Publication Details
Abstract
This study sought to examine the impact of Information and Communication Technology (ICT) innovation on the performance of microfinance institutions in Rwanda, using AB Bank Rwanda Plc as a case study. Specifically, it aimed to (1) identify the determinants of ICT innovation within AB Bank Rwanda Plc, (2) analyze microfinance performance indicators before and after the adoption of ICT innovations, and (3) explore the relationship between ICT innovation and microfinance performance.
A descriptive research design was employed. The study population comprised 19 staff members of AB Bank Rwanda Plc, Gisozi Main Branch, and 1,740 customers. A total sample of 84 respondents, both staff and clients, was selected through purposive and simple random sampling. Data were collected using questionnaires and documentary reviews, and analyzed through descriptive statistics such as frequencies and percentages. Pearson’s correlation coefficient (R) was used to determine the relationship between variables.
Findings revealed that the most commonly utilized ICT innovation determinants were software and computerized accounting systems (98.8%) and branch networking (89.3%). Other determinants included internet banking (79.8%) and digital financial services (86.9%). The study further established that 73.7% of staff identified portfolio quality, 89.2% cited financial efficiency and productivity, and 100% confirmed financial profitability and sustainability as major performance indicators. Key profitability indicators included net profit margin, return on assets (ROA), and return on equity (ROE).
Results showed a strong positive relationship between ICT innovation and microfinance performance, with a correlation coefficient of R = 0.987, indicating a close and significant link between technological innovation, financial sustainability, and profitability. The study recommended that AB Bank Rwanda Plc continue upgrading its technological systems to meet evolving customer needs by investing in modern ICT infrastructure and ensuring clients are adequately informed about new digital services.