Smartphone Banking Applications and Digital Financial Inclusion Barriers Mitigation: The Moderating Role of Behavioral Intentions (The Case of Iraq)

   In adopting digital financial inclusion using digital apps in the Iraqi banking sector, users’ behavioral intentions and acceptance of digital apps are critical considerations to mitigate financial inclusion barriers. This study examines and discusses the role of smartphone banking technology as a new trend for extending financial inclusion by testing the impact of clients’ behavioral intentions (as a modified variable) on the part of smartphone banking apps in mitigating the digital financial inclusion barriers in the Republic of Iraq. The study used two models: the unified theory of acceptance and use of technology (UTAUT) model to determine essential constructs of technology use and a second model, a multidimensional index of financial inclusion (focusing on the dimension of the barriers).

   The main objective is to enhance understanding of how smartphone apps mitigate barriers to digital financial inclusion.

   The researchers collected survey data from 338 participants of Iraqi bank clients in the Baghdad governorate. After excluding 10 invalid responses, 328 (92%) were tested and analyzed using sPss software. Results of the two hypotheses emphasize that the respondents believe four critical constructs of the UTAUT model (PE, EE, SI, and FC) are key to digital financial inclusion and mitigate its barriers. Besides that, the positive of bank clients’ Baghdad governorate behavioral intentions to use digital apps play a vital role in improving the effectiveness of smartphone banking apps to mitigate digital financial inclusion barriers. Therefore, the study recommends that Iraqi banks with smartphone banking apps must develop and improve those apps to extend and diversify their operations on mobile platforms to enable more comprehensive categories of Iraqi society and motivate them to use the bank apps to purchase products and implement transactions.

1. Gallego-Losada M.-J., Montero-Navarro A., García-Abajo E., Gallego-Losada R. Digital financial inclusion. Visualizing the academic literature. Research in International Business and Finance. 2023;64:101862. DOI: 10.1016/j.ribaf.2022.101862

2. Srivastava A. Mobile banking and sustainable growth. American Journal of Economics and Business Administration. 2013;5(3):89–94. DOI: 10.3844/ajebasp.2013.89.94

3. Ozili P. K. Theories of financial inclusion. Munich Personal RePEc Archive. MPRA Paper. 2020;(101810). URL: https://mpra.ub.uni-muenchen.de/101810/

4. Lamidi, Rahadhini M. D. The effect of digital marketing and financial inclusion on business sustainability through marketing performance culinary MSMEs in Surakarta. Journal of Economics, Finance and Management Studies. 2021;4(6):716–723. DOI: 10.47191/jefms/v4-i6–06

5. Marakarkandy B., Yajnik N., Dasgupta C. Enabling Internet banking adoption: An empirical examination with an augmented technology acceptance model (TAM). Journal of Enterprise Information Management. 2017;30(2):263–294. DOI: 10.1108/JEIM-10–2015–0094

6. Hu Z., Ding S., Li S., Chen L., Yang S. Adoption intention of Fintech services for bank users: An empirical examination with an extended technology acceptance model. Symmetry. 2019;11(3):340. DOI: 10.3390/sym11030340

7. Avornyo P., Fang J., Odai R. O., Vondee J. B. Factors affecting continuous intention of mobile banking in Tema and Kumasi. International Journal of Business and Social Science. 2019;10(3):114–130. DOI: 10.30845/ijbss.v10n3p11

8. Sakala L., Phiri J. Factors affecting adoption and use of mobile banking services in Zambia based on TAM model. Open Journal of Business and Management. 2019;7(3):1380–1394. DOI: 10.4236/ojbm.2019.73095

9. Anouze A. L.M., Alamro A. S. Factors affecting intention to use e-banking in Jordan. International Journal of Bank Marketing. 2020;38(1):86–112. DOI: 10.1108/IJBM-10–2018–0271

