Strategies adopted by Commercial Banks in Kenya's competitive business environment

Abstract

The objective of this study was to investigate the strategies adopted by commercial banks in Kenya’s competitive business environment. The research adopted a descriptive research design. The population of interest was the 43 commercial banks in Kenya. Since the population was small, the study adopted a census design. The study collected primary data. Questionnaires were administered to the heads of operations department or their equivalents. The researcher used the Statistical Package for Social Sciences (SPSS V.22) to key in both quantitative and qualitative data and analyze data using descriptive statistics. The data were then presented in form of frequency tables, mean scores, standard deviations, percentages, pie charts, bar graphs among others for easier interpretation and deduction. The study concluded that market forces (power of suppliers, power of buyers, threat of substitutes and rivalry in the industry) only dominate the industry to a moderate extent while barriers to entry dominate to a great extent. It also concluded that banks have different characteristics gaining them competitive edge with the most used one being focus on market segment. This allows the bank to develop very specific focused marketing messages and services that will likely appeal far more strongly than a broad general messaging. It was further concluded that challenges in strategy implementation in the banking industry are; complexity in customer needs, frequent changes by regulators, rise in the cost of borrowing, high implementation cost, lack of commitment to implement and lack of skilled labour all to a moderate extent.On the opportunities enabling banks to compete favourably, it was concluded that increasing bank resources, mergers and strategic alliances, qualified human resource, lowering interest rates, highly differentiated services, and reduced capital requirement moderately enable banks to compete favourably. Reduction in government regulations on the other hand greatly enables favourable completion by commercial banks. The research recommends that commercial banks formulate and implement strategies that will enable them gain competitive edge over others. The banking industry remains competitive and banks can only stay competitive through developing competitive strategies.The study further recommends the formulation of favourable policies and regulations governing the banking industry. Regulations in the industry play a big role in ensuring favourable competition