Role of Pesalink Innovation in Business Model Re-alignment of Commercial Banks in Kenya

Abstract

Financial innovation has been a key feature in the banking sector based on the high levels of innovations and use of modern technologies in the day to day operations. The need to meet customer demands and enhance competitiveness in the dynamic markets, has been a key driver to adoption of modern technologies in the banking sectors to keep up with all these trends. PesaLink is a financial innovation tool that has been adopted by commercial banks in Kenya which has improved market share, quality of resources and reduced instances of imitation in the banking sector. The study was aimed at establishing the role of PesaLink innovation as a financial innovation in business model realignment of commercial banks in Kenya. It was specifically aimed to establish how, value creation, quality of resources, imitability and affect business model realignment of commercial banks in Kenya. The study used descriptive research design since it focused on the role of PesaLink innovation in business model realignment of commercial banks in Kenya. The study was guided by Schumpeter theory of Innovation, Innovation Diffusion Theory and Transaction Cost Innovation theory. The study used a descriptive statistic in its methodology on supply chain management practices and performance of private hospitals in Nairobi. This study used primary data. Data collection was effected by use of structured questionnaires. Senior, middle and low level management were the targeted population from a total of 42 commercial banks in Kenya. These questionnaires were issued through drop and pick method, coded, keyed and analyzed using both descriptive and regression analysis. The regression model used had four variables. PesaLink features value creation, quality of resources, imitability and adaptability) were the dependent variables while business model realignment (performance) was the independent variable. The study findings indicated PesaLink innovation has a positive impact on business model realignment of commercial banks in Kenya. The major limitation of the study is that it was based only on one type of financial innovation which was PesaLink .Other future academicians should research on role of financial innovation on other financial institutions on other financial institutions rather than commercial banks and it should deal with other types of financial innovations rather than PesaLink alone.