10. Thich P. D. A study on behavior intention to adopt mobile banking apps. International Journal of E-Services and Mobile Applications (IJESMA). 2021;13(2):60–72. DOI: 10.4018/IJESMA.2021040104

11. Chawla D., Joshi H. Consumer perspectives about mobile banking adoption in India — a cluster analysis. International Journal of Bank Marketing. 2017;35(4):616–636. DOI: 10.1108/IJBM-03–2016–0037

12. Barnes S. J., Corbitt B. Mobile banking: Concept and potential. International Journal of Mobile Communications. 2003;1(3):273–288. DOI: 10.1504/IJMC.2003.003494

13. Zhang T., Lu C., Kizildag M. Banking “on-the-go”: Examining consumers’ adoption of mobile banking services. International Journal of Quality and Service Sciences. 2018;10(3):279–295. DOI: 10.1108/IJQSS-07–2017–0067

14. Sulaiman A., Jaafar N. I., Mohezar S. An overview of mobile banking adoption among the urban community. International Journal of Mobile Communications. 2007;5(2):157–168. DOI: 10.1504/IJMC.2007.011814

15. Bansal S. Perspective of technology in achieving financial inclusion in rural India. Procedia Economics and Finance. 2014;11:472–480. DOI: 10.1016/S2212–5671(14)00213–5

16. Halboos A., Altameemi A., Alzoubai S. Factors sustaining clients behavioral intentions to use smartphones-banking in Oman: A survey study based on COVID-19 crisis. Journal of Jilin University (Engineering and Technology Edition). 2022;41(7):10–17. DOI: 10.17605/OSF.IO/J9568

17. Billy M. The influence of dynamic organizations and the application of digital innovations to educational institutions in the world during the COVID-19 pandemic. SSRN Electronic Journal. 2020. DOI: 10.2139/ssrn.3588233

18. Demirgüç-Kunt A., Klapper L., Singer D., Van Oudheusden P. The Global Findex Database 2014: Measuring financial inclusion around the world. World Bank Policy Research Working Paper. 2015;(7255). URL: https://openknowledge.worldbank.org/server/api/core/bitstreams/1f980942–7e24–54f9-a29b-d61ceed03db8/content

19. Ramananda S., Sankharaj R. Financial inclusion: A critical assessment of its concepts and measurement. Asian Journal of Research in Business Economics and Management. 2015;5(1):12–18. DOI: 10.5958/2249–7307.2015.00002.X

20. Cámara N., Tuesta D. Measuring financial inclusion: A multidimensional index. BBVA Working Paper. 2014;(26). URL: https://www.bbvaresearch.com/wp-content/uploads/2014/09/WP14–26_Financial-Inclusion2.pdf

21. Sakariya S. M., Ruparel N. Evaluation of financial inclusion strategies of banks in India: Reflections from literature. An Indexed Refereed Journal of Higher Education. 2018;10(2):52–64. URL: https://www.researchgate.net/publication/323357969_EVALUATION_OF_FINANCIAL_INCLUSION_STRATEGIES_OF_BANKS_IN_INDIA_REFLECTIONS_FROM_LITERATURE

22. Beck T. Fintech and financial inclusion: Opportunities and pitfalls. ADBI Working Paper Series. 2020;(1165). URL: https://www.adb.org/sites/default/files/publication/623276/adbi-wp1165.pdf

23. Nathan R. J., Setiawan B., Quynh M. N. Fintech and financial health in Vietnam during the COVID-19 pandemic: In-depth descriptive analysis. Journal of Risk and Financial Management. 2022;15(3):125. DOI: 10.3390/jrfm15030125

24. Korynski P. The contribution of the Fintech sector to financial inclusion and health : A review of opportunities and challenges. Warsaw: Microfinance Centre; 2019. 19 p. URL: https://mfc.org.pl/wp-content/uploads/2020/03/SUMMARY-PAPER_FINTECH-CASE-STUDY_FEB 2020.pdf

25. Fellag S., Charfi S. The role of the financial technology industry in promoting digital financial inclusion in the Arab world: Experience of the Kingdom of Bahrain. Social and Human Sciences Review, 2019;21(1):297–320. URL: https://www.asjp.cerist.dz/en/downArticle/97/21/1/122057 (In Arab.).

