Usage of mobile banking services and financial inclusion of rural populations in Rwanda

Abstract

The adoption of Information communication Technologies (ICT) has pervaded every sector and the banking sector has not been spared. ICTs are adopted with the hope that they will increase efficiency, effectiveness and broader customer participation. This study aimed at investigating on the impact of mobile banking on financial inclusion. The objectives were to: examine to which extent the use of technology adoption in banking services affects financial inclusion in Karongi District; to determine the level of financial inclusion by (a) examining the number of active users of financial products and services and (b) the level of access to financial information provided by banks in Karongi District; to establish the extent to which income level influence the relationship between mobile banking and financial inclusion of the rural population in Karongi District; and to determine to which extent the personal factors (Gender, educational level, Age) affect the relationship between mobile banking and financial inclusion of the rural population in Karongi District. A descriptive and analytical methods were adopted mixed with correlation on a sample size of 246 estimated using slovin’s formula from a target population of financial providers in Karongi District totaling to 634. Questionnaires were designed and distributed to collect data and using SPSS version 22 analyzed according to each objective. The finding revealed that the majority of the respondents were male, unemployed, uneducated and earned above 120000 frw. Mobile Money, agent, ATM banking technologies were adopted though majority adopted mobile banking. There was sufficient evidence to conclude that mobile banking positively affects financial inclusion through the various technologies. A positive relationship existed between personal factors and financial inclusion and between Personal Factors and Mobile Banking implying that personal factors had a positive effect on mobile banking and financial inclusion. The most significant personal factor common to both was employment status. The regression produced for the relationship between income level and mobile banking and financial inclusion was also positive and statistically significant. The research made recommendations to stakeholders and ministry of finance to design more initiatives for promoting financial inclusion through the use of technologies such as mobile banking but also consider the challenges to such technologies in rural settings.