THE EFFECT OF MOBILE BANKING TO THE FINANCIAL PERFORMANCE OF BANKING INSTITUTIONS IN RWANDA case study: BANK OF KIGALI PLC period: 2020-2023

Abstract

This research explores the effect of mobile banking services on the financial performance of Bank of Kigali PLC from 2020 to 2023. The study focuses on key mobile banking services such as electronic funds transfer, electronic deposits, and balance checks, all of which were utilized by 100% of respondents. Using both qualitative and quantitative research methods, data were gathered from 100 respondents, including employees and customers of Bank of Kigali. The study assesses various financial performance indicators such as net income, loans-to-deposit ratios, and return on assets. The findings indicate that mobile banking plays a significant role in enhancing operational efficiency and financial outcomes. Quantitative analysis shows a strong positive correlation (r = 0.894) between mobile banking services and the bank’s financial performance, with a p-value of 0.000, confirming a statistically significant relationship. Between 2020 and 2023, the bank’s net income increased from RWF 37.3 billion to RWF 59.7 billion, reflecting a 60.1% growth. Similarly, the loan-to-deposit ratio decreased from 97.2% in 2020 to 83.6% in 2023, indicating improved loan management. Return on assets (ROA) for the period fluctuated between 2.95% and 3.66%, while return on equity (ROE) ranged from 14.86% to 18.72%. These results underscore the financial benefits of mobile banking in reducing operational costs and increasing profitability. -13- However, the study also identifies challenges such as network reliability, electricity issues, and customer knowledge gaps, with 75% of respondents citing network problems and 57.8% reporting a lack of mobile banking literacy. To overcome these challenges, the study recommends improving digital infrastructure, expanding customer education programs, and strengthening security measures. Overall, the findings confirm that mobile banking significantly contributes to the financial performance of Bank of Kigali PLC and could serve as a model for other banking institutions in Rwanda.