Effect of Fintech Strategy on Financial Services Delivery to the Unbanked Low Income Earners in Nairobi County

Abstract

The objective was to establish the effect of Fintech strategy on the financial services delivery to the low income earners in Nairobi County. The study anchored on Porter's Model of Generic Strategies for Competitive Advantage, Financial Intermediation Theory, Theory of financial innovations, and Technology Acceptance Model. Theq studyq adoptedqaqcross-sectionalq surveyq design. The study population comprised of 38 Fintech companies in Kenya. The study targetted the management staff, one in each of the Fintech company. Theq studyq collectedq primaryq data. Theqprimary dataq was collectedqthrough aqquestionnaire. The data was analyzed using descriptive statistics and inferential statistics through use of SPSS (Version 21). The study found out that Fintechs operating in Kenya offered varied financial products and services which ranged from credit, business advisory services and digital payment platforms. The study findings showed that the cost of financial intermediation by Fintechs was low which enhanced cheaper delivery of services and products. The FinTechs had an efficient service delivery process which minimized costs and which reduced the transaction costs in financial services delivery. The study results further indicates that majority of the participants reported that FinTechs improved financial inclusion of low income earners and small businesses to a great extent. The Fintechs expanded the pool of affordable financial services and products accessible to low income individuals and small enterprises. The regression resultsq also established thatq there is a positiveq andq statisticallyq significantq relationshipq between FinTechs and financial services delivery to the low income earners. The study concludes that Fintechs in Kenya used cost leadership, differentiation and focus strategies in serving their markets. The study also concludes that FinTechs enhanced delivery of financial services to low income earners and small businesses to a great extent, which subsequently leads to financial inclusion. The study recommends that the government should promote and support FinTechs in the country, since they have the potentialq toq provideq financialq servicesq faster, moreq efficiently,q moreq conveniently,q andq moreq cheaplyq toq everyone,q includingq theq under-servedq by conventional financial institutions. The study also recommends that FinTech Companies should continue to develop products and services that target the low income earners, and the small and micro businesses who are described as risky and non-profitable and therefore shunned away by financial institutions.