The Impact of Digital Innovation on Financial Performance of Forex Bureaus in Kenya

Abstract

The role of digital innovations on efficiency, and cost reductions in the financial services sector is paramount to the profitable service delivery and competitiveness of firms in the industry. Financial service providers such as banks have continued to use huge investments in digital innovations to handle new technologies and service delivery. Yet, the adoption of digital innovations in the context of Forex Exchange bureaus lack. None of the available studies focused on the impact of digital innovations on the performance of Forex Exchange Bureaus. The main objective of this study was therefore to explore key digital innovations adopted in Forex exchange bureaus and their effect on the performances of Forex Exchange Bureaus. The specific objective of this study was to determine the impact of digital innovations on the financial performance of Forex bureau firms in Kenya. The research problem was studied through quantitative research and used questionnaire method to collect primary data. Due to their limited number, the target population was registered in Forex Exchange Bureaus in Kenya. The study used descriptive and inferential statistics SPSS and presented using means, standard deviation and frequencies. From the findings, the key digital innovations adopted by Forex Exchange Bureaus included electronic money transfer, online trading platforms, mobile applications and automated office automation. The study concludes that the adoption of digital innovations affected the performance of Forex Exchange Bureaus. Specifically, office automation was the most common innovation adopted to facilitate operations of Forex Exchange Bureaus, which consequentially enhanced their financial performance through cost reductions. The other necessary innovation was Mobile applications. They were significantly important for customer care, facilitating monitoring of accounts and access to quotes and enhancing the operations of the Forex Exchange bureaus as a result. In relation to electronic money transfer, the use of this digital innovation expanded commission and interest-based payment and significantly increased the overall income of Forex Exchange Bureaus. The study recommends that for Forex Bureaus to be highly competitive, they need to employ modern technological innovations particularly automated office operations and mobile applications to grow their customer base as one of their key strategic priority which will eventually contribute to the financial performance and growth of these firms.