DIGITAL BANKING ADOPTION AND THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN MOGADISHU, SOMALIA Abdikafi Mohamud Ahmed, Dr. Chukwuemeka O Agwu

Digital banking has become an integral part of commercial banking allowing for greater convenience to the customer. Due to the increasing popularity of mobile money in Somalia and the growing formal banking sector, digital banking may give commercial banks new opportunities to increase customer reach, transaction efficiency and improve financial performance. This article will look at the existing literature relating to digital banking adoption and the financial performance of commercial banks in Mogadishu, Somalia. This includes mobile banking, electronic banking, customer adoption, financial inclusion and the factors within an organisation that can link digital banking with profitability and operational efficiency. A structured literature review has been completed by searching accessible sources. Narrative synthesis has been performed due to the variety in research design, sample and outcome measures. Published studies show there is a positive relationship between digital banking service provision and commercial bank performance in Somalia. Studies show there are factors that influence mobile banking adoption including perceived usefulness, ease of use and trust. Other studies show that electronic banking leads to financial inclusion but there are issues with implementation including the cost of the technology, network reliability, fraud and customer awareness. Whilst there are positive findings, there is not enough evidence to conclude there is a causal relationship between digital banking and improved audited financial performance indicators. There are limitations to the evidence including a cross-sectional design, questionnaires, lack of standardisation in performance and little longitudinal data. Overall, digital banking may lead to improved financial performance if the digital adoption is supported by reliable systems, effective cyber security, customer education, proper governance and accurate recording of costs and benefits. Future research should look at combining audited financial statements with bank level digital banking adoption.