A survey of expansion strategies adopted by commercial banks in Kenya
The banks are employing both acquisition and start-up in their regional expansion strategies. Financial pundits opine that it would be prudent for the banks to consolidate themselves in the local market before going regional. With only 20 per cent of Kenya's population banked, there is need for banks to strategise and reach more of the un-banked, which would constitute a big business growth as opposed to regional. Therefore, expansion strategy is vital to the adaptation of the changing business environment. This study therefore sought to determine the expansion strategies adopted and to establish factors influencing expansion of commercial banks in Kenya. This study adopted a census survey design. The population targeted comprised of all the banks licensed to operate in Kenya by the Banking Act as at April 30, 2009.According to the Central Bank of Kenya, Economic Review of May 2009 the banking sector comprises of 43 commercial banks. The study was done using census survey commercial banks. Primary data was collected using a structured questionnaire. Secondary data was collected from various documents including Banking Surveys and Economic Reviews from Central Bank Supervision annual reports. Data was then analyzed statistically using descriptive statistics such as mean score, percentages and frequencies. Data was then presented using frequency tables. The study found that all the commercial banks in Kenya had undertaken a major expansion since they were started. The expansion strategies adopted by these banks were physical branch distribution network, infrastructure software and electronic distribution systems and mergers and aquisitions. The distribution channels used to reach all the consumers in expansion were contracting distributors, locating the banks where they were accessible by most customers, mobile bank branches, bank agents, Internet banking, automated teller machines (ATMs), POS devices, EFTPOS devices and mobile phones. The study therefore recommends that for commercial banks to successfully undertake their expansion strategies, they should ensure that they employ the best strategies for their expansion. For such a strategy to succeed, these commercial banks should have the prerequisite capital to implement the expansion and ensure that there is an attractive market before expanding. They should have appropriate and adequate workforce to implement and support their expansion. Absence of these co operant factors can be ix addressed through means such as outsourcing of the experts from the labour market or developing and training employees so as to equip them with the needed skills to undertake theassignment.