Electronic Banking and Performance of the Banking Industry

Abstract

The study set out to find out the impact of e-banking on performance of financial institutions in Uganda, with Pride Micro Finance as the case study. The study was guided by the following objectives: to find out the forms of e-banking used in financial institutions in Pride Micro Finance; to find out the relationship between e-banking and performance of financial institutions in Pride Micro Finance; and, to find out the effect of e-banking on performance of financial institutions in Pride Micro Finance. In their efforts to provide cheap, reliable, flexible, fast and convenient financial services, financial institutions resorted to e-banking which relies on FinTech tools, However, the provision of e-banking products in financial institutions may heighten operational vulnerability due to network failure, initial high investment technological infrastructure, cyber- attacks, risking customer data confidentiality all of which may affect performance of financial institutions. The study adopted a descriptive research design and survey designs, which helped in collecting and analysing qualitative and quantitative data. A sample of 138 participants was selected from a target population of 210 subjects who were purposively and randomly selected. The study used both structured and unstructured questionnaires, and an open-ended interview guide to collect data. Descriptive statistics (percentages) were used to examine the forms of e- banking, while inferential statistics were used to assess the relationship and the impact of e- banking on performance of financial institutions. The results showed internet banking as the most used form of electronic banking. The study found a significant moderate relationship (r = .761; sig. <.05) between electronic banking and performance of financial institutions. Electronic banking was found to account for 74.5% of the performance of financial institutions, with electronic cards alone predicting about 61.6% for any unit-change in the use of electronic cards. The study concluded that electronic banking has a significant impact on performance of financial institutions. As a recommendation, financial institutions should promote e-banking workshops and training to their customers to make them user-friendly.