Effect of Fintech on the Operational Performance of Investment Firms in Kenya

Abstract

This research aimed to critically analyse the influence of fintech innovations on the operational performance of investment firms in Kenya. Specifically, it focused on understanding how Peer to-Peer (P2P) Lending, Robo-Advisors, Crowdfunding Platforms, Blockchain-based Investment Models, and the prevailing Regulatory Environment affect key operational metrics like revenue growth, customer satisfaction, and market positioning. The study was a census incorporating all 68 investment firms into the research. The study employed a quantitative research approach, utilizing regression analysis to determine the relationships between the fintech innovations and operational performance. Data were collected from a sample of Kenyan investment firms, and analysis was conducted using statistical tools including correlation analysis and ANOVA. The results revealed a strong correlation (R = 0.700) between fintech innovations and the operational performance of the firms, accounting for approximately 49% of the variance in operational performance. The ANOVA results further corroborated the statistical significance of this relationship. Notably, each fintech innovation was found to contribute distinctively to operational efficiency. P2P Lending and Robo-Advisors were instrumental in enhancing customer engagement and portfolio diversification, Crowdfunding Platforms in increasing market reach and visibility, Blockchain technology in improving transactional efficiency, and a supportive Regulatory Environment in fostering overall fintech adoption. The study concluded that fintech innovations are crucial for the operational success of investment firms in Kenya. These technologies are not only pivotal in enhancing operational efficiency and customer engagement but also play a significant role in improving market positioning and overall business growth. The findings underscored the transformative impact of fintech in the investment sector and emphasize the importance of continuous innovation and supportive regulatory policies for sustained growth and competitiveness in the industry. The study recommended that investment firms continue to invest in fintech innovations to leverage their benefits fully. It also suggests that policymakers focus on creating and maintaining a regulatory environment that nurtures fintech growth while ensuring consumer protection. Additionally, investment firms are encouraged to develop comprehensive strategies for fintech adoption, including staff training and infrastructure development, to optimize the use of these technologies.