Effect of mobile phone banking on the profitability of Ugandan banks (a case study of ABSA)

Abstract

The main objective of this study is to examine the effect of mobile phone banking on the profitability of Ugandan banks with a case study of ABSA. The study further had three specific objectives and one research hypothesis that were all used to achieve the study purpose. The study applied a non-experimental design called descriptive survey research design. The study population included all permanent staff (both senior and junior staff) of ABSA main branch in the Kampala City Centre. The respondents at ABSA were selected using a probability sampling method called simple random sampling. Cochran (1963) equation was used to yield a representative sample for proportions thus obtaining a sample of 100 respondents. The researcher prepared the interview guide questions in connection to research questions. The questionnaires administered to the respondents at ABSA were both open ended and close ended. The data that was collected was first edited for uniformity, precision, wholeness, consistency and was later arranged to enable tabulation coding before the final analysis. The data was then entered into a computer program called Statistical Package for Social Sciences (version 16) for analysis and interpretation. Bivariate tool will be used to analyse the association and compare the variables. To address the specific objectives, Pearson correlation was used. This test was used since both the dependent and independent variables are continuous in nature. To address the main objective, the general multiple linear regression model was used. Pearson correlation results revealed that there is a positive significant relationship between mobile-banking payment of bills, withdraws and deposits and the financial profitability of commercial banks since p<0.05. Regression results furthermore revealed that there is a statistically significant positive relationship at (at 5 percent level of significance) between the mobile money payments of bills, withdraws and deposits and profitability of the bank in this study since its P-value is less than 0.05. The study therefore recommends that commercial banks should improve on their mobile banking mode to ensure flexible acquisition of loans due to low loan limits and hence improve financial performance. Last but not least, the banks should improve on convenient banking mode in order for users of mobile banking are able to receive money conveniently.