Assessing The Effects of Digital Financial Services on Financial Performance of Commercial Banks in Rwanda (2019-2025)

Emmanuel Manishimwe and Thomas Tarus
University of Kigali
Email: immanuelmanishimwe@gmail.com

Abstract: This study assessed the effects of Digital Financial Services (DFS) on the financial performance of commercial banks in Rwanda.. The purpose was to examine how DFS channels; mobile banking, internet banking, and ATM/card services impact key financial performance indicators, namely Return on Assets (ROA) and Return on Equity (ROE). The research adopted a descriptive and explanatory design, using secondary data from nine commercial banks over six years, yielding 54 firm-year observations. Data was analyzed using descriptive statistics and multiple linear regression to test hypotheses. Findings revealed that DFS adoption positively influenced ROA and ROE, with internet banking and mobile banking contributing most significantly to profitability and efficiency. However, high investment costs, cybersecurity risks, and regulatory compliancerequirements were noted as challenges that can offset short-term gains. The study concludes that DFS enhances operational efficiency, diversifies revenue streams, and strengthens risk management, but requires careful cost control and innovation strategies. It is recommended that Rwandan commercial banks continue investing in secure digital infrastructure, expand customer-centric DFS products, and strengthen regulatory compliance to maximize long-term financial performance.