Mobile Banking and Microfinance Institutions Sustainability: Analysis of Digital Financial Services in Rwanda (2011-2015)

The study analyzed the digital financial services in Rwanda basing on mobile money operators, the case study of COPEDU Ltd (2011-2015). The objectives of the study were to examine the technical and non-technical requirements for linking a mobile money account to MFI's normal account in COPEDU Ltd; to assess the usage behavior of the service by the mobile subscribers in COPEDU Ltd, to assess the service effectiveness and cost charges of the mobile money systems of the clients in COPEDU Ltd and finally to determine the impact of the linkage between Mobile money and COPEDU account on savings in COPEDU Ltd.

Research Methodology used was the qualitative and quantitative methods to achieve the research objectives: Both primary and secondary data were collected to 200 clients of COPEDU Ltd using the questionnaire and interview techniques then analyzed through MFI Factsheet_ 3.4, SPSS 16 tools (Pearson correlation, and multi regression analysis).

The outcome indicates that 54% accept that COPEDU can link the ordinary account to Mobile Money account while 46% do not accept it as detailed below: 26.7% of the respondents expect funds transfer between the two accounts, 32% expect decreased cost of managing the COPEDU account, 24% said that they expect that it will be easy to access both accounts using a single terminal while 9.3% expect flexibility, independence and freedom and 8% think that the linkage between two accounts will increase the use of money.

Based on the results, the savings on MM Account affect negatively the savings on COPEDU Account for MM users. Therefore the saving on MM accounts for the users increases by 1%, the savings on COPEDU Account decrease by 0.998% ceteris paribus. Due to these results above the linkage of the two accounts could be one of the solutions, which can create the positive relationship. However, the mobile money non-users have the reasons of keeping getting the loans from COPEDU and they feel more secure with their assets. Mobile money has increased the financial services accessibility and usage in Rwanda according to the results.

To sustain their activities, the MFIs should adopt MM system to stay in the market in the future.