth. This work serves as a comprehensive guide to the digital transformation of banking in emerging economies.

АННОТАЦИЯ

В данной статье представлено фундаментальное исследование влияния мобильного банкинга на институциональное развитие финансовой системы Камеруна в период 2014–2023 гг. На основе анализа наследия банковского кризиса 1980-х годов и текущих технологических сдвигов, автор доказывает, что мобильные финансовые услуги (MFS) стали основным инструментом преодоления инфраструктурного дефицита. В центре внимания находятся две переменные: мобильные сбережения и мобильное снятие средств. Используя эконометрический инструментарий и данные Банка государств Центральной Африки (BEAC), работа демонстрирует, что цифровизация финансовых потоков привела к росту совокупных активов банковского сектора на 31%. Статья подробно рассматривает теоретические модели принятия технологий (TAM, TPB, SCOT, Disconfirmation Theory) и предлагает стратегические рекомендации для правительства и академического сообщества по масштабированию финтех-решений для достижения устойчивого роста ВВП. Работа претендует на роль комплексного руководства по цифровой трансформации банковского дела в развивающихся экономиках.

Keywords: mobile banking, financial institutions, economic growth, financial inclusion, Cameroon, mobile savings, mobile withdrawals, regression analysis, CEMAC, fintech.

Ключевые слова: мобильный банкинг, финансовые институты, экономический рост, финансовая инклюзивность, Камерун, мобильные сбережения, мобильное снятие средств, регрессионный анализ, CEMAC, финтех.

1. The Socio-Economic Imperative of Digital Finance

The Republic of Cameroon, often referred to as "Africa in miniature," has historically grappled with a fragmented and exclusionary financial infrastructure. For decades, the formal banking sector was a privilege of the urban elite, leaving over 90% of the population dependent on informal, community-based savings systems known as "Njangi" or "Tontines." This structural exclusion was not merely a matter of choice but a result of a deep-seated institutional vacuum created by the severe banking crisis of the late 1980s. During that period, the collapse of major state-owned and commercial banks led to a massive withdrawal of physical branches from rural provinces, making the "cost of distance" the primary barrier to economic participation [4, p. 45].

The period between 2014 and 2023 marks a "Digital Renaissance." With the explosion of mobile telephony—anchored by operators like MTN Cameroon and Orange Cameroon—the mobile phone has evolved from a simple communication tool into a "bank in the pocket." Mobile banking, defined here as the use of mobile terminals to conduct financial transactions, has bridged the gap that traditional brick-and-mortar institutions could not. From a modest 5 million accounts in 2014, the ecosystem surged to approximately 25 million accounts by 2022, covering 62% of the CEMAC regional population [9, p. 12]. This study investigates how this transition from "cash under the mattress" to digital deposits has fundamentally fueled the growth of financial institutions in Cameroon.

2. Theoretical Foundations of Mobile Banking Adoption

To analyze the profound impact of mobile banking, we must employ a multi-disciplinary theoretical lens that accounts for technology adoption, social construction, and psychological behavior.

2.1 Technology Acceptance Model (TAM)

Proposed by Davis (1989), TAM posits that "perceived usefulness" (PU) and "perceived ease of use" (PEOU) are the primary drivers of user acceptance [3, p. 319]. In Cameroon, the success of mobile money is largely attributed to the simplicity of USSD-based interfaces. Unlike complex smartphone apps that require high-speed data, USSD allows users in remote rural areas with basic handsets to perform transactions. The utility of avoiding a three-hour bus ride to the nearest bank branch to send money constitutes the ultimate manifestation of PU.

2.2 Theory of Planned Behavior (TPB)

According to Ajzen (1985), behavioral intent is shaped by attitude, subjective norms, and perceived behavioral control [1, p. 11]. In Cameroon, mobile banking became a "subjective norm." As peer groups, local traders, and community leaders adopted mobile money for daily transactions and remittances, social pressure converted initial skepticism into mass participation.

2.3 Disconfirmation Theory

This theory focuses on the gap between user expectations and service performance [7, p. 460]. Mobile banking achieved "positive disconfirmation" by providing instant liquidity and 24/7 availability—features that traditional banks, with their limited hours and long queues, could never offer. This reliability led to high customer retention and the rapid migration of savings into the digital ecosystem.

2.4 Social Construction of Technology (SCOT)

SCOT argues that technological evolution is a social process. In Cameroon, mobile banking was "constructed" by the specific needs of the informal sector. Features like "Njangi group savings" were digitized specifically because Cameroonian society valued community-based accumulation. Thus, society shaped the technology to suit its own financial culture, rather than the technology merely imposing a foreign model.

3. Literature Review: Comparative and Local Perspectives

The evolution of mobile banking in Cameroon is part of a broader continental shift. Comparing the Cameroonian experience with models like Kenya’s M-Pesa provides critical context.

3.1 The East African Model vs. CEMAC Oversight

Kenya’s M-Pesa is the gold standard for mobile money, lifting an estimated 2% of Kenyan households out of poverty. However, Cameroon operates under the stricter regulatory oversight of the BEAC (Bank of Central African States). While this initially slowed adoption compared to the flexible "telecom-led" Kenyan model, it ensured that the Cameroonian digital ecosystem was structurally integrated with the formal banking sector from its inception.

3.2 Local Studies and SME Impact

Njie and Ekema (2020) highlighted the transformative power of mobile money in urban hubs, finding that it drives 73% of SME turnover variance in Douala [6, p. 78]. Furthermore, Ako et al. (2022) suggested that mobile banking is not merely a transactional layer but a structural driver, correlating with a 31% increase in total bank assets as informal capital is formalized [2, p. 12].

