Mobile banking and financial performance of banking institutions in Rwanda

Abstract

The research was purposely conducted to examine the effect of mobile banking and financial performance of banking institutions. The objectives were to determine the effect of mobile banking on return on assets, assess the effect of mobile banking on return on investment establish the effect of management decision making on financial performance and how technology has enhanced financial outcomes. The researcher used a correlation research design with both qualitative and quantitative methods. The sample size was 169 people who were selected from 300 ZCSS staffs and members at the Head Office-Gasabo-Remera. These respondents were selected by use of purposive and convenience sampling techniques. The questionnaire and interview guide were used to collect primary data while documentary checklist was used to collect secondary data. Data entry was done by use of SPSS and Microsoft. In terms of changes in return on assets, it was found out that bank assets and profitability was positive. For example, the bank’s total assets grew from Rwf 170,144,653 in 2015 to Rwf 215,427,597 thus registering an increase of 27% growth rate from 25% registered in 2015. Net asset profit grew by 31% from Rwf 5,240,118 in 2015 to Rwf 6,860,465 in 2016. In 2014, total net income from investments was Rwf 13,497,130,647 which subsequently increased to Rwf 15,521,760,859 in 2015 and Rwf 19,251,466,657 in 2016. This signifies that ZCSS has been registering positive financial performance in 2014-2016. Management and the level of technology have also indirectly promoted performance in terms of risk reduction, convenience, cost reduction, etc. Pearson correlation recorded a value of 0.781*, which signifies that there was a very strong and significant relationship between mobile banking and financial performance in ZCSS, where MB product affect indirectly the performance. It is however observed that mobile banking (MB) is exposed to security threats of fraud and virus attacks, affected by poor internet connection some time in rural areas. Management should therefore make effort to improve security of customers’ deposits, ensure even distribution of automated teller machines (ATMs), point of sale in strategic locations, ensure interoperability between telecommunication companies, etc.