Digital banking, service quality and financial performance at FINCA Uganda

Abstract

The study examined the relationship between digital banking, service quality and financial performance at FINCA Uganda Ltd (MDI). The study had three objectives: to establish the relationship between digital banking and financial performance at FINCA Uganda, to evaluate the relationship between service quality and financial performance at FINCA Uganda and to assess the combined effect of digital banking and service quality on financial performance at FINCA Uganda. The study was quantitative and adopted a descriptive research design. Self-administered questionnaires were distributed to 292 respondents, who included staff from the banking, credit, innovation, risk, marketing, finance, audit, information technology (ICT), and legal departments of FINCA Uganda. The data was analyzed for descriptive statistics, correlation and regression using SPSS software. The findings of the study indicate that digital banking (r=0.54, p=0.00) and service quality (r=0.683, p=0.00) were positively correlated with financial performance and the combination of digital banking and service quality (r=0.712, p=0.00) were positively correlated with financial performance. The study found that digital banking and service quality individually impact the financial performance of FINCA Uganda and hence it recommends FINCA management to improve the uptime or availability of mobile banking and agent banking platforms, and train clients to use the digital platform as well as improve service quality in all their product offerings to improve financial performance. Additionally, the current study found a strong combined effect of service quality and financial performance and hence recommends FINCA Uganda to incorporate service quality principles in the design of digital banking platforms to improve their financial performance. The findings of the study are relevant to regulators, researchers, microfinance institutions and the public. The various stakeholders can use these findings to improve their financial performance by the microfinance institutions