The Effect of Electronic Banking on Customer Services Delivery in Commercial Banks in Rwanda

Review Article

Austin J Bus Adm Manage. 2019; 3(1): 1038.

The Effect of Electronic Banking on Customer Services Delivery in Commercial Banks in Rwanda

Nyiranzabamwita R and Harelimana JB*

Kigali Independent University (ULK), Rwanda

*Corresponding author: Jean Bosco Harelimana, Kigali Independent University (ULK), Rwanda

Received: November 21, 2019; Accepted: December 18, 2019; Published: December 25, 2019


The aim of the study was to assess how electronic banking affected customer delivery channels in Rwanda commercial banks. The specific objectives include assessing the effectiveness of e banking, analyzing the factors affecting the customer delivery system, and finding out the affiliation that exists between customer service delivery and e banking in the bank of Kigali. Study participants included 1215 employee and about 350000 bank clients. The total number was 351215 study participants. The sample size was 400, which included both the staff and clients. The study revealed that customer service delivery in Bank of Kigali was explained by the probability of 0.0374 for internet banking; by the probability of 0.0004 for mobile banking; by probability of 0.0010 for electronic tax and that are respectively expected to 3.74% & 0.04% & 0.1% and of probabilities, which are less than 10%. If we consider the simple regression theory, there is a probability of less than 10% by each electronic banking factor, which represents functional fitness variability. The R2 is 0.969, whereas the Adjusted R2 is 0.965, which indicates estimated model goodness. Up to 96.9% of the long-run appreciation in customer service delivery is influenced by changes in internet banking; mobile banking; electronic tax as implemented by the organization. Hence, the study revealed of essential affiliation between electronic banking and the observed factors, and the customer delivery channel in Bank of Kigali. The study recommended on sensitization of clients on the utilization and advantages of electronic banking services through having public awareness programs that boost their knowledge of the service.

Keywords: Electronic banking; Internet banking; Mobile banking; Electronic tax; Customer services delivery; Customer satisfaction; Customer preferences; Customer perception


According to Taylor A [1] cited by Alexan M [2], some international monetary institutions implement electronic banking services to their customers. Such firms include commercial banks, financial cooperatives, and firms offering microfinance services, among others. The automated service is meant to provide adequate customer delivery channels. It is collectively approved that a safe and well-organized e-banking service use as an international technology system is crucial for secure banking institutions in different locations such as Europe, America, Asia, and Africa. The benefits derived from the information technology system, as well as electronic banking, are practical among users. The automated information technology system offers some benefits to the customers; it is convenient, secure, keeps records of transactions, and maintains a low cost. Customer service delivery proves that the information technology system can eliminate or reduce the challenges users may encounter in services such as payment or any other financial settlement system.

The European Union (EU) has been involved in the usage and adoption of e-money since 2000, as well; for example, in France, England, and German implemented electronic banking much longer than many other countries of the same regions. Mobile financial services are a term used to collectively refer to a range of financial services, which the use of mobile phones can facilitate. The three financial services completed over mobile phones include money transfer, mobile payment, and also mobile banking. The Barclays Bank in the UK had commercial electronic where clients in any region of the country can send and receive money with the use of their mobile phones. The money is transferred electronically with their mobile phones. The service is also offered by the organization internationally or cross-borders (Barclays Bank, 2013) [3].

In Africa, on behalf of financial institutions, the electronics implementation as well as internet banking services retail information technology system has been designed in a bid to help both the clients and the financial institutions in curbing some of the challenges experienced during the settlement and payment processes. South Africa, Ghana, and Nigeria, including Egypt, are the countries that have effective implementation of electronic banking in Africa more than others, and they present success results. These countries have adopted e-money over cash. The monetary value is stored in gadgets and is used in settling any payment or monetary value deal. There are various methods of storing e-money, such as cards, devices, or even the servers. For example, the pre-paid cards, electronic purses, which include the Kenyan MPESA system, or also web-based electronic stores such as PayPal. Therefore, e-money serves as an overall term for more specific electronic financial products and services [4].

For the case of Rwanda, banking institutions, financial firms are making substantial technological investments in improving their setups in a bid to ensure the provision of new and essential electronic financial services. Some of these electronic web-based retail banking services are making small firms adopt the use of technology at relatively favorable costs.

Also, links that have been developed between cell phone and bank accounts of corporations and individuals. It has enabled customers to adopt the use of their cell phones as another banking channel. The services they enjoy through the use of mobile phones include deposits, withdrawals, fund transfers from one record to the other, settlement of bills, and also balance inquiry. Most of these mobile financial settlement services are additive in that they provide new delivery channels to their existing bank clients (NBR, 2018) [5].