26. Bouzana A., Hamdouche W. Emerging fintech companies as an alternative to support sustainable financial inclusion for SMEs with reference to the case of Algeria. Annals of Bechar University in Economic Sciences. 2020;7(3):95–109. URL: https://www.asjp.cerist.dz/en/downArticle/659/7/3/149684 (In Arab.).

27. Alktrani S. H., Abbas A. N. The impact of financial depth indicators on economic growth of Iraqi banking sector: An analytical study. Turkish Journal of Computer and Mathematics Education. 2021;12(7):3352–3363. URL: https://turcomat.org/index.php/turkbilmat/article/view/4414/3755

28. Yue X.-G., Cao Y., Duarte N., Shao X.-F., Manta O. Social and financial inclusion through nonbanking institutions: A model for rural Romania. Journal of Risk and Financial Management. 2019;12(4):166. DOI: 10.3390/jrfm12040166

29. Kim M., Zoo H., Lee H., Kang J. Mobile financial services, financial inclusion, and development : A systematic review of academic literature. The Electronic Journal of Information Systems in Developing Countries. 2018;84(5): e12044. DOI: 10.1002/isd2.12044

30. Atkinson A., Messy F.-A. Promoting financial inclusion through financial education: OECD/INFE evidence, policies and practice. OECD Working Papers on Finance, Insurance and Private Pensions. 2013;(34). DOI: 10.1787/5k3xz6m88smp-en

31. Ravikumar T. Financial access indicators of financial inclusion: A comparative analysis of SAARC countries. International Journal of Intelligent Enterprise. 2020;7(1–3):28–36. DOI: 10.1504/IJIE.2020.104643

32. Bongomin G. O.C., Ntayi J. M. Mobile money adoption and usage and financial inclusion: Mediating effect of digital consumer protection. Digital Policy, Regulation and Governance. 2020:22(3):157–176. DOI: 10.1108/DPRG-01–2019–0005

33. Sahay R., Allmen U., Lahreche A., et al. The promise of Fintech: Financial inclusion in the post COVID-19 era. International Monetary Fund. Monetary and Capital Markets Department. Paper Series. 2020;(9). URL: https://www.imf.org/en/Publications/Departmental-Papers-Policy-Papers/Issues/2020/06/29/The-Promise-of-Fintech-Financial-Inclusion-in-the-Post-COVID-19-Era-48623

34. Patwardhan A. Financial inclusion in the digital age. In: Chuen D. L.K., Deng R. H., eds. Handbook of block chain, digital finance, and inclusion. Vol. 1: Cryptocurrency, FinTech, InsurTech, and regulation. London: Academic Press; 2018:57–89.

35. Karunakaran S., Gopinathan N. Role of digitalisation in rural banking sector in Madurai, India. Finance: Theory and Practice. 2023;27(1):76–90. DOI: 10.26794/2587–5671–2023–27–1–76–90

36. Schuetz, S., Venkatesh V. Blockchain, adoption, and financial inclusion in India: Research opportunities. International Journal of Information Management. 2020;52:101936. DOI: 10.1016/j.ijinfomgt.2019.04.009

37. Ozili P. K. Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review. 2018;18(4):329–340. DOI: 10.1016/j.bir.2017.12.003

38. Banna H., Alam M. R. Islamic banking efficiency and inclusive sustainable growth: The role of financial inclusion. Journal of Islamic Monetary Economics and Finance. 2020;6(1):213–242. DOI: 10.21098/jimf.v6i1.1089

39. Gomber P., Koch J.-A., Siering M. Digital finance and FinTech: Current research and future research directions. Journal of Business Economics. 2017;87(5):537–580. DOI: 10.1007/s11573–017–0852-x

40. Ozili P. K. Digital finance, green finance and social finance: Is there a link? Financial Internet Quarterly. 2021;17(1):1–7. DOI: 10.2478/fiqf-2021–0001

41. Fishbein M., Ajzen I. Belief, attitude, intention, and behavior: An introduction to theory and research. Reading, MA: Addison-Wesley; 1975. 480 p.

