EFFECT OF MOBILE MONEY SERVICES ON PROFITABILITY OF COMMERCIAL BANKS IN TANZANIA

Abstract

This study investigated the effects of mobile money services on the profitability of commercial banks in Tanzania. The study was conducted at Tanzania Commercial Bank (TCB) in Mwanza City, focusing on mobile balance checking, money transfers, and bill payments. A mixed-methods approach was adopted, integrating quantitative and qualitative techniques to provide a comprehensive understanding of mobile banking usage and its financial impact. The study employed a descriptive research design, with data collected from a purposively and randomly selected sample of 58 respondents, including bank customers, managers, IT specialists, financial analysts, and mobile services staff, using structured questionnaires and interviews. Quantitative data were analyzed through descriptive statistics, while qualitative responses were examined using thematic analysis to identify contextual and operational factors affecting profitability. The findings revealed that mobile balance checking significantly enhances profitability by increasing transaction volumes, fee income, deposit mobilization, and operational efficiency. Mobile money transfers improved liquidity management, reduced cash handling costs, increased transactional activity, and strengthened customer retention. Mobile bill payments contributed to operational efficiency, provided cross-selling opportunities, increased fee income, and reinforced customer loyalty. Collectively, these services positively impacted TCB Bank’s financial performance, operational sustainability, and market competitiveness. The study concludes that mobile money services constitute a strategic tool for enhancing profitability, customer engagement, and operational effectiveness in commercial banks. Critically, the research recommends that commercial banks including TCB Bank and similar institutions continue to invest in mobile banking infrastructure, improve service reliability, and develop targeted customer engagement strategies to maximize transaction volumes and fee-based revenue. Additionally, integrating service specific performance monitoring and staff training programs can further strengthen operational efficiency and competitive positioning