Factors influencing adoption of electronic payments by Commercial Banks in Kenya

Abstract

Electronic payments is one of the technologies that has been significantly affected in the field of businesses. Electronic payments have greatly revolutionized the manner in which businesses conduct their operations and transactions by making payments of goods and services a convenient and flexible process. However, despite the potential benefits posed by electronic payments especially to financial institutions, several commercial banks in Kenya have been lagging behind in adopting this technology. It is against this backdrop that this research purposed to investigate factors influenceing the adoption of electronic payments by Kenyan commercial banks. In fulfilling this objective, this research was guided by three objectives; assessing the extent to which commercial banks in Kenya have adopted electronic payment systems, identifying the key factors influencing the uptake of the electronic payments by the commercial banks, and identifying the main challenges and benefits associated with the adoption of electronic payment systems by the commercial banks. In assessing these objectives, a descriptive research desing was adopted in which a census of 43 banks in Kenya were studied. Questionnaires were used to collect data from the head of payments for each of the banks. The collected data was then coded and inputted on SPSS for descriptive and inferential statistical analyses. The findings revealed that Kenyan commercial banks have adopted a range of electronic payment methods such as ATMs, electronic fund transfers, bulk cash deposit machines, and mobile banking applications. Of these technologies, electronic fund transfer payment methods were found to be the most widely adopted. Additionally, the study found that information security, infrastructure, technology, regulatory framework, and top management support positively influence the uptake of electronic payment technologies by Kenyan commercial banks. Moreover, the study found that adoption of these technologies face the following challenges; inadequate legal and regulatory frameworks, outdated technologies, poor infrastructure, connectivity issues, poor technologies, inefficient customer care services, time consuming technologies, and poor infrastructure associated with accessibility, connectivity, and usage. Therefore, in order to improve the uptake of electronic payment systems in Kenya, these challenges need to be addressed. As such it is recommended that the government should formulate and enforce regulations that provide conducive legal and regulatory frameworks for the commercial banks.