IMPACT OF ELECTRONIC BANKING SERVICES ON THE PERFORMANCE OF COMMERCIAL BANKS IN RWANDA CASE OF BANK OF KIGALI (2021-2024)

Abstract

The study sought to examine the effect of electronic banking on performance of commercial banks in Rwanda. It was specifically conducted in bank of Kigali with following those specific objectives: to identify electronic banking tools used by bank of Kigali , to analyze performance of bank of Kigali.To achieve the above stated objectives, the study has collected data through primary and secondary sources. Data were conducted from 60 respondents who are actually the employees and clients of BK who were selected using purposive sampling. The results showed that BK uses telephone banking, internet banking ,electronic cards such Visa cards, and ATM cards for different financial services, including cash deposit, cash withdrawal, and account enquiries among others and 100% confirmed that BK uses mobile banking as a system that allows its customers to conduct financial transactions remotely using mobile phones. The results also showed that 100% accepted that this new banking technology helps the bank deliver financial services to the customers at a lower cost as clients no longer queue up for financial services because they use ATMs and get the same easy and rapid services, saving time and money. The results also showed that the electronic banking system helps to satisfy customers by quickly getting information from the bank about their accounts and accessing rapid financial services. The availability of a electronic banking system has also enabled the bank to provide services to customers at remote distances, enabling the bank to gain more clientele from the outreach services. The results have shown that BK's financial performance is stable, as indicated by the evolution of customer ratio analysis. Non-interest income totaled FRw 59.0 billion, an increase of 34.8% Y- o-Y(refer to year-on-year change on the Frw values. Total operating income increased by 23.6% to FRw 224.4 billion, while total operating expenses rose by 15.8% to FRw 96.0 billion. Loan loss provision stood at FRw 22.2 billion as at YE 2023, from FRw 13.1 billion in 2022. The correlation was equal to 0.851, meaning there is a positive high correlation between electronic banking and the financial performance of BK. Therefore, all hypotheses were verified, and all objectives were achieved. Finally, recommendations were formulated depending on the findings.