42. Camilleri M. A., Camilleri A. C. Digital learning resources and ubiquitous technologies in education. Technology, Knowledge and Learning. 2017;22(1):65–82. DOI: 10.1007/s10758–016–9287–7

43. Ajzen I. Attitude theory and the attitude-behavior relation. In: Krebs D., Schmidt P., eds. New direction in attitude measurement. Berlin: Walter de Gruyter; 1993:41–57.

44. Venkatesh V., Thong J. Y.L., Xu X. Consumer acceptance and use of information technology: Extending the unified theory of acceptance and use of technology. MIS Quarterly. 2012;36(1):157–178. DOI: 10.2307/41410412

45. Alkhunaizan A., Love S. What drives mobile commerce? An empirical evaluation of the revised UTAUT model. International Journal of Management and Marketing Academy. 2013;1(2):82–99.

46. Mahfuz M. A., Khanam L., Hu W. Examine website quality on M-banking services adoption in Bangladesh. International Journal of Computer Science & Information Technology. 2016;8(2):33–50. DOI: 10.5121/ijcsit.2016.8203

47. Davis F. D. Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly. 1989;13(3):319–340. DOI: 10.2307/249008

48. Tsu Wei T., Marthandan G., Yee-Loong Chong A., Ooi K., Arumugam S. What drives Malaysian m-commerce adoption? An empirical analysis. Industrial Management & Data Systems. 2009;109(3):370–388. DOI: 10.1108/02635570910939399

49. Venkatesh V., Morris M. G., Davis G. B., Davis F. D. User acceptance of information technology: Toward a unified view. MIS Quarterly. 2003;27(3):425–478. DOI: 10.2307/30036540

50. Lu J., Liu C., Yu C.-S., Wang K. Determinants of accepting wireless mobile data services in China. Information & Management. 2008;45(1):52–64. DOI: 10.1016/j.im.2007.11.002

51. Khalifa M., Ning Shen K. Explaining the adoption of transactional B 2C mobile commerce. Journal of Enterprise Information Management. 2008;21(2):110–124. DOI: 10.1108/17410390810851372

52. Al-Gahtani S.S., Hubona G. S., Wang J. Information technology (IT) in Saudi Arabia: Culture and the acceptance and use of IT. Information & Management. 2007;44(8):681–691. DOI: 10.1016/j.im.2007.09.002

53. Chang I.-C., Hwang H.-G., Hung W.-F., Li Y.-C. Physicians’ acceptance of pharmacokinetics-based clinical decision support systems. Expert Systems with Applications. 2007;33(2):296–303. DOI: 10.1016/j.eswa.2006.05.001

54. Shaikh A. A., Glavee-Geo R., Karjaluoto H. Exploring the nexus between financial sector reforms and the emergence of digital banking culture — Evidences from a developing country. Research in International Business and Finance. 2017;42:1030–1039. DOI: 10.1016/j.ribaf.2017.07.039

55. Rifai M. M., Grant K., Edgar D. Big TAM in Oman: Exploring the promise of on-line banking, its adoption by customers, and the challenges of banking in Oman. International Journal of Information Management. 2012;32(3):239–250. DOI: 10.1016/j.ijinfomgt.2011.11.007

56. Martins C., Oliveira T., Popovič A. Understanding the Internet banking adoption: A unified theory of acceptance and use of technology and perceived risk application. International Journal of Information Management. 2014;34(1):1–13. DOI: 10.1016/j.ijinfomgt.2013.06.002

57. Bruhn M., Love I. The real impact of improved access to finance: Evidence from Mexico. The Journal of Finance. 2014;69(3): 1347–1376. DOI: 10.1111/jofi.12091

