Abstract

This paper investigates the increasing competition between traditional banks and mobile money service providers. Although mobile money service is a well-researched area in the literature, the competition between mobile money operators and banks has yet to receive much attention. This paper contributes to a better understanding of the competition between banks and mobile money service providers through a qualitative study framed within Porter’s competitive advantage theory. This study applied purposeful sampling of experts in mobile money service provision, Fintech and Banks operating in Ghana. The banks saw mobile money at inception as unattractive, and therefore no pressure on the banks to support this type of innovation. Over time, it has evolved into a critical digital payment service, forcing the banks to launch their mobile money service, Ghana Pay. This study highlights three elements of Porter’s theory and provides evidence that banks led mobile money service is not expected to increase competitive pressure on existing mobile money service providers; it is an uphill task because the incumbents benefit from network externalities effects. The data from this research shows that for many years it was challenging for the banks in Ghana to collaborate and deploy common platforms; therefore, the introduction of Ghana Pay is significant since it is the first-time banks as competitors are collaborating to deal with existential threat to their business.