THE IMPACT OF E- BANKING ON THE PERORMANCE OF FINANCIAL INSTITUTIONS IN RWANDA A CASE STUDY BANK OF KIGALI NYAGATARE (2019-2022)

Abstract

This research examines the impact of e-banking on promoting a cashless policy in Rwanda, with a specific focus on MTN customers in downtown Kigali. Motivated by challenges such as the inefficiency of cash transactions, long queues at banks, the high cost of cash handling, and the increased risk of theft and fraud, this study aimed to assess how e-banking solutions contribute to the transition towards a cashless economy. The study employs a descriptive research design, using both qualitative and quantitative approaches to gather and analyze data. Primary data was collected through structured questionnaires distributed to a sample of MTN customers, while secondary data was gathered from reports and studies on e-banking trends in Rwanda. The findings indicate that e-banking services, including mobile money, mobile banking, and electronic payments, have significantly contributed to reducing the dependency on cash transactions. Mobile money, in particular, has been pivotal in driving digital payments for day-to-day purchases, bill payments, and money transfers among MTN customers. The adoption of e-banking has led to improvements in financial access, transaction security, and customer satisfaction. The study also reveals that the cashless policy has had a positive impact on economic efficiency, reducing costs related to cash handling for both banks and consumers. In terms of measurable outcomes, the use of mobile money services among MTN customers increased by 40% between 2021 and 2023, while cash-based transactions in the same customer segment decreased by 25%. The research highlights a strong correlation between the usage of e-banking services and the effectiveness of Rwanda's cashless policy, with a correlation coefficient of 0.826, indicating a strong positive relationship. The study recommends that continued investment in e-banking infrastructure, customer education, and enhanced security features will be critical to sustaining the success of the cashless policy in Rwanda.