Application of electronic banking as a Competitive strategy by commercial banks in Kenya
Abstract
The Banking industry has been undergoing significant transformation in an endeavor
to offer world class service to its customers. The model of this transformation has
been the change in technology and therefore innovation has been taking place from
time to time.ICT is at the centre of great change and transformation and therefore
banks would not like to lag behind. It is in line that commercial banks have been
investing heavily on technological upgrade in order to keep abreast with modem
developments and improve on service delivery to the customers. The study focused on
the application of e-banking as a competitive strategy by commercial banks in Kenya.
The aim of the study was to establish the level of adoption of electronic banking by
the commercial banks in Kenya. The population consisted of all the 43 commercial
banks and a self administered questionnaire was sent out to all the E-Channels
managers in each of the 43 banks. The study showed that majority of the banks
undertaking e-banking belonged to Tier II with an asset base of between 50billion and
60billion with a representation of 46.4%. The most popular services were Electronic
funds transfer and Swift services and were ranked the highest (71.4%). Another
finding showed that customers generally look for convenience while banking and they
prefer channels that enable them to save time. The study recommends that the
Government should issue licenses to banks when new products and services are
introduced to the market. The study revealed that there are various challenges while
dealing with e-banking services and one of them was lack of secure networks which
could lead to loss of customers' funds. The future researchers may study on how to
make e-banking secure and offer solution(s) to the banks with a view to improve on
the threat of insecurity. Another future study may address connectivity to the rural
areas as compared to the urban centers. This will enable the rural population to access
e-banking services. Due to unauthorized access by fraudsters, the future researchers
may also study on system developments that can detect fraud or criminal activities on
line. The implication of this study on Resource based view theory and Dynamic
capabilities is that the commercial banks of Kenya have gained competitive advantage
by adopting new technology to meet the demands of their ever changing consumption
habits of their customers. The study suggested various measures to the banks'
management and the CBK which is a regulating authority for banks. Some of the
measures included tightening the security of the e-banking products and services in
order to safe guard the customers' funds. Practically, commercial banks have to keep
abreast with the rapid change in technology and constantly invest in the latest
technology in order to sustain their profitability.
Citation
Master of Business AdministrationPublisher
Unversity of Nairobi