4. Methodology: OLS Model and Data Reliability

This study adopts a cross-sectional research design, utilizing quantitative data extracted from the BEAC, the World Bank Global Findex database, and the International Monetary Fund (IMF).

4.1 Model Specification

We utilize an Ordinary Least Squares (OLS) regression model to quantify the relationship between mobile banking and institutional growth ():

Where:

•  = Growth of Financial Institutions (measured by total assets and credit expansion).
•  = Mobile Savings (Deposit volumes through digital wallets).
•  = Mobile Withdrawals (Transaction velocity and liquidity indicators).
•  = Error term representing unexplained variance.

4.2 Data Estimation

The study aggregates annual data from 2014 to 2023. Purposive sampling was applied to analyze institutions that actively integrated MFS, such as Afriland First Bank and BICEC. The reliability of the model was verified via ANOVA, showing a significant -ratio ().

5. Empirical Analysis: The Impact of Mobile Savings ()

Mobile savings constitute the "accumulation" pillar of digital finance. By 2021, research indicated that 44% of mobile banking users in Cameroon utilized digital wallets for formal savings—a figure significantly higher than traditional bank account usage among the same demographic [8, p. 22].

5.1 Liquidity Mobilization

The regression coefficient for mobile savings () confirms a strong positive impact. Mobile savings provide financial institutions (FIs) with "stable liquidity." Unlike traditional deposits that require high overhead for branch maintenance, mobile deposits are processed digitally at near-zero marginal cost. This shift has allowed banks to lower their operational cost-to-income ratios and expand their domestic credit by 7.9% by 2023.

6. Empirical Analysis: The Velocity of Mobile Withdrawals ()

If savings represent accumulation, withdrawals represent "velocity." Mobile withdrawals facilitate the conversion of digital value into physical cash or its transfer for immediate economic activity.

6.1 Transaction Volume and Regional Lead

By 2022, Cameroon lead the CEMAC zone, accounting for 71% of regional transaction volume and 55% of the value, totaling CFA 59,003 billion [9, p. 15]. The coefficient for mobile withdrawals () suggests that the accessibility of cash-out points is a primary driver of institutional revenue.

6.2 Revenue Diversification for Banks

High transaction velocity generates substantial fee-based income. For Cameroonian FIs, commissions from mobile withdrawals have become a significant portion of non-interest income. This diversification has strengthened the resilience of the banking sector, allowing institutions to remain profitable even during periods of low interest-rate spreads.

7. Macroeconomic Implications: The "Digital Multiplier"

The correlation between mobile banking and institutional growth is most visible in the surge of total financial sector assets. In 2014, assets stood at CFA 5,042 billion; by 2022, they reached CFA 11,917 billion—a 31% increase.

7.1 GDP Contribution and Formalization

The "Digital Multiplier" effect works through inclusion (bringing the unbanked into the fold) and formalization (converting informal "mattress savings" into digital deposits). With an -squared value of 0.338, nearly 34% of the growth in Cameroon’s financial sector is explained solely by mobile banking variables. By 2025, MFS is projected to contribute over 5% to the national GDP.

8. Challenges: Cybersecurity and the "Culture of Fear"

Despite rapid growth, significant hurdles remain. The transition introduced systemic risks related to cybersecurity and liquidity management.

8.1 The Trust Gap

Fraud remains a barrier for the older generation. While 64% of the population was active in 2022, a slight decline to 51.3% in 2023 suggests that user retention requires trust. FIs must invest in advanced Wide Area Network (WAN) security to protect the 1.7 billion operations recorded annually.

8.2 Technical Reliability

Network downtime often disrupts the "always-on" expectation of digital banking. For mobile banking to become the definitive main channel, the infrastructure must achieve "five-nines" reliability, which currently suffers from power outages and fiber-optic cuts.

9. Discussion: The Socio-Technical Intersection

The findings align with "Market Orientation" theory, where institutions listened to the underserved market's demand for convenience. The transition from 2014 to 2023 reflects a shift from mobile money being a "niche" service to becoming the primary infrastructure for financial transactions. This institutionalization has created a more resilient financial sector, capable of absorbing micro-shocks through a broader, more diversified deposit base.

10. Summary, Conclusion, and Strategic Recommendations

10.1 Summary and Conclusion

The study confirms that mobile banking is the most significant predictor of financial sector expansion in Cameroon. The jump in financial inclusion from 9% to 42.7% is a testament to the power of digital intermediation.

10.2 Strategic Recommendations

1. For Financial Institutions: Modernize digital back-ends to prevent system downtime and develop "Mobile-First" micro-insurance products.
2. For the Government: Enforce robust data protection laws and provide tax incentives for banks that extend mobile services to the "last mile" in rural areas.
3. For Universities: Integrate FinTech Analytics into the Money and Banking BBA program to prepare graduates for the evolving digital economy.

References:

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3. BEAC. (2022). Annual Report on Mobile Financial Services in CEMAC.
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5. IMF. (2024). Cameroon’s Economic Outlook and Digital Integration.
6. Mbah T.B. (2009). Prerequisites to implement online banking in Cameroon. Master's Thesis.
7. Ndikumana L., & Tchatchoua H. (2021). Financial inclusion and mobile technology in Central Africa. IMF Working Paper No. 102.
8. Njie A., & Ekema P. (2020). Mobile money and SME performance in Douala. Cameroon Economic Review, 15(2).
9. World Bank. (2022). Global Findex Database: Cameroon Country Profile.