The impact of electronic banking systems on the banking performance in Uganda: a case study of DFCU Bank

Abstract

The purpose of this study was to examine the impact of electronic banking systems on the banking performance in Uganda. A case of DFCU Bank. The study objective was the main objective. The study analyzed electronic banking systems using both primary and secondary data with a target population of 150 participants interviewed in the survey. The dependent variable of the study was banking performance and was evaluated on the basis of efficiency and cost reduction, customer acquisition and retention, revenue growth, profitability and competitive advantage and the independent variables was e-banking and was studied basing on the specific services under e-banking such as mobile banking, internet banking, PC banking, Automated Teller Machine and electronic card. The study investigated the extent to which e-banking has been adopted by DFCU bank and it indicates that e-banking services have been fully adopted by customers. The use of ATMs has been seen as the most adopted form of e-banking by many bank customers with a total contribution of 16.4%. Regression analysis on the effect of internet banking on profitability was examined to determine the effect of adoption of e-banking services on the financial performance of banks and a positive and significant correlation between internet banking and profitability was (F=0.921, p<0.01). The study further shows a standardized beta coefficient of (beta= 0.132, p<0.01). Correlation analysis was also examined so as to examine the relationship between e-banking and customer satisfaction and the study found out that there was a negative correlation coefficient (-0.274) indicating a weak relationship between e-banking and customer satisfaction. However, the correlation was less than 0.005 and it’s significant at 0.003, therefore, there was a significant relationship between e-banking and customer satisfaction. The study recommends that commercial banks and other financial institutions should enhance their network and connectivity issues especially on ATMs, mobile banking and internet banking so as to ease convenience and accessibility, financial institutions should introduce new ebanking products on the market and also implement several strategies to enhance user experience on e-banking systems and improve customer satisfaction.