Digital Technology and Competitive Advantage of Commercial Banks in Kenya

Abstract

Digital Technology has been considered as the defining factor in modern banking. It has enabled banks to provide quality services and products to the consumer eventually improving competitiveness. Technology is a form of change that is geared to allow the institutions to adapt to changes. Therefore, the role of digital technology is essential in the distribution channels and competitiveness of commercial banks. The objective of the study intended to determine the effect of digital technology on the competitive advantage of Kenyan banks. The study used a descriptive cross-sectional survey. The population of study was all the registered 43 commercial Banks in Kenya. Open ended questionnaire was used to gather the primary data from commercial banks. Collected questionnaires were edited and cleaned for completeness in preparation for coding. They were coded and keyed into the SPSS version 22, for analysis. Descriptive statistics such as means, standard deviation and frequency distribution were used to analyze the data while percentages and frequency tables were used for data presentation. The study found that the use of ATMs in service delivery influences the competitive advantage of the bank. The use of ATM has helped the bank in simplifying customer banking experience and lowering the costs of transactions for example the electronic withdrawal of cash across the ATM has resulted into reduction of costs. The study found that that the use of mobile banking in service delivery influences the competitive advantage of the bank. The study also found that the use of mobile banking has managed to enhance convenience and flexibility in offering financial services to its customers. The study found that the use of internet banking in service delivery influences the competitive advantage of the bank. The study concluded mobile banking provides increase convenience, expand access and significantly save time for the customers. The main limitation of the study was in the inability to include other financial institutions as the case study focused on Kenya commercial banks only. The study would have covered more institutions across all sectors so as to provide a broader based analysis. The study recommends that a further study should also be carried out to determine the influence of ICT in achieving competitive advantage at other sectors such as manufacturing companies. A further study should also be carried out to determine the relationship between information technology strategies and competitiveness in banking