IMPACT OF ELECTRONIC BANKING SERVICES ON THE PERFORMANCE OF COMMERCIAL BANKS

Abstract

The objective of this study was to investigate the impact of electronic banking services on the performance of commercial banks in Rwanda, a case study of I&M Bank during the period of 2020 to 2022. Specifically, this study aimed: To identify electronic banking tools used by I&M Bank; to analyze the contribution of electronic banking system on performance of I&M Bank, to identify the challenges faced by I&M Bank while using electronic banking system and to suggest solutions to those challenges. The study used a descriptive research design and used also quantitative method in data collection and analysis through questionnaire tools. The study used primary data which were gathered using questionnaires and secondary data were collected using documentation review. Additionally, interviews with bank executives, managers, and customers provided insights into their experiences, perceptions, and challenges related to electronic banking services. The total population for this study was composed of total population of 120. The study used a sample size of 55 respondents. The Respondents were selected using universal sampling technique. The data were analyzed using descriptive statistics and they were presented using frequency table and percentages. The study found out that I&M Bank plays a significant role on the performance of commercial banks in Rwanda, Electronic banking plays a significant role in modern financial institutions, in providing consumers with convenient access to their funds and easing various types of transactions. However, infrastructural deficiencies, inadequate skilled manpower, high costs of e-payment terminals, insufficient security measures, lack of government support, power failures, lack of computer backups, inadequate investment capital, reduced employment opportunities, high charges on machines, low public acceptance, insecurities in banks, and excessive withdrawals are challenges of I&M Bank is facing in promoting electronic banking. On the other hand the study recommends that I&M Bank should increase efficiency, reduce transaction cost and enhance security. The study concluded that electronic banking has positive impact on the performance of commercial in Rwanda.