Impact of financial digital solutions on bank performance in Uganda. A case of ABSA Bank Uganda Ltd

Abstract

The purpose of the study was to assess the relationship between digital solutions and bank performance using Absa bank as a case study. The objectives of the study were: to establish the different digital solutions used by commercial banks in Uganda; how the digitalization solutions affect the bank relationship with customers and to establish how the performance of a commercial bank is measured and its constituents. Literature review was done to establish how other researchers wrote about digital technology and the need for banks to innovate and remain competitive, maintain and attract new client bases in both the short term and the long-term. The study used both qualitative and quantitative research design. A sample of 90 Absa bank staff was extracted from the population using simple random sampling technique. Both the primary and secondary methods were used to collect data, but with a questionnaire as a key instrument for primary data. Analysis was done with SPSS-20 and MS Excel. It was found out that all common digital solutions are highly used by the bank customers and these include: mobile money; automated teller machines; internet banking; and others. In addition, bank customers fully enjoys all benefits of digital solutions and these include: convenience of banking home; 24/7 availability of access; and others. There were many other digital solutions such as Credit cards; Electronic standing orders. Furthermore, it was established that the measures performance of the bank are: Revenue per employee; Total Deposits per Branch; by Net Interest Margin (NIM); Default loan servicing; Commercial loan decision cycle time; and others. In the same way, all common effects of digital solutions on bank performance are highly relevant and applicable to Absa bank and these include: serving many different customers at the same time; maintaining its existing clientele base; reshaping the traditional interaction between customers and the bank; increasing output (number of customers); and others. Apart from digital solutions, there were other identified factors that affect the financial performance of Banks in Uganda such as Competitive Environment; Central bank rates; Poor customer care; and many more. Conclusion made is that digital technology has a fundamental impact on banks performance and there’s need for banks to bench mark or adopt upcoming digital trends to remain relevant in a given market. Recommendations made were; service, maintain and innovate the commonly used digital solutions like mobile money; automated teller machines; internet banking; point of sale terminals; and other solutions. Areas for further research put forward is how banks can leverage on digital technology to improve customer experience levels and also market a financial institution.