Influence of Perceived Mobile Financial Services Risk and Usefulness on Digital Financial Inclusion of Low–Income Individuals in Tanzania

Abstract

Digital Financial Inclusion (DFI) plays a critical role in empowering underserved communities by providing access to essential financial services, thereby fostering their social and economic development. This study was designed to address two themes: The extent to which Perceived Risks (PR) and Perceived Usefulness (PU) influence DFI among low-income individuals. Secondly, how PR moderates the relationship between PU and DFI. Drawing data from 283 microfinance banks clients in Arusha and Dar es Salaam, Tanzania, the study employed the Partial Least Squares Structural Equation Modelling (PLS-SEM) for statistical analysis. Descriptive findings highlighted moderate PR concerns, especially regarding transaction security and errors while PU was rated highly for its perceived benefits in saving time, reducing costs and improving financial management. Inferential analysis revealed that PU had a substantial and statistically significant positive effect on DFI whereas PR exhibited no direct influence nor moderating role in the PU–DFI relationship. These results suggest that enhancing the PU of Mobile Financial Services (MFS) can significantly drive DFI even in the presence of moderate risk concerns. The study underscores the need for targeted strategies to promote MFS usability and security, particularly for low-income users in developing economies. Future research should explore evolving risk dynamics and technological innovations to proactively monitor and address emerging risks in DFI.