Assessing the performance of digital financial services in rural areas in Uganda

Abstract

The purpose of the study was to assess the performance of digital financial services on financial inclusion in rural communities. The study was guided by three specific objectives which included; to assess the availability and accessibility of digital financial services in Masuliita Sub County, to evaluate the affordability of digital financial services in Masuliita Sub County, to determine the level of usage and quality of digital financial services in Masuliita Sub County. The study adopted a cross sectional research design that involved the use of both qualitative and quantitative research methods. Quantitative research involves the use of both numerical data and discrete variables to get the respondents level of understanding about the topic under study. The preference for a cross-sectional research design is because it collects information from a random sample that has been drawn from different categories of the population at a point in time. This was all applied on a sample size of 331 respondents using questionnaires. The study established that digital financial services promote financial inclusion hence high level of utilization. This can be observed in cash withdraw and deposits made and bills settlements as well. There was effort to use digital financial services for funds transfer and savings although this was at low level as most households in the rural communities found it difficult to deposit savings on their accounts. Although most of the respondents agreed that there are bank agents helping to carry out banking transactions, respondents also agreed that there are opportunities to open an account in a formal financial institution (banks, microfinance institutions and registered SACCOs). The findings on the affordability of digital financial services in Masuliita Sub County revealed that the cost of carrying out financial transactions in a financial institution is affordable, the costs of depositing and sending money through mobile money account is affordable. Further, respondents agreed that it’s not expensive to access financial institutions and the cost of accessing financial services through bank agents is affordable. The study recommends that there is need for the bank management to constantly review their agency policies to increase the number of agents for increased financial inclusion. There is need for the management of the commercial banks to collaborate with the telecommunication players to enhance uptake of mobile banking for enhanced financial inclusion.