The Automated Teller Machines and Profitability of Commercial Banks in Rwanda

Abstract

A study on Automated teller machines (ATM) and profitability of commercial bank was conducted in this paper under a period from 2010 to 2016 with the aim of assessing the use of ATM and its contribution to the profitability in bank of Kigali. Quantitative and qualitative Methods of data collection were employed including questionaires in collecting primary data. The total population was 334,121 ATM users at BK where a sample of 200 respondents were used. The findings have shown that in Bank of Kigali still faces an obstacle on lack of financial education (information, training…) of the customers about how to use ATM cards in general. The evolution of the profitability shows that the profitability of the Bank of Kigali remained intact with, ROA, ROE and net margin of 4.0%, 22.9% and 9.9%, respectively in 2014. 4.0%, 22.2%, 11.1% in 2013. When the correlation of variables is < 0.5 the hypothesis is rejected when the correlation of variables is > 0.5, therefore the hypothesis confirmed that there is a significant relationship between automated teller machines and profitability of Bank of Kigali where the finding shows that the correlations between ATM and ROA, ROE and net margin are > 0.5. Lower cost, differentiation and accessibility are factors determinants level of satisfaction of ATM users at BK and competitive market, advertisement and increase ATM services are strategies to optimize the usage of ATM at BK. Also it has been confirmed that there is a significant relationship between ATM and profitability at the BK. It is recommended to invest in ATM usage for the accessibility of the services of Bank of Kigali to be competitive on the market and finally to be sustainable on the market.