Effect of Electronic Banking on the Financial Performance of Commercial Banks in Kenya

Abstract

The study intended to investigate the link between electronic banking and the financial performance of commercial banks. The data came from annual reports from the 41 commercial banks that were accessible. This was obtained from the Central Bank's websites and the individual Bank's websites as published there. The study collected data on the number of transactions done through ATMs to represent ATM banking. E-banking was measured by the numbers of transactions through online platforms and the value of transactions through online banking platforms. The research also used mobile banking measures such as the number of transactions through mobile banking. Return on Assets, on the other hand, was used to measure financial performance (ROA). According to correlation research, ATM banking, mobile banking, and internet banking all show a favorable link with commercial bank financial success in Kenya. However, the regression results demonstrated that ATM and online banking have a positive and significant impact on commercial banks' financial performance. The results, Mobile banking, on the other hand, has been determined to have a negative and considerable influence on Kenyan commercial banks' financial performance. Based on the findings, the research recommends that banks boost their use of electronic banking, notably ATM banking and internet banking. The research also advises Kenya's central bank, as the country's primary regulator and supervisor of commercial banks, to develop effective policies governing the use of electronic banking by Kenya's commercial banks.