Analysis of digital lending among commercial banks. a case of Post Bank Uganda

Abstract

This study aimed at examining digital lending in commercial banks in Uganda: a case of Post Bank Uganda, Kampala Road branch. The study was premised on three objectives: to examine factors influencing the adoption of digital lending at Post Bank Uganda, to assess the challenges that affect effectiveness of digital lending at Post Bank and to design strategies for improving the adoption of digital lending at Post bank Uganda. The study employed a cross-sectional and descriptive research with a quantitative study approach which involved collecting numerical data from 95 respondents out of a sample of 108 PostBank customers, using a survey questionnaire. Data were analyzed using the statistical package for social science (SSPS Version 27). The study findings revealed that the adoption of digital lending at Post Bank Uganda is influenced by peer influence, convenience, time efficiency, fair lending terms, and financial service quality, with social validation playing a major role in customer decisions. However, several challenges hinder adoption, including concerns about financial independence, security risks, negative perceptions, technological complexity, and system disruptions, highlighting the need for security enhancements, educational programs, and infrastructure improvements. To increase adoption rates, the study recommends governmentled digital literacy programs, financial incentives, proactive customer engagement, expanded ICT infrastructure, and awareness campaigns, all aimed at building trust, improving accessibility, and encouraging participation in digital lending services. Therefore, recommends several strategies to improve digital lending adoption at Post Bank Uganda. Customer education and awareness campaigns should be implemented to address misconceptions and increase trust in digital lending services. Strengthening security measures such as multi-factor authentication and fraud detection systems will reassure users about the safety of their financial data. Improving platform usability by simplifying navigation and offering multilingual support will enhance accessibility and encourage adoption. Expanding ICT infrastructure and internet access, particularly in underserved regions, will ensure more customers can engage with digital lending platforms. Lastly, offering financial incentives, such as lower interest rates and cashback rewards, will motivate hesitant users to transition to digital lending, fostering longterm customer loyalty and financial inclusion.