Mobile Banking Technology and Financial Performance of Non-Deposit Taking Institutions: Evidence from Kamuli District, Uganda

Abstract

Financial performance remains critical to the sustainability of non-deposit-taking financial institutions, yet effective utilization of mobile banking technologies continues to pose challenges. Guided by the Resource-Based View Theory, Systems Theory, and the Diffusion of Innovation Theory, this study examined the relationship between mobile loan application, mobile fund transfers, and mobile-based customer outreach on financial performance. A quantitative correlational design was employed using data from 124 staff members of Development Microfinance Ltd in Kamuli District, analyzed with SPSS through multiple linear regression. The results revealed that mobile loan application had an insignificant relationship with financial performance (p > 0.05), while mobile fund transfers showed statistically significant relationship (p < 0.05). Mobile-based customer outreach, however, demonstrated a strong and significant positive effect on financial performance (p < 0.05). The study contributes theoretically by illustrating how digital capabilities function as strategic resources, interconnected system components, and innovations with varying adoption outcomes. Practically, the findings suggest that non-deposit-taking microfinance institutions should prioritize customer outreach mechanisms, streamline mobile fund transfer systems, and simplify mobile loan application processes to enhance financial performance, with implications extending to similar institutions in developing economies.