Strategic Alternative Banking Channels and Performance of the Commercial Banks in Kenya

Abstract

This study was based on the premise that alternative banking channels like the ATM, mobile, agency and internet banking have made it possible for banks to achieve a wider market share across all geographical areas with minimal efforts. However, irrespective of the various studies that were documented on the above concept, it remains unclear how alternative banking techniques of distributed fiscal services affect the performance of commercial banks. As a result, the study ought to determine the various alternative banking channels strategies adopted by the commercial banks in Kenya and to establish the correlation involving Alternative Banking Channels strategy and performance of the commercial banks in Kenya. This research problem was deliberated through cross-sectional survey research design. Thus, the 39 commercial banks in Kenya were the focus of the study which given a natural setting on which data was gathered. Accordingly, the aimed respondents are the heads of departments, their assistants; target respondents included the departmental heads, plus inferior cadre workers like the administrators, book keepers, and finance administrators from the 39 commercial banks’ head offices in Nairobi. The descriptive statistical tools applied for the data scrutiny are the Statistical Package for Social Sciences (SPSS) as well as MS Excel. The outcomes are expressed through the tables as well as charts. To measure the mean score and the standard deviation, the Likert scales was applied. The results also revealed that alternative banking channels affect transaction volume to a great extent as well as customer deposits, return on assets (profitability) cost efficiency (income), customer base and human resource cost. This is a clear indication that ABCs are crucial banking tools that affect various aspects of performance of the commercial banks in Kenya. The study advocates apt management of associated risks to enhance customer confidence, ensuring accessibility to target consumers, incorporation of wide range of services, provision of consumer knowledge, and internal efficiency mechanisms to dealing with security concerns. According to the findings, the study recommends to the management of commercial banks to adopt more alternative banking channels as well as exploiting more innovations that enhance alternative banking