Determinants of Digital Innovations Adoption by Financial Institutions in Kenya
Abstract
This study‟s objective was to examine the determinants of digital innovations
adoption by financial institutions in Kenya. This study used descriptive survey
research design and data was analyzed using Statistical Package for Social sciences
(SPSS). The target population of this study was financial institutions in Kenya
undertaking deposits, payment services and lending with specific focus on
commercial banks, microfinance banks and deposit taking Savings and Credit
Cooperatives (SACCOs). This study sampled 30% of the population applying
stratified proportionate random sampling method from the three strata namely
commercial banks, MFBs and SACCOs. Survey questionnaires were used to collect
primary data while secondary data was obtained through document analysis of
reports, journals and other published works. This study yielded both quantitative and
qualitative data. Descriptive and inferential statistics were used to analyze quantitative
data; they included percentages, mean, frequencies and standard deviation. Inferential
statistics included regression and correlation analysis which was used to identify the
determinants of financial innovations adoption. Results of quantitative data analysis
were presented in tables and charts. Qualitative data analysis was done using content
analysis where documents and open-ended responses on the six variables of this study
were examined. Emerging themes were categorized to supplement quantitative results
and helped in making conclusions. The results reveal that organizational resources
positively contribute to adoption of digital innovations by financial institution and that
technological changes negatively contribute to use of digital innovations by financial
institutions in Kenya. Findings further reveal that competitive pressure and the drive
for new sources of revenue growth contributed positively to adoption of digital
innovations by financial institutions in Kenya. Customer behavior changes were also
found to contribute positively to use of digital innovations in financial institutions.
This study concludes that organizational resources especially monetary resources are
important determinants of digital innovations adoption by financial institutions.
Technological changes form an important category of determinants of digital
innovations adoption. Competitive pressure was found to have forced financial
institutions to adopt digital innovations. Customer behavior changes were found to be
the most critical determinant of digital innovations adoption by financial institutions.
These changes have pushed financial institutions to adopt digital innovations in order
to meet customer demands and align with their preferences. This study recommends
that financial institutions should invest monetary resources in digital innovations
adoption. Financial institutions should seek expert advisory in their digital
innovations adoption pursuit to avoid the risk of obsolete technology in form of
software and hardware. Financial institutions should first assess the security of their
data and information before adopting digital innovations and despite being
competitors, explore ways to collaborate in gainful digital innovations. The
government and other stakeholders should help and support financial services industry
to establish a framework that can be followed by organizations seeking to adopt
digital innovations. The government should also support digital innovations adoption
by improving internet and mobile networks infrastructure, online security and curbing
cybercrime. Financial institutions should also embrace market research so that they
are aware of the customer preferences and how they can meet those preferences using
digital innovations. Generally, the institutions should strategize for digital and align
their strategies to among others, these determinants.
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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