CONTRIBUTION OF ELECTRONIC BANKING ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA. CASE STUDY: ACCESS BANK RWANDA. PERIOD: 2020-2023

Abstract

This research investigates the impact of e-banking on the performance of commercial banks in Rwanda. Prompted by issues such as delays in check payments, long queues, manual errors, and fraud, as highlighted by the National Bank of Rwanda, this study aimed to assess how e-banking systems contribute to banking performance. Employing a descriptive research design with both qualitative and quantitative approaches, the study utilized primary data collection through questionnaires and secondary data via documentary analysis. The findings reveal that e-banking services, including ATM services, mobile banking, telebanking, electronic fund transfers, and online banking, significantly affect bank performance in terms of profitability, liquidity, and solvency. Specifically, profitability improvements are reflected in the ROA, which increased from 1.13% in 2021 to 2.91% in 2023, and ROE, which rose from 7.79% in 2021 to 20.13% in 2023. Liquidity also improved, with the current ratio increasing from 1.22 in 2021 to 1.33 in 2023. In terms of solvency, the debt-to-assets ratio slightly decreased from 0.8551 in 2021 to 0.8556 in 2023, while the debt-to-equity ratio declined from 2.149 in 2021 to 2.5136 in 2023. The correlation coefficient of 0.817 indicates a strong positive relationship between e banking and the performance of Access Bank. Consequently, the research suggests that continued focus on effective e-banking systems is crucial for enhancing financial services.