Factors Influencing Adoption of Alternative Banking Channels by Commercial Banks Listed in Nairobi Securities Exchange

Abstract

The purpose of this study was to investigate on factors that influence the adoption of alternative banking channels by commercial banks listed in Nairobi Securities Exchange. The study had four main objectives which were: to assess the influence of the client’s technological literacy factors on the adoption of alternative banking channels by commercial banks listed in the Nairobi Securities Exchange; to establish the influence of costs factors on the adoption of alternative banking channels by commercial banks listed in the Nairobi Securities Exchange; to determine the influence of security factors on the adoption of alternative banking channels by commercial banks listed in the Nairobi Securities Exchange; and to establish the influence of regulatory factors on the adoption of alternative banking channels by commercial banks listed in the Nairobi Securities Exchange. The study adopted descriptive survey design. The data was collected through a self-administered structured questionnaire to collect data from the banks’ I.T employees and branch managers and interview guide to collect data from managers from the Kenya Bankers Association. The research instrument was piloted for validity through content related method and reliability through half-split criterion. A target population 1,220 Banks’ I.T Employees and 903 Banks’ branch managers and Kenya Bankers Association management 10 was selected. A sample size of 122 banks’ I.T employees were selected using stratified sampling from a target population of 1,220 Banks’ I.T Employees and 90 Banks’ branch managers and 10 Kenya Bankers Association management members. The sample size was 222 composed of 122 Banks’ I.T Employees, 90 branch managers from the 11 commercial banks listed in the NSE and 10 managers from the Kenya Bankers Association selected using stratified sampling and random sampling. Out of the 222 questionnaires that were administered, 180 questionnaires were duly filled and returned and therefore regarded as the responsive instrument and formed the basis for data analysis. This formed a questionnaire return rate of 81.08%. Data was analyzed through the use of Statistical Package for Social Sciences (SPSS). The data collected was analyzed by descriptive statistics. Regression analysis was conducted to determine the relationship between the five under study variables and their influence on the topic of study. Descriptive statistics such as frequencies and percentages were used to describe the data. The analyzed data was presented in form of tables. The study found out that 94%, 90%, 85% and 83% of the respondents felt that the client’s technological level, cost factors, security factors and regulatory factors respectively. The factors had beta values of 0.219, 0.303, 0.219 and 0.100 respectively confirming that they are significant in the adoption of alternative banking channels. The study recommends that commercial banks should consider the clients technological level when coming up with new products and establish network surveillance and security monitoring procedures using of network scanners, intrusion detectors and security alerts. The study further suggests that more research be carried out to determine the influence of clientele charges on the adoption of the alternative banking channels.