The Effect of electronic banking on the performance of savings and credit cooperative societies in Tanzania

Abstract

This study examines the effect of electronic banking on the performance of Savings and Credit Cooperative Societies (SACCOS) in Tanzania, focusing on mobile banking and Automated Teller Machines (ATMs). Electronic banking is becoming a crucial tool for improving accessibility and operational efficiency, especially in the microfinance sector. The study also explores the challenges associated with electronic banking for SACCOS, such as security concerns and inadequate technological infrastructure. The primary objectives were to assess the effects of use of mobile banking and ATMs on SACCOS performance and to understand staff perspectives on these services. A cross-sectional research design and mixed-method approach were used, incorporating both qualitative (thematic analysis of interview) and quantitative (regression analysis) data collection. Purposive sampling was employed to select three SACCOS offering electronic banking services in Dar es Salaam and Kilimanjaro regions, with a total sample size of 64 employees. The employee population of each SACCOS was classified according to size, ensuring a sample that considered characteristics and variances across the SACCOS. Findings indicated that mobile banking was favourably viewed for improving accessibility and efficiency, while ATMs were perceived as enhancing reliability and overall service quality. Both mobile banking and ATMs had a statistically significant impact on SACCOS performance, specifically on Return on Assets (ROA), with p<0.01. The study concludes that electronic banking has positively contributed to the performance of SACCOS in Tanzania, despite challenges like network outages and security risks. Recommendations include enhancing security measures, improving technology infrastructure, and ensuring regulatory compliance. These findings have important implications for policymakers, SACCOS management, and future research on electronic banking.