58. Bongomin G. O.C., Munene J. C., Ntayi J. M., Malinga C. A. Exploring the mediating role of social capital in the relationship between financial intermediation and financial inclusion in rural Uganda. International Journal of Social Economics. 2018;45(5):829–847. DOI: 10.1108/IJSE-08–2017–0357

59. Bongomin G. O.C., Munene J. C. Analyzing the relationship between mobile money adoption and usage and financial inclusion of MSMEs in developing countries: Mediating role of cultural norms in Uganda. Journal of African Business. 2021:22(1):1–20. DOI: 10.1080/15228916.2019.1695189

60. Morgan P. J., Trinh L. Q. Fintech and financial literacy in Viet Nam. ADBI Working Paper Series. 2020;(1154). URL: https://www.adb.org/publications/fintech-and-financial-literacy-viet-nam

61. Jünger M., Mietzner M. Banking goes digital: The adoption of FinTech services in German households. Finance Research Letters. 2020;34:101260. DOI: 10.1016/j.frl.2019.08.008

62. Singh S., Sahni M. M., Kovid R. K. What drives FinTech adoption? A multi-method evaluation using an adapted technology acceptance model. Management Decision. 2020:58(8):1675–1697. DOI: 10.1108/MD-09–2019–1318

63. Bongomin G. O.C., Yosa F., Ntayi J. M. Reimaging the mobile money ecosystem and financial inclusion of MSMEs in Uganda: Hedonic motivation as mediator. International Journal of Social Economics. 2021:48(11):1608–1628. DOI: 10.1108/IJSE-09–2019–0555

64. Vyas V., Jain P. Role of digital economy and technology adoption for financial inclusion in India. Indian Growth and Development Review. 2021:14(3):302–324. DOI: 10.1108/IGDR-01–2020–0009

65. Ahmad M., Majeed A., Khan M. A., Sohaib M., Shehzad K. Digital financial inclusion and economic growth: Provincial data analysis of China. China Economic Journal. 2021:14 (3):291–310. DOI: 10.1080/17538963.2021.1882064

66. Baker L. Everyday experiences of digital financial inclusion in India’s ‘micro-entrepreneur’ paratransit services. Environment and Planning A: Economy and Space. 2021;53(7):1810–1827. DOI: 10.1177/0308518X211026320

67. Ji X., Wang K., Xu H., Li M. Has digital financial inclusion narrowed the urban-rural income gap: The role of entrepreneurship in China. Sustainability. 2021;13(15):8292. DOI: 10.3390/su13158292

68. Wang X., Fu Y. Digital financial inclusion and vulnerability to poverty: Evidence from Chinese rural households. China Agricultural Economic Review. 2022;14(1):64–83. DOI: 10.1108/CAER-08–2020–0189

69. Ahmed A. A., Al-Nuaimi Z. A. The effect of financial depth in promoting financial inclusion in some Arab countries. Tikrit Journal of Administration and Economics Sciences. 2022;18(57–1):380–400. (In Arab.). DOI: 10.25130/tjaes.18.57.1.20

70. O’Rourke N., Hatcher L. A step-by-step approach to using the SAS system for factor analysis and structural equation modeling. 2^nd ed. Cary, NC: SAS Institute; 2014. 443 p.

71. Hair J., Black W., Babin B., Anderson R. Multivariate data analysis: A global perspective. 7^th ed. Upper Saddle River, NJ: Pearson Education; 2010. 800 p.

72. Sekaran U., Bougie R. Research methods for business: A skill building approach. 5^th ed. Chichester: John Wiley & Sons Ltd; 2009. 468 p.

73. Simintiras A. C., Dwivedi Y. K., Rana N. P. Can marketing strategies enhance the adoption of electronic government initiatives? International Journal of Electronic Government Research. 2014;10(2):1–7. DOI: 10.4018/ijegr.2014040101