Mass Market Strategy and Growth of Commercial Banks in Kenya

Abstract

Commercial banks in the world have continued to implement market innovations strategy so that they remain competitive. These help in delivering a broad range of value-added products and services to customers. The introduction of mass market innovations such as electronic banking, agency banking, and mobile money has improved business efficiency in rendering services. This survey was carried out to establish the relationship between mass market strategy and growth of commercial banks at lower market segments. Therefore, this research sought to answer the question: to what extent does mass market strategy at lower market segments influence growth of commercial banks? This study adopted a census survey research design. The researcher issued selected respondents a standardised questionnaire. The study targeted all 42 commercial banks operating in Kenya. The study used secondary data obtained from annual reports of the targeted banks and Central Bank of Kenya’s. The study used both descriptive and inferential statistics in analysing the data through besides the Statistical package for social scientists (SPSS version 20). The study found out that the average total pretax profit from 2002 to 2014 was Kshs. 1,485,867, net assets were Ksh.37, 226,574, Return on Assets ROA was 29%. The number of deposit account for mass, and the non-mass market was Ksh.229, 331, 794 and Ksh.18, 068,052, the number of mass market and non-mass market deposits was Ksh.7, 298,845 and Ksh.19, 097, 007respectively. The study also established that the mass market deposits accounts were 93% while the non-mass market deposits were 7%. The study confirmed that the mass market deposits were 28% while the non-mass market deposits were 72%.The study found out that total asset as a measure of non-mass market strategy had 50%. Non-mass deposits accounts had 24%, and non-mass deposits had 26%, 57.3% variation in growth of commercial banks was explained by mass deposits accounts and mass deposits and 44.5% change in growth of commercial banks is defined by non-mass market deposits and non-mass deposits.The study concludes that that mass market deposit account and mass market deposits all affect the growth of commercial banks as a result of the mass market strategy.There is also a statistically significant association between a mass market deposit account and pretax profit, mass market deposits, and pretax profit. An increase in mass market deposit accounts or mass deposit all increases pretax profits of commercial banks. The study recommends that commercial banks should come up with proper strategies on attracting and retaining a huge number of retail customers which shall boost the level of deposits. These strategies include organising for road shows and public rallies. Commercial banks should also lower their interest rates offered to customers as this shall make it attractive for borrowing as well as deposits.This study will contribute to knowledge base existing regarding expansionary growth strategies adopted by most commercial banks that drive their growth in an ever competitive environment. The study will help management of commercial banks in formulating proper policy regarding growth. Both the retail and corporate banking will benefit from this research. The study will offer practical solutions to current instability witnessed in the business. The findings in this study will help CBK in the formulation of proper policies to regulate the banking sector.