Big Data Analytics and Competitive Advantage of Commercial Banks and Fintech Companies in Kenya

Abstract

Data and subsequently information has won its place as a key resource for organizations. This is due to its ability to transform operations and aid in decision making. Big data has popularly been characterized using three Vs which are high volume, velocity and variety. Big data analytics (BDA) allows organizations to derive insights from the enormous multi-structured data that they store. The Kenyan financial sector is quite competitive and banks have for a long time enjoyed dominance in that industry. However, the entrance of fintech companies that are using technology to offer similar services has caused a stir in the industry and banks have moved towards adopting partnerships with the fintech companies or offering fintech products to remain competitive. The objectives of the study were to establish the extent to which big data analytics has been adopted amongst banks and fintech companies in Kenya, to establish the relationship between the adoption of BDA and competitive advantage and finally to establish the challenges and opportunities of adopting BDA. The study was carried out using descriptive research design. The population consisted of 42 commercial banks and 38 fintech companies in Kenya amongst whom a census survey was done. Data was collected using a structured questionnaire. It was then analyzed using descriptive statistics and regression analysis. Multiple regression was carried out to establish the nature of the relationship between adoption of BDA and competitive advantage. The results of the study showed only 11.5% of organization had not taken any steps towards adoption of BDA while 23.1 % were effectively using the technology. The rest of the organizations were either planning to adopt or testing their data models. The study found that adoption of big data analytics leads to significant achievement of competitive advantage. It had also enabled the organizations that were effectively using BDA to come up with new products and enter new markets. It was also found that the organizations studied faced various challenges in the adoption of BDA, some of which were integration of legacy systems with new technologies and poor quality of data. Adoption of BDA presented the organization various opportunities which could be exploited some of which were improving customer service, fact-based decision making and operations management. Further research needs to be undertaken on the adoption of BDA in other areas of the financial sector and to also establish the impact of the adoption on financial performance.