The effect of electronic banking on the financial performance of commercial Banks in Rwanda: Case study of Equity Bank Rwanda

Abstract

The main objective of this study was to assess the effect of electronic banking services and the financial performance of Commercial banks in Rwanda. The study was carried out in Equity Bank Plc as case study. Descriptive research design was used within this study, and the study population comprised customers of Equity Bank and financial statements for the period (2014-2023). The size of the sample of this study was composed of 100 customers of Equity Bank Plc sampled using convenient sampling technique and all questionnaires were returned back and they were effectively filled giving a response rate of 100%. Descriptive research design using mean and standard deviation were used to interpret the collected data, while correlation analysis was utilized to assess the relationship between the variables, and multiple regression was used to test hypotheses of the study. To compute and analyze the data in this study, SPSS version 27 was used. The findings showed that the respondents confirmed that the level of E-Banking services in Equity Bank Plc is satisfactory through the analysis done on ATM as shown with the overall moderate mean of 3.65 (Table 4.2), analysis done on Mobile banking with the overall high mean of 4.04 (table 4.3), analysis done on POS systems with the overall high mean of 3.92 (table 4.01), and analysis done on internet banking with the overall mean of 3.32 (table 4.5). The financial analysis revealed that the bank has been performing well in 2014-2023 in terms of ROE, ROA and NIM. The multiple regression analysis proved that jointly, ATM, Mobile banking, POS systems and internet banking contribute 77.7% on the financial performance in Equity Bank Plc. Therefore, the study concluded that there is significant impact of Embanking services on the financial performance of Equity Bank. However, some weakness were found, and the study recommended Equity bank to develop a strategic plan to expand the ATM network to underserved areas, and to develop and implement comprehensive training programs for customers to educate them on how to effectively use the internet banking platform.