The Effect of Mobile Banking on the Financial Performance of Stock Brokerage Firms in Kenya

Abstract

The main objective of this study was to examine the impact of mobile banking on the performance of stock brokerage firms in Kenya. The study employed a descriptive research analysis. The population was 25 market participants in Kenya. The data that was used in the study was secondary collected using a data collection tool. A multiple regression analysis was applied in the data analysis in order to establish the nature of the relationship between mobile banking and the performance of brokerage firms in Kenya. From the findings, total commission to total market revenue had Pearson correlation r=0.507, p=0.000<0.05, the number of investors to total traders had r=0.320, p=0.002; volume of trade to total revenue had r=-0.869, p=0.000; firm size had an r=0.552, p=0.000 and operational cost efficiency had an r=-0.156, p=0.130. The study concludes that total commission volumes generated through mobile banking to total revenue of market participant significantly affects performance of stock brokerage firms, the number of investors who traded via brokers using mobile banking to total number of traders who trade through market participant is a significant predictor of performance of stock brokerage firms, volumes of trades moved using mobile banking per participant to total revenue moved through all trading platforms is a significant predictor of performance of stock brokerage firms, firm size had significant effect on performance of stock brokerage firms, operational cost efficiency was a significant determinant of performance of stock brokerage firms. The findings of the study was that total revenue generated through mobile banking had a positive significant effect on the performance, the number of investors who traded through mobile banking had a moderate effect on the performance, volumes of trade moved through mobile banking had a positive effect on performance, firm size had a positive effect on performance and operational cost efficiency had a positive effect as per regression analysis but was insignificant as per the probability values generated from testing the correlation analysis. The study recommends that the top management of all stock brokerage firms operating in Kenya should come up with sustainable strategies geared towards growing of the total commission volumes generated through mobile banking and total revenue of market participant. Management of NSE should create awareness among market participants including investors to leverage on mobile banking in carrying out their transactions and this will enhance performance of stock brokerage firms. Capital Market Authority CMA in conjunction with the Central Bank of Kenya and Telecommunication firms like Safaricom need to cooperate in formulation of sound policies and regulations that shall grow volumes of trades moved using mobile banking per participant and total revenue moved through all trading platforms and this shall enhances performance of stock brokerage firms. Stock brokerage firms need to align their growth strategy with the overall strategic goals of their organization in order to increase their sizes and this improves performance. Top management of all stock brokerage firms and all firms generally operating in Kenya and investors should adopt technology for example m-banking in carrying out their operations.