Impacts of Technological Innovations on the Financial Performance of Commercial Banks in Kenya

Abstract

Business environment especially the financial sector has continued to be more competitive in the recent years. The competition has been attributed to the increasing uptake of various technological innovations such as agency banking, mobile banking, internet banking, and ATMs usage, being adopted by commercial banks. However, despite the uptake, many of the commercial banks continue to struggle with growth particularly in their overall financial performance. Therefore, this project work established the theoretical and conceptual relationship on the impacts of technological innovations applied on the financial development of commercial banks in Kenya. The project employed the return on assets as a measure of performance and the total transactions on agency, mobile and ATMs as measures of the technological uptake. The research was conducted on the 43 registered commercial banks from 2011 to 2020. From the regression analysis carried, the study deduced that indeed there is a positive correlation between financial performance of commercial banks and the technological innovations being used. However, despite this tremendous output, there are still gaps in the uptake. Therefore, the study proposes further research work to be conducted to indentify some of the hindrance factors that affect the update of new technological innovations in Kenya.