Influence of Service Digitalization on the Performance of Commercial Banks in Kenya
Abstract
The banking industry in Kenya has seen tremendous growth during the last few years.
There has been growth in assets, deposits, products and profitability. Competition has also
intensified both from local banks and international banks as a result of new entrants into
the industry and heighted innovations. The competition impacts on the wealth of companies
and consumers affecting the banks’ financial performance. This study sought to establish
the level of digitalization and the influence of service digitalization on the performance of
commercial banks in Kenya. Specifically, the study sought to establish how ATMs, internet
banking and mobile banking influence the performance of commercial banks in Kenya.
Theories the study was based on were Disruptive Innovation Theory and Innovation
Diffusion Theory. A descriptive cross-sectional design was adopted for this study and the
population for this study was commercial banks in Kenya. The study used both primary
and secondary data. Primary data was obtained from respondents through the use of
structured questionnaires. Documented previous research done by other scholars, CBK
journals, media circulations, newsletters, internal circulars, banks reports as well as their
websites were used to obtain secondary data. Descriptive statistics was used to analyze the
information obtained. Linear regression analysis was used to evaluate the relation between
the independent variables ATMs, internet banking and mobile banking, against the
dependent variable, performance. The inferential findings from the correlation and
regression analysis showed that ATMs, internet banking and mobile banking had positive
effect on the performance of commercial banks in Kenya. The study concludes that ATMs,
internet banking and mobile banking led to increased earnings, higher growth in market
share, reduced costs, faster delivery of banking services, high quality services among
Kenyan banks, enhanced customer experience, more accurate records, improved
convenience in business delivery time, faster services and enhanced banks’ image. The
study recommends that commercial banks should incorporate all the main platforms of
service digitalization so as to operate both effectively and efficiently in order to enhance
the overall performance.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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