Despite the usage of computerized innovation in the financial division, banks continue to recognize the long queues as their clients are still using different branches of banks at a vast rate comparing to the previous one before the implementation of e-banking. Public awareness and willingness to adopt e-banking impacts its adequacy. Also, the speed of internet connection and its availability in different areas of the country affects the selection of web-based financial services. The financial sector is key to support the economy of the country as the availability of the financial inclusions increases savings; hence, economic growth. Banks in Rwanda are facing the above challenges as the result of a lack of access to remote financial inclusion. From this concept, there are some problems regarding customer satisfaction through financial inclusion associated with the banking sector arise. Among those questions, the use of remote financial inclusion and how it is connected with its success factors have a remarkable effect on customer service delivery in the banking sector. It shows the existence of a research gap that concerns the appropriate use of financial inclusion, especially electronic banking, in delivery of service in the banking sector that can be enhanced if the E-banking usage is used effectively and efficiently. Therefore, it is from previous issues that motivated the researcher to find out how electronic banking in Bank of Kigali has impacted on delivery the customer services.


This study is aiming to assess the impacts of electronic banking towards customer services delivery of commercial banks in Rwanda.

The following are specific objectives of the study

1. To assess the effectiveness of electronic banking application in Bank of Kigali.

2. To analyze the determinants of customer services delivery in Bank of Kigali.

3. To find out the relationship among electronic banking and customer services delivery in Bank of Kigali.

Literature Review

Salehi C. & Zhila V [6], explain that the internet and World Wide Web development influenced banks to increase the use of electronic systems in receiving instructions as well as service and product delivery to their customers. This system of using the internet in financial services is termed as e-banking. However, there are various variety of items and services which banks provide electronically, with each system having its substance, capacity, and refinement.

E-banking is the conveyance of customary budgetary administrations to the clients electronically. The variation arises partially because electronic banking denotes any monetary services in which customers can acquire their bank details or information and perform on their own through the use of mobile phones or computers. According to Salehi C. & Zhla V [6], e-banking is an electronic connection between a commercial facility, that is a bank, and the customers, which enable management and control of customers’ finances.

There are some values which e-banking offers to its clients. For instance, a full range of services is made available at any time of the day to the customers, which include services which are not offered in some branches. Also, e-banking provides a significant advantage to the clients that have low costs, with some services free to clients. Price is an essential factor which seems to be influencing e-banking services [7].

Mobile banking is any form of financial transaction which is carried out over a mobile phone. The activities range from bank sending fraud or even usage event which a client is notified over the phone, to complex transactions such as settling bills or sending money over long distances. Mobile banking offers an advantage in that a client can transact anywhere at any time of the day. However, some security concerns and some limited scope of capabilities compared to banking person offers some disadvantages of mobile banking. Many financial institutions are offering some mobile applications to their clients, which makes mobile banking very convenient. People choose mobile banking services due to their ability to check deposits, paying for a service or product offered, transferring money to another partner, or locating instant ATMs.

Electronic tax is an automated automatic payment process that some corporations and banks use. E-banking facilitates the whole automated tax process, from initiating the payment to the final settlement of the payment, which is free from any human intervention. E-banking comes for the aid of corporations and local businesses in that they pay taxes faster over the internet than the traditional queuing process [8].

Customer service delivery is ensuring customers’ satisfaction through the use of a product or service. The facility must ensure clients’ expectations, preferences, and perceptions are met. Customer service happens when a commercial facility is offering a service to the client, which includes purchases or returning a product. Customer service can happen through in-person interactions, making phone calls, the customer making self-services, or any other means. The process is essential in retaining a client and the relationships with the financial firms [9].

Any commercial facility offering monetary services such as deposits and giving business loans is a commercial bank. Commercial banks can also refer to a bank that deals with corporations or businesses. The provision of financial services to the general public is the primary role of commercial banks. Similarly, economic and social stability is a role given to commercial banks. Therefore, creating and managing credits is another task of commercial banks [2].

There are similar studies on the impacts of e-banking on client service delivery of banks. In the segment below, the study presents some of the studies related to the topic.

Bahia U [10], cited by Vilart, Ferraro R and Semunegus H [11], gives evidence of cost reduction productivity gain, which technological advances in the financial sector have made in European banks. Similarly, operational costs in the Turkish retail banking sector are lowered while customer satisfaction and retention are increased through e-banking, as illustrated by Carlson E. & Lang A [12]. According to Meuter D [13], operating costs minimization and maximizing the revenues are the significant factors driving e-banking. Similarly, Ombati, Peterson M, Onserio N and Richard D [14], IT is the ideal solution to the banking sector in reducing operating costs as well as enhancing information management, which makes banking more profitable.

Many sectors in the economy, inclusive of the financial industry, cannot avert technological advances. Banking over the internet is one of the technological advancement, which has gained competition. The evolution of ATMs, e-banking, and mobile banking has increased competition among banks. New markets and distribution channels have also been created due to the penetration of the internet into other areas. Allen M. & Strahan F [15] explain e-banking as giving financial services over the internet. In modern times, banks have started adopting various channels in delivery of services through using hybrid platforms where some branches offer both traditional and electronic banking services.

The CBK allowed some microfinance that takes deposits to operate agencies. Some of the mobile network operators and other financial institutions in Kenya have embraced this channel and opened multiple agencies throughout the country. One of the mobile operators in Kenya, Safaricom had more than 100000 agencies in the country by 2016 [16]. Similarly, over ten banks have connected more than 10,000 bank agents in the country since 2011. Two leading banks, namely Equity Bank and KCB Group, have been at the forefront in opening bank agents in the country. The vast number of agents across the country support their adoption of this distribution channel. The main objective of this channel is cutting down operational costs for the banks, with many scholars have researched e-banking.

Kigen N [17] sought to set up the exchange cost effect of mobile banking on banks. The study revealed reduced transaction charges. Lack of customer awareness of e-banking led to banks not yet feeling the transaction reduction. However, there has been a significant difference in the same. A study by Munaye H [18] sought to establish the impact of mobile banking as a strategic reaction to the external challenges of Equity bank limited. The report revealed that the effects of financial performance were not considered during the response.

A report by Mulee S [19] sought to establish how e-banking impacted the microfinance firms in Nairobi. The report failed to touch on mainstream banks in the country. The above studies reveal little studies on the financial impact which e-banking has on banks in Kenya. Hence, this study established how e-banking influenced commercial banks’ monetary performance. The past studies have carried out researches on other fields, leaving out some challenges on e-banking unaddressed.

The previous studies have some gaps in commercial banks in which the research focused on filling through its findings.

However, the study revealed some adverse relationships between a customer’s education level and how they are satisfied by e-banking services. There is additionally a negative connection between customers’ fulfillment and satisfaction with e-banking services. Hence, literature offers some negative relations in some sectors and even positive links in some areas of e-banking and customer service delivery. Nevertheless, the findings which can relate to the Rwandan case remain unclear, which is what the study aims to cover and give some recommendations on e-banking services in Rwanda.


This section reveals the overall approach and process which the research took, starting with data collection and its analysis.

Data collection: The study applied the questionnaire, interview and documentary. The research population meant to give information that relates to research objectives is based on the Bank of Kigali employees. The complete number of employees is 1215 in various offices. Additionally, the bank customer were included, with a total of 350 000 customers on Bank of Kigali being targeted during the survey. Therefore, the target population totals to 351 215 participants. The sample size was determined using Yamane mathematical formula. Thus, the sample size for this study is 400 respondents, with staff and customers included. A simple random sample technique was used in determining the sample population.

Data analysis

regression analysis model was presented through calculating, analyzing and interpreting the relationship which exists between the research variables. The Internet Banking (or IB); the Mobile Banking (or MB) and the Electronic Tax (or ET); all as independent variables.

The independent research variables include Internet Banking (IB), Mobile Banking (MB), and also Electronic Tax (ET). The dependent variable include Customer Service Delivery (CSD).

β0 is constant, while the parameters of equation are β1; β2 and β3

The term error is εt. The values were particularly stated for the regression model used in the analysis stage, and presented below.

Y(customer services delivery)= β0 + β1(internet banking) + β2(mobile banking) + β3(electronic tax) + εt.

Log CSD= β0 + β1LogIBt1+ β2LogMBt2+ β3LogETt3+ εt;

The equation was set from the general model and the following;

Y= β0 + β1Xit1 + β2Xiit2+ β3Xiiit3 + εt

And/ or

LogY= β0 + β1LogXit1 + β2LogXiit2 + β3LogXiiit3 + εt.

Results, Discussions and Findings

The section below shows the findings of the study. It also indicates some linked information that relates to the research questions. Besides, there is statistical data analysis using the SPSS 23rd version.

The Table 1 shows the analysis of 5 items on how e-banking impacts the delivery of customer service. There was an overall mean of 4.286, which illustrates a reliable internet banking service by Bank of Kigali. On the first item of time and security of the funds, there was a mean of 4.71 and a high correlation standard deviation of 0.951. It shows that the clients strongly agree that e-banking saves their time as well as ensuring the security of their funds. Also, the second item about holding financial data and decreasing costs had a mean of 4.72 and a high correlation standard deviation of 0.956. The third item centered on a reduction of financial errors as well as quick money transfers. The results showed a mean of 4.14 and a positive correlation with a standard deviation of 0.734, which showed that respondents agreed that e-banking has fewer financial errors. The fourth item under study indicated quick financial and paperless services with a mean of 3.99 and positive relations with a standard deviation of 0.713. The fifth item which the study examined showed there was increasing financial profits as well as several customers, which the respondents agreed on with a mean of 3.87 and a positive correlation with a standard deviation of 0.709.