This study was carried out to assess the effect of electronic banking on financial performance is Stanbic Bank using Mbarara branch as a case study in Mbarara Municipality, Mbarara district. The objectives of the study were; to examine the types of E-banking used by Stanbic Bank, to evaluate the effectiveness of electronic banking methods employed by Stanbic Bank –Mbarara Branch, to establish how E-banking has influenced the financial performance of Stanbic Bank and to establish the challenges of E-banking in Stanbic Bank. A non-experimental design was used to select a sample size of 50 respondents and Purposive and Simple random sampling procedures were used. Data was collected using questionnaires; it was later analyzed to be presented as a report. This study indicates that there are several electronic payment methods being used by Standard Chartered Bank and they include; credit cards, internet banking and withdrawing, use of debit/ prepaid cards and electronic fund transfer cards. Also, several factors were identified as benefits to electronic payment to Standard Chartered Bank and these were; reduced manual labour, maintenance of customer contact, reduced duplication, transparency and improved sourcing. Findings on the effectiveness of electronic banking methods employed at Stanbic bank Mbarara branch indicated that the methods offer quick services to its clients; respondents can easily transfer money from one account to another electronically; there is insufficient number of ATM booths. Findings revealed that Electronic Banking has satisfied most of people banking needs; Centenary bank is characterized by long ques; few break downs in ATM machine; the presence of breakdowns of ATM machines affects electronic banking services hence affecting the level of client’s satisfaction. High costs of machine maintenance, cash-based economy, channel conflicts and lack of more skilled and experienced labour force turned out to be the main constraining factors